Typology of NFTs and how to make money on them?
Description
NFTs are a promising direction for investing and earning money. In this article, we'll cover how to make money with NFTs.
NFT tokens are a popular sector of cryptocurrency. It's largely due to the high value of tokens and the ability to earn NFT passive income. Therefore, it is necessary to understand the typology of tokens to answer the main question: how to make money on NFT?
What's an NFT: correct definition of unique tokens
NFT (non-fungible tokens) are unique tokens that can not be replaced with each other. It's the main value of NFTs, so their value depends on the exclusivity of these tokens. The definition and capabilities of NFTs have been discussed in detail in our article here.
Unlike cryptocurrencies or fiat currencies, a non-fungible token cannot be replaced with another NFT. For example, each Bitcoin of 21,000,000 coins is interchangeable. You can take the first, the tenth, the one hundred and thirty-seventh, the one million and seventy-first. There would be no difference and no exclusivity either. Likewise, with classic money - all banknotes are equal and the same in value.
NFT, in turn, cannot be exchanged for the same token without loss of quality or value. Each object is unique.
What Gives an NFT Value in the Market Economy of Cryptocurrencies
NFT uniqueness is the main parameter for the value of tokens. Digitized art objects, branded images, logos, photos, videos, music, and unique collections of digital artists can all be converted into non-fungible tokens and sold. Unique identification codes and blockchains will ensure the invariability and safety of exclusive parameters.
The higher the artistic or practical value of a unique token, the higher its price. For example, there was a well-known case when the American blockchain company Injective Protocol bought back one of the valuable copies of a work by the famous contemporary artist Banksy called "Morons". The value of the work was $95,000. However, according to Injective Protocol, Morons was burned live on the Internet, and at the same time, it was released as an NFT token. The original work of art no longer physically exists, but there is a digital copy. It means the digital copy is worth even more because it is the only copy of the work.
It's a very categorical option to add value to the NFT. There are fewer definite options. During the non-fungible tokens boom, many artists created special collections of their work adapted for NFT.
For example, singer Grimes, also known for her relationship with the head of Tesla and SpaceX, Elon Musk, released her collection of NFT tokens in 2021. Or the famous calligrapher Pokras Lampas presented his works in the form of NFT.
Types of NFTs that exist on the market
Depending on the artist's content, you can divide non-fungible tokens into several kinds. These include:
Social media avatar.
At the beginning of 2022, a new type of NFT appeared – in the form of an avatar for a personal page on social networks. The most famous example is Twitter. Users can link a cryptocurrency wallet to their account and put an NFT from their collection as a profile image.
A unique (world's only) work of art.
These are tokens based on artists' collections, where each item carries a high artistic value and has exclusivity. The most famous example here is "Everydays: The First 5000 Days" by artist Beeple. In March 2021, it was sold at Christie's for a record $69.3 million. "Everydays: The First 5000 Days" is also the most expensive token currently in existence.
NFT collection tokens.
These are examples of collections sold by a variety of companies. This type of non-fungible tokens share a common concept, the issue of the collection can go up to several thousand and even several tens of thousands. It is one of the most common types of unique tokens.
According to the Dappradar service, the top 5 most successful collections of all time for NFT sales include:
Axie Infinity on the Ethereum and Ronin blockchain; CryptoPunks, Bored Ape Yacht Club, Mutant Ape Yacht Club, Art Blocks on Ethereum blockchain.
Photos, screenshots of correspondence, and historically significant social media posts.
Jack Dorsey's first tweet on Twitter is an example. As an NFT on the OpenSea marketplace, it was sold for a record $2.9 million.
NFT and music.
An example of such an NFT is the British band Muse album “Will of the People,” which topped the British charts in early September 2022.
NFT for GameFi and Metaverse.
NFT profit is not only implemented in one plane of non-fungible tokens. Another common segment of application and creation of unique tokens is the game industry and Metaverse.
Event tickets.
NFTs can also perform practical tasks such as admitting attendees to events. It's very convenient because tokens cannot be counterfeited. One of the largest music festivals in the world, Coachella, launched NFT collections in partnership with the FTX exchange. Three lots were raffled off: a lifetime admission to the festival, a collection of the most striking photos from the festival, and 10 variations of the legendary Coachella poster.
These aren't the only types of NFTs used in the crypto industry. Any object can be tokenized and sold as a unique digital work. Digital property rights, streaming service platform subscriptions, custom paintings, branded merchandise.
How to Make Money with NFTs for Beginning Investors and Experienced Holders of Digital Assets
For many people, the NFT boom will always be associated with high prices and big profits. And indeed, many token collections have become legendary, true passes to the elite world of successful cryptocurrencies. But how does NFT make money today? What ways of earning on NFT exist? And how to make NFT profitable in the fierce competition of unique tokens.
In general, we can distinguish several points contributing to the monetization of non-fungible tokens.
- With the to-Earn concept.
The NFT in the to-Earn concept (Play-to-Earn, Lern-to-Earn, Move-To-Earn, and others) acts as a digital avatar, a central object of personal play, or a valuable prize. The value of NFT is tied to the game activity. The more activities a player performs, the higher the token's value. Examples of successful games are STEPN, Axie Infinity, Illuvium, and others.
- NFT HODLing.
Many products in the early stages of forming the NFT market, many products held free token giveaways among their users. For example, in 2017, the creators of the legendary CryptoPunks collection gave away 5,000 promo NFTs to everyone for just a couple of cents. This collection is now at the top of the most expensive in the world and has brought thousands of percent profit to its investors, NFT HODLing.
