In this article we’ll tell you what is NFT, how they work and how much money you can make off them.
Here, you can find different profit methods, non-obvious features of NFT tokens, and market prospects in simple terms.
An NFT is a blockchain technology that has emerged recently and quickly became popular.
New projects and authors are emerging every day, NFT prices are soaring, and many moneymakers have already capitalized on this nascent industry.
We decided to devote a series of articles to NFTs and crypto technologies, with this being the first article. After reading, you will learn about the basic principles of the technology, what is a non-fungible token and how to make money on them.
What is NFT token: how does it work for dummies?
In simple terms, an NFT is a non-fungible token. Its main purpose is to confirm the authenticity of a particular piece of content. This is a certificate attached to a specific digital product.
The main difference from Bitcoin or any other cryptocurrency is that all NFTs are unique. While one Bitcoin can be replaced by another, just like, for example, a dollar, this won’t work the same with NFTs.
If we draw parallels between NFTs and the real world, then non-fungible tokens are like paintings in a gallery. You can copy any painting, re-draw it by hand, or commission it from the artist, but the original, which has value, will still be kept in the library.
In simple terms, NFTs are unique paintings, while Bitcoin or other cryptocurrency are banknotes.
Types of NFT content
Now let’s figure out what can be used as content for an NFT. Any digital product can be made into a non-fungible token, for example:
- Audio file;
- 3D model;
You can pack any sort of digital content into an NFT, as long as it is unique.
Blockchains that run NFTs
The next important thing to know is what blockchains can run NFTs. These are global systems, within which there are platforms for creating and exchanging non-fungible tokens.
There are two blockchains that can run NFTs:
- The Ethereum blockchain
A large and popular blockchain. Its main drawback is its low speed, high prices, and high commissions. Keep in mind that this blockchain has minimum requirements for NFTs, anyone can add a new one;
- The Solana blockchain
A less popular blockchain. Unlike the previous entry, the commissions here are low, as are the prices for tokens and the speed is high. Also, the mods here are more strict.
The blockchain you choose will determine the marketplace you’ll be trading on. For Ethereum, the most common option is Opensea, for Solana, you can use either Solsea or Solanart.
Keep in mind that different blockchains house different works. You won’t be able to transfer your NFTs from Solsea to Opensea and vice versa. You can transfer and exchange NFTs only within the same blockchain.
Wallets for different blockchains, how to replenish them and link them to the exchange
Each blockchain also has a unique wallet. If you’re planning on working with Etherium — download and install Metamask, for Solana — go for Phantom. The desktop version looks like a browser extension, the mobile one — like an app.
Create a wallet, remember and write down all your passwords and passphrases. After that, you can start using it, to do this, click the “Connect Wallet” button, most decentralized exchanges have it.
Next, you need to make a crypto deposit in your wallet. Funds will be needed to pay commissions when creating and exchanging NFTs. You can top up your wallets through exchange points or centralized exchanges as long as they accept bank cards.
To top up your wallet through an exchange, you must:
- Top up your balance with a fiat currency, for example, dollars or rubles;
- Exchange it for cryptocurrency, ETH or SOL;
- Find the “withdrawal” button on the exchange and enter your wallet ID.
After some time, the cryptocurrency will arrive in your wallet, the exact time depends on the commissions and overall load on the network.
We’ve already figured out NFT what is it. Now let’s get to the bottom of how to make money on them.
How to earn with NFT tokens?
There are several ways to make money. Here are the most popular:
- designing your own NFT project,
- trading or investments,
- for those without a starting budget — Airdrops.
Let’s go over each option in detail.
Designing your own project
There are 2 parts to developing and selling your own NFT collection: the creative stage and the technical one. We’ll start with the creative stage, seeing as it’s the more complicated one.
The creative stage
You need to come up with an original and unique idea that people will want to buy. When brainstorming, you can build on:
- The news agenda. In the future, many modern events will become historical, dedicating an NFT collection to something like that is a great idea;
- Memes or newsbreaks. Have you come up with a cool meme or spearheaded a new format? You can secure your authorship using NFTs;
- Your own creative. Maybe you used to draw illustrations, blog, or record music? If so, then you can keep doing that while digitizing existing projects;
- The problems and dreams of mankind. Art has always drawn attention to the problems of mankind and the things that are worth striving for. Many find inspiration in this, and it is also a great format for NFTs.
After that, it’s time to pick a format. You can NFT-ize any form of digital content, just so long as you are the rightful author. You can experiment with music, design a picture or make a video.
The technical stage
Once the collection is ready, it’s time to move onto the technical side. Let’s use the example of Opensea (in the Solana blockchain, the process is identical, but the commissions, moderation process, and speed of work differently):
- Go to the website and connect your wallet;
- Click “Create” in the top right corner of the screen;
- Come up with a name and upload the general logo of the collection, fill in the description;
- Add the NFTs to the collection using the “Add items” button;
- Upload the media files. Acceptable formats: JPG, PNG, GIF, SVG, MP4, WEBM, MP3, WAV, OGG, GLB, GLTF. Size — under 100 МБ;
- Add a description of the token and a link to your website (if any);
- You can also improve each token with blocked content, only the buyer sees it. You can add backstage footage, details about the project, or showcase the design process;
- In the last window, select the number of tokens and click “Create”.
Done, you’ve created a token. Wait a few days for it to pass moderation, and after that, you can put it up for auction.
Create a selling proposal, select the NFT’s starting price, auction format, and set access parameters. When you’re done, click the “Post your listing” button.
In order for your ad to be published, you will need to pay the Gas Fee, this is a charge the Ethereum network charges. It depends on the current load on the network and can range from 50 to several hundred dollars, so check the price before posting anything.
And that’s about it. Your NFTs make their way onto an auction, where investors can buy them, after which you will get cryptocurrency on the wallet you attached. Also, some networks also provide you with dividends on subsequent transactions involving your NFT.
The likelihood of people taking an interest in your art and buying it depends directly on how active you are in the community, on the product, and on the advertising. Communicate with other players, post ads and talk about your project — this will raise the price of your NFTs.
You can buy tokens, wait and sell them for more, this is the easiest and most convenient way to make money with NFT tokens.
There are 2 strategies to choose from:
- Secondary reselling
You buy NFTs that are already present on the exchange. If there is positive news about the project, the price of tokens will go up and you will be able to resell them at a nice profit. For example, the recent price surge of NFT Bored Ape was triggered by the listing of the APE cryptocurrency on Binance;
- Purchasing pre-sales
On the exchange’s homepage, you can find tokens that will soon be up for sale. They have a high growth potential. After they get added to the exchange, you will be able to sell the tokens for more than you bought them.
A secondary resale is a suitable option for large investors who are willing to spend thousands of dollars on investing in large NFT projects. It is almost always pointless to resell tokens of small projects, they