The tech world has been booming as of late. With the world relying more on virtual networks and goods, we see new things coming in with a bang every few years. First, Cryptocurrencies had everyone in a frenzy, but the new talk of the town is none other than NFTs.
So you’ve probably heard about NFTs and how people have been cashing them in. NFTs are non-fungible or unique tokens that act as digital assets, and since they hold value as determined by the market, they can be sold and bought like pieces of art. The data stored in the NFTs makes them traceable and verifiable, which helps validate ownership and transfers between parties.
The exponential growth rate of NFTs that we’ve witnessed over the past two years has given rise to several exciting ways for investors to get a considerable profit and generate a return.
Since the trend will become increasingly popular in the next few years, this guide on how to make money with NFTs will highlight the approaches you can take and explain in detail which path provides a safer and more profitable investment opportunity.
Early investment in new NFTs
The best way to make money on NFTs is to invest early on in promising new collections before their value skyrockets in the market. Many current NFTs on the “best to buy” list were initially placed at meager prices but their market value increased significantly within months.
An excellent example of this is how CryptoPunks, purchased for up to $34, were suddenly very popular when the NFT craze took over, leading to their market value reaching as high as $24 million.
Play-to-earn NFT games
P2E or Play-To-Earn NFT games are another way to profit from NFT tokens. Many games now offer P2E features that allow users to obtain NFT rewards for their skilled gameplay. You can also spend these on in-game purchases.
Playing games to earn NFT rewards has become a common and popular practice that encourages platforms to be more generous with their offers, drive in more traffic, and offer a certain level of consistent income. One of the most popular of these games is Axie Infinity in which users can battle others to win rewards. Since the structure of these games relies heavily on NFTs, the rewards can be easily reinvested to enhance game performance, leading to far better rewards.
Given Axie Infinity’s success, many other platforms are following suit and other projects are gaining momentum. As time passes, there will likely be more of these platforms with far more advanced features. This trend isn’t going away anytime soon.
One of the best known strategies to employ when banking your NFTs is to buy and HODL. For those of you who haven’t heard this term, it was popularized by retail traders and stands for “Hold On For Dear Life.” This investment strategy means that you do not sell, no matter what happens.
Investors who have been in the crypto arena will know that this strategy has its pros and cons.
However, strategic planning accompanied by HODL is a great way to earn more profit on your tokens. If we look back at the success rate of CryptoPunks, there must have been investors who sold when they did not see any profit, whereas the ones who refused to sell got to reap their patience in millions of dollars.
This approach doesn’t always work because HODLing does not help create momentum to generate a price spike. However, it’s something for you to consider.
Flip your NFTs
Flipping is a concept used in many different businesses and refers to the process of buying cheap and selling high. When done right, this can offer a substantial return. The stark difference between flipping and other investment models is that flipping typically takes place over a short period of time, unlike other methods like HODLing.
While the idea seems simple, buying NFTs for cheap and flipping them to sell for a profit can be challenging. This is because there’s a growing trend already and the competition in the market is steadily rising. So before purchasing, community backing and utility of the token should be your priority, along with the visual appeal of the artwork.
Monetize your creation
A common approach when trying to make money off of NFTs is to mint your own NFT. It’s where you take a digital token or asset (like a picture, art or digital music) to place it on the blockchain so it can be sold on the NFT marketplace, giving you the chance to monetize your creation.
While minting NFTs is a rather straightforward process given the number of marketplaces that make it seamless for beginners, it should also be mentioned that the competition is increasing with new NFTs launching every day. It is important for your collection to stand out from the rest.
Once you’ve created your NFT and it’s minted to the blockchain, it’s all about waiting for someone to buy it. That’s where the marketplace can come into play and promote the NFT so investors can notice it.
Unlike NFT flipping, trading is a long-term process aimed at making capital gains over an extended period of time rather than getting in and out of the market as quickly as the profit is solid. NFT trading involves investors buying and selling for a small portion of the profit and repeating the process. This particular process requires a lot of patience and market knowledge. That’s probably why NFT trading is much more common among experienced investors.
Generating royalties on your NFTs is one of the biggest perks of this market. You get to set the percentage of the royalties on your NFTs. This allows the creator to earn a payment each time it is used by a secondary market. You can also embed the royalty percentage into the NFT to earn a passive income every time NFT is resold.
There’s a lot of promise with NFTs, judging by the way they’re taking over the market. Now would be a great time to invest. Start working!