- Minting an independent collection of NFTs.
For many art content creators, minting NFTs is a valid monetization option. It's a fairly simple action that is suitable for beginners and experienced cryptocurrency users. The pros of this approach are the high sales profits, coordinated in the hands of the author. The disadvantages include the associated costs of minting and marketing, as well as high competition among the authors.
- NFT Stacking.
Many DeFi projects offer to put client non-fungible tokens into staking. It's a great option, especially if you stick with the HODL concept. These strategies are compatible with each other and give NFT passive income.
- Sales royalties.
During the creation of an NFT, the issuer can set a special royalty percentage that is paid on each sale on the secondary market. This percentage can be 3%, 5%, or even 10% of sales. It's another opportunity for NFT passive income and a convenient solution for the collection builder.
Create and Sell NFTs
How to make NFTs? It's very simple. The whole stage of token minting is the same for both companies and private artists. After all, the NFT is a good investment The only differences appear to be the length and complexity of the collection creation process. For example, an independent artist or group of artists can digitize their works and submit them as NFTs on any marketplaces. It's an elementary action that does not require an additional promotion plan.
Sales volume appears through the organic development of the collection's recognition and the growth of a loyal community. There are no additional activities within the marketing strategy.
At the same time, large launches of NFTs collections imply more detailed development of marketing promotion and large financial and time expenditures.
From a technological point of view, the process of creating NFTs is divided into several stages. And how to make money from NFT can only be understood by fulfilling a number of conditions:
- Concept development.
It's the first stage, the beginning of all the work. At this stage, it is important to determine the artistic value of the digital object, the semantic load, and the general principles for NFT tokens.
- Choosing a blockchain.
There are several dozens of blockchains which have a smart contract standard for NFTs. You can choose the most popular one, Ethereum. Then the token collection will get a plus in the form of network recognition among cryptocurrency users. You can also use TRON, Binance Smart Chain, Solana, NEAR, Polygon, Ronin, WAX, and others.
- Creating an image for digitization.
Creating NFT: It's the stage of creating the object itself, which you will present as NFT. You can tokenize almost any format: photo, video, GIF, or audio.
- Choosing a marketplace.
According to Dappradar, there are over 80 platforms for trading NFT money. The key factors in choosing are the compatibility of the marketplace, and the blockchain on which the NFT minted is planned. Popular NFT Platforms and Marketplaces for different types of non-fungible tokens
The most popular Platforms and Marketplaces for investing in NFTs in 2023 are:
OpenSea.
Compatible with Ethereum, Avalanche, BNB Chain, ETH, Polygon, and Solana. 2,610,642 traders were registered at all times. Trading volume exceeded $34.2B.
Axie Marketplace.
The marketplace is compatible with Ethereum and Ronin. 2,183,930 traders were registered. Trading volume exceeded $4.26B.
Magic Eden.
A specially developed marketplace for Solana blockchain. 1,418,012 traders were registered. The trading volume exceeded $2.07B.
NBA Top Shot.
Supports FLOW blockchain. 570,933 traders and $979.93M in trading volume over all time. ** CryptoPunks**
Supports Ethereum blockchain. 7,461 traders and $3.02B trade turnover over time.
NFT platforms and marketplaces Mobox (BNB Chain), LooksRare (Ethereum), BloctoBay (Flow), AtomicMarket (WAX), Immutable X Marketplace (Immutable X), Rarible (Ethereum, Tezos), and others are also frequently used.
What Is the Future of NFTs in the short and medium term?
The future of NFTs remains moderately optimistic. Even against the backdrop of the overall market decline, many collections were able to set sales records. For example, the first collection of NFTs by former U.S. President Donald Trump was sold out less than a day after it went on sale, which brought its creators almost 4.5 million dollars.
How to make money from NFT? Famous NFT brands continue to develop and offer their users new technological solutions. For example, Bored Ape Yacht Club will launch its Metaverse and gaming token.
The non-fungible tokens market, along with all other cryptocurrencies, is in an accumulation phase, gathering power. Most of the high-profile premieres are postponed for the start of a new bull rally and a general rise in interest in cryptocurrency. Today, the invisible side of the work is happening: technological upgrades, creating strategies and testing different forms of NFT.
Risk investing in NFTs
The general rules for cryptocurrencies limit the risks of using non-fungible tokens. Obviously, the price of NFTs can be affected by the global economic and geopolitical situation, negativity in the crypto industry, problems with regulators, and restrictions from legislative bodies. These are the problems of every highly volatile asset, not just NFTs. A private investor can have minimal impact on these risk factors.
What is much more important is personal digital wallet security and attention to industry transparency and integrity. More often than not, problems with NFT come not from the pressure of global changes and crises but from basic inattention to digital finance and a lack of minimal security.
Basic Principles and tips for competent management of investments in non-fungible tokens
The main advice for future or current NFT owners is to offer self-testing of tokens, their issuance, storage, use, and earning. You can't understand the industry without trying to create your own NFT at least once. Test the market's opportunities and make your own opinion about non-fungible tokens.
Conclusion
Non-fungible tokens are a popular trend in the crypto industry. The prospect is for more use of NFTs as a digital token to convey intangible value and uniqueness. How to make NFTs? NFTs will continue to be collector's items, like the works of the most famous artists.
The cryptocurrency industry will continue to evolve, just as the non-fungible tokens market will continue to grow. A new leap to records in creating NFTs can be seen very soon. And if you have a question, is NFT real money? We can answer that yes, NFT is a good investment, and NFT passive income is profitable, so traders' prices selling their own NFTs are very promising and valuable.