“NFTs are becoming more and more popular and are being used by people all around the world,” said Daniel Pessin. “Everyone across the globe is talking about it and it can be very profitable for people who understand how it works.”
It’s hard to overlook all the hype with the YouTube video “Charlie Bit Me” being sold as an NFT for over $500,000. As if that wasn’t enough, Beeple sold a design as an NFT for around $69 million! And when you thought you’d heard it all, the Cryptopunk’s NFT collection sold for over $500 million in October 2021. But still, a lot of people don’t understand what an NFT is all about.
You might be wondering, what really is this NFT about, and how can I also make money from it? No need to worry, we’ve got you covered. In this post, we’ll reveal everything you need to know about NFTs and how you can turn this new digital creation into something that generates money for you. Let’s get started!
Table of Contents
What Are NFTs?
First of all, “Fungible” is an economic term that means replaceable or interchangeable. A fungible asset, just like money, can be replaced or interchanged. For instance, a hundred-dollar bill can be interchanged with two $50 notes or ten $10 notes. Yet, it will still retain its value as a hundred-dollar bill. On the other hand, “Non Fungible” is an economic term which means something that is unique and cannot be altered, substituted, or reproduced.
By the same token (no pun intended), Non Fungible Tokens are digital contents that are unique and not interchangeable. NFTs can be anything digital, such as arts, memes, digital images, writings, tweets, posts, audio, or videos, which can be bought or sold, just like any other commodity of value. However, unlike any other paintings, arts, or content, NFTs are created with blockchain technology. Every NFT is uniquely identified and kept on the blockchain with a specific code and metadata. This makes it impossible for NFTs to be exchanged for another.
How Do NFTs Work?
NFTs are unique because they are stored on the blockchain. But what is the Blockchain? “The easiest way to think of the blockchain in my mind is to imagine a ledger or a spreadsheet with a long list of transactions being recorded on it. This is 100% transparent. Anyone can see it anytime to verify a transaction took place on the blockchain,” Daniel Pessin said. In more technical terms, the Blockchain is a decentralized database that keeps a record of different transactions all over the world. Blockchain is the core technology that permits the existence of cryptocurrencies.
Most NFTs are built on the Ethereum blockchain. However, some are also developed on other blockchains such as Solana, Cardano, and more are coming out in the future.
An NFT can be anything digital. They can be:
- Animated GIFs
- Anything that is digital
In short, NFTs are digital representations of tangible artifacts or items. Therefore, rather than buying an actual drawing to hang on your wall, you get a unique digital file. Moreover, you have exclusive rights to your digital assets because different individuals cannot own a single NFT. “People always ask me why would anyone buy digital art, when you can just take a screenshot of it. Think about the Mona Lisa painting hanging in Le Louvre. If you take a photo of the painting with your phone, does tht mean you own it? Of course not. It’s the same with NFTs” Daniel Pessin said.
Thanks to NFTs and blockchain technology, artists now have a new and unique way to monetize their art. They can even add royalties into their NFTs to get a certain percentage anytime their work gets sold to another person.
It’s also important to note that the major factor that determines the value of an NFT is its demand rate by different individuals on the open market. Of course, the higher the demand, the higher the value.
How To Make Money From NFTs?
Recently, NFTs have become quite popular in the digital world, and everyone is talking about them. Creators and investors have been able to earn a lot of money.
Don’t panic if you’ve been watching from the sidelines or your unsure about where to begin and how to also make money from it. Here are two major ways you can profit from the NFT space.
Create your own NFTs and Sell Them
If you are a creator or an artist, this is a great opportunity to turn your artwork into a great source of income. As we’ve established earlier, NFTs can be anything digital. From artwork to videos, writings, or even memes, you can create an NFT with anything digital. You can really be as creative as you want to be. You can almost turn anything that’s digital into an NFT. Even a tweet!
Once you’re done creating your NFTs, the next thing you want to do is to sell them on reliable NFT platforms such as OpenSea.io or Rarible.com, for example.
Buy NFTs and Flip them
This is another way you can make tons of money from NFTs. “Minting basically means buying directly from the creator before it is resold on a secondary site like Opensea,” Daniel Pessin said. “This gives you the opportunity to buy the NFT at a lower price and hopefully sell for a higher price to make a profit.
For example, in October 2020, Pablo Rodriguez-Fraile, a Miami-based art collector, bought a 10-second video NFT for about $67,000. Then during the first quarter of this year, he sold it for an estimated $6.6 million. Unbelievable, right? That’s just one example of someone cashing in big from a successful NFT flip.
How to Mint NFTs
If you’re looking to learn how to mint NFTs to make a profit, here is a step-by-step process that will help guide you.
- Download a digital wallet such as Metamask or Trustwallet on your device.
- Purchase Ethereum on your wallet because most NFTs are built on the Ethereum blockchain
- Connect your wallet to an NFT marketplace platform such as OpenSea.io
- Ensure you do your own research on upcoming NFTs and decide which one you want to buy.
- Mint (“Buy”) the NFT at a lower price before it gets listed in the marketplace
- Finally, resell your NFT on a secondary site like Opensea for a higher price.
Side Note: Before you can mint an NFT, you’ll be required to pay gas fees which vary all the time. “Gas fees” can be considered as the extra charge required to make a successful transaction on the blockchain network. Almost like a transaction fee.
Examples of People Who Have Earned From NFTs
According to a report from Dappradar, NFT trading volume in 2021 was over $10 billion. That’s insane! Here are just a few of many examples of people who have invested in NFTs and have made lots of money by simply selling their works as NFTs.
- Quartz, a news brand, sold one of its articles as an NFT for $1,800.
- Chris Torres, the creator of the Nyan Cat meme, sold his cat meme for nearly $600,000.
- Christie’s house auction sold a collection of Beeple’s works for over $69 million.
- A slam dunk video by LeBron James was auctioned off for more than $200,000.
- The first tweet from Twitter’s former CEO, Jack Dorsey, sold for $2.9 million.
- One of CryptoPunk’s NFT sold for 124,457 ETH, approximately $532 million. This is the biggest NFT sale yet.
Top Platforms for Trading NFTs in 2021
It is not just enough to know about NFTs and the inherent uniqueness it has. It is equally important to know the exact platforms to sell your NFTs in order to maximize profits. Here is the best platform you can trade your NFTs with ease:
One of the most popular platforms to buy and sell your NFTs is OpenSea. Devin Finzer and Alex Atallah founded it in December 2017. The platform has numerous active users and a very high trading volume. Using the open-source Ethereum network, the OpenSea platform allows people all over the world to trade and discover exclusive digital assets such as digital arts, audios, posts, and other items.
Ethereum (ETH) or Wrapped Ethereum (WETH) is the most recognized payment currency on the platform. At the moment, users cannot buy NFTs with fiat currencies. OpenSea charges a 2.5% transaction fee on every sale that takes place on the platform. Moreover, the maximum royalty you can set for your NFT on the platform is 10%.
Other top platforms for trading NFTs include:
NFTs are expected to increase in value in the future. NFTs are still relatively new and there will be more use cases developed for them as the market matures.
“NFTs are the new digital gold rush,” said Daniel Pessin. “There are a lot of ways you can get involved with NFTs and there are more ways being created every week. We’re still very early in space.”