A couple on the outskirts of Atlanta, Georgia had just $1 in their account. After getting into NFTs, they were able to make almost $120,000 in less than 6 hours! This literally doesn’t sound real, but it is. The money they got from NFTs gave them the opportunity to get themselves back on the right track. Even though they were on the brink of foreclosure, they were able to use their NFT funds to save their farm, and get a sense of relief.
While this story sounds crazy, it happens to more people than you may think. That’s because of the introduction of NFTs. As technology continues to advance, so do the opportunities to make money. However, are NFTs a way for you to make money? Can you have a story similar to the couple in Georgia?
Understanding NFTs
Before you can decide how you want to handle NFTs, it is important that you have a clear understanding of them. NFT stands for “non-fungible token”. These tokens are unique digital assets. Whoever owns these assets is determined thanks to blockchain technology. NFTs can literally be anything from a picture, to a social media message, to a domain, etc. Sometimes people confuse NFTs with cryptocurrencies. However, they are different because they are irreplaceable and non-interchangeable. NFTs have been gaining in popularity. Partly due to how much time people are spending online.
What is Blockchain?
We mentioned the word blockchain in this article. However, you will likely need more context if you haven’t heard the term before! To better understand what Blockchain is, you can think of it like a book. Blockchain is basically a book that contains a list of transactions that members of a network need to see. Every member (also known as a node) of the network will have their own copy of the “book”. Each “page” in the “book” is a block of data and every page has a unique page number (also known as a hash).
What Do NFTs Mean for Creators?
The benefit of NFTs varies depending on the person. A creator will have a different set of advantages and risks than an investor of NFTs. Let’s start with the creator point of view! NFTs provide creators the chance to monetize their work. Not only can creators benefit by getting paid for their work with an NFT, they can also continuously be paid thanks to royalties. For example, the original owners/creators of the EulerBeats Originals earn an 8% royalty every time the NFT is sold. Besides benefiting financially from NFTs, creators can benefit by taking advantage of the marketplace that NFTs provide.
You see stories like the couple from Georgia that show how people can change their whole life from NFTs in basically the blink of an eye. Because of this, many people look to get into NFTs in hopes that they will make big bucks too. However, even though plenty of people have done this and continue to do this, there are things to know before you do.
Every Situation is Different
We started off this article by telling you about a Georgia couple that was able to make almost $120,000 in less than 6 hours. However, their earnings from NFTs look like a drop in the bucket compared to Mike Winkelman. Winkelman was able to sell his art in the form of a NFT for $69 million! Whether people are getting over $100,000 or $10,000,000, there is some serious money that comes along with NFTs.
Not everyone can see a lot of success when getting into NFTs. There is some exclusivity involved in who can make the most money. For example, artists that have access to an auction house will have more opportunities to sell their NFTs compared to an artist that can’t use an auction house. It isn’t a guaranteed source of money.
Run the Risk of Loss in Value
Let’s say that you have an NFT that is an image of a duck wearing a watch. The person who owns that NFT decides to set it as their profile picture on a social media platform like Twitter. Anyone on Twitter can take a picture (also known as a screen shot) of the profile picture. Potentially that means less people will be inclined to buy it from the original owner since they have a “counterfeit” version of the NFT.
What Do NFTs Mean for Investors?
Now that you understand the creator point of view for NFTs, it’s time to understand the investor point of view. NFTs give investors the chance to own a digital asset. Let’s look at an example. Let’s say that an investor wants to buy an NFT image. The image is linked to a specific token address. This token address will prove whether or not it belongs to someone’s specific wallet.
Understanding Gas Fees
There are some complicated behind the scene pieces that are important to know from an investor standpoint. Every transaction on the blockchain is verified. The verification process happens with computers that solve complicated math problems. Simply put, the energy used for every verification made by computers is known as a “gas fee”. Gas fees help keep the network secure and require a fee for every equation. However, the price of the NFT may double when taking into consideration the gas fee involved in the transaction.
How to Make Money Using NFTs
Now that you have a better understanding of NFTs, you can learn how to make money from them! There are a variety of different ways that people can earn some money from NFTs. However, 3 popular ways that people can earn a passive income from NFTs include:
- Rent Out NFTs
- NFT Royalties
- Stake NFTs
Bottom Line
As technology continues to advance, so do the ways that people can make money. NFTs are a popular option for both creators and investors. However, creators and investors will have their own sets of risks and rewards.
People can make a lot of money thanks to NFTs but that’s not always the case. It’s important to keep that fact in mind, especially if you are thinking of getting into NFTs. While you may be able to earn some serious bucks, it isn’t guaranteed. Take your time, and you may find that NFTs are something that you want to consider in the future.