How to Make Money with NFTs
Posted by Frank Gogol in Crypto | Updated on June 20, 2023
There are different ways to earn an income using crypto blockchains. One of these is using non-fungible tokens, also called NFTs. Read on to learn some of the potential ways how to make money with NFT.
9 Ways to Make Money with NFTs
There are more than a few ways to make money with NFTs. Below, we’ll take a look at the nine best ways to earn with money with non-fungible tokens.
1. Mint and Sell Your Own NFTs
The most direct way how to make money with NFTs is to create your own and sell them (similar to how to create a cryptocurrency). The process of making an NFT is called ‘minting’. The cost of minting is usually low. This means that you (and thousands of other people) can create hundreds or thousands of NFTs for very little crypto.
In 2022, there are dozens of very similar NFT marketplaces that you can choose from to sell your NFTs. You don’t have to list your NFT on a marketplace to sell it to someone, but the kind of people who buy NFTs usually buy from marketplaces.
Once you have listed your NFTs on a marketplace, you wait until someone buys them. There are millions of nearly identical NFTs on every marketplace, so the only way anyone will ever buy your NFT is if you create hype and make it desirable. This is usually done through social media marketing.
If you manage to sell an NFT, crypto from the buyer is transferred to your wallet, and the NFT is transferred to the buyer’s wallet.
2. Trade NFTs
Trading NFTs is similar to trading stocks (you can learn more here about what are NFT stocks). As a trader, you find an NFT for a low price which you believe will become more popular and increase in price later.
When the NFT’s value goes up you sell it again for a profit. The vast majority of NFTs are completely worthless and will never increase in value.
The most valuable ones are determined by trends in popularity. As a trader, you have to be able to quickly spot trends in the popularity of various NFT collections.
3. Rent NFTs to Others
Most NFTs do not serve any purpose. However, some NFTs have a role in games or other niche platforms. This means you can lend your NFT to someone to use in a game or other specialized platform for a fee. This allows another person to use the NFT without having to buy it.
These rental agreements are governed by software programs on a blockchain called smart contracts. The payments and return of the NFT happen automatically unless there are bugs in the contract.
4. Play-to-Earn (P2E) NFT Games
In the last few years, there has been an increase in a specific type of online video game called play-to-earn (P2E) games. These games incorporate some aspect of cryptocurrency into the gameplay to allow players to earn crypto for playing the game or achieving certain objectives.
P2E NFT games allow you to earn NFTs from playing the game. Rather than being a currency, this takes the form of a collectible in-game item that you can potentially sell to someone else. If the game is very popular, and the item is rare, then the NFT associated with it could be valuable and you might make a significant sum of money from selling it.
However, P2E games in 2022 are generally unpopular compared to other online multiplayer games. It may be a long time before any NFTs you earn gain value.
In addition, these NFTs are usually game-specific. If the game developer stops supporting the game or it loses popularity then any NFTs you have for it become worthless.
5. Earn from NFT Royalties
At their core, NFTs are pieces of software on a blockchain called smart contracts. It is possible to include code in an NFT smart contract that pays some crypto to the creator every time it gets sold. This is often called royalty. Many NFT marketplaces cap the royalty at 10%.
Since royalties are only paid when the NFT changes ownership, they make the most sense for NFTs which will be traded many times.
6. License NFT Collectibles
Some people and organizations have begun to create NFT versions of physical collectible items. These items could be trading cards or other unique physical items. By minting an NFT associated with the physical collectible, you can have a digital asset that can be traded similarly.
However, there is no barrier preventing someone from creating an NFT of the same collectible on a different blockchain or marketplace. In other words, there is no practical way to make your NFT of the collectible item the only NFT of the collectible unless you have the marketing skill to make people believe yours are the only genuine NFTs of the item.
7. Stake NFTs
The concept of crypto staking can be extended to NFTs. By depositing your NFTs in a staking platform, you can earn rewards for the period in which it is staked. NFT staking in August 2022 is still a new concept in defi (decentralized finance), so few platforms allow you to stake NFTs.
As with crypto staking, the staking rewards are usually in the form of the platform’s native token. The value of this token depends on its utility and popularity. Therefore, keep in mind that real rewards from NFT staking can vary widely, even if the stated APY (annual percent yield) is very high.
8. Invest in NFT and NFT-Adjacent Companies
Rather than directly investing in NFTs on a blockchain, you can also indirectly invest in the success of NFTs by investing in companies whose core business has something to do with NFTs.
By buying stock in an NFT-related company, you can benefit from the increased value if NFTs increase in popularity and that company becomes successful.
However, there are few companies currently active in NFTs, and fewer still whose shares can be bought on the stock exchange. In August 2022, Coinbase is one of the few companies in this category.
Keep in mind that by investing indirectly in this way, you are also investing in the competence of the company’s management, not just the popularity of NFTs. A company with poor management could fail even while NFTs explode in popularity and value. Then, your investment would decrease in value despite the growth of the NFT industry.
9. Flip NFTs
Flipping means buying at a low price and later selling at a higher price. Essentially it is a slower version of trading. The same considerations as with trading apply to flipping NFTs. It is difficult to predict the price movement for NFTs, especially ‘art’ NFTs which have no utility.
Even NFTs which have supposed utility, usually for P2E games, still depend for their value on the popularity of the platform on which they are used.
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There are several options for how to make money with NFTs. The simplest is to create and sell NFTs, but millions of nearly identical NFTs already on the market, so you need to market your NFTs to create demand. Most of the ways of making money with NFTs rely on the popularity of the NFT among crypto fans, or of the platform on which the NFT is used. If you are not already well versed in crypto and social media marketing, do not try to make money with NFTs. Your chances of success are extremely low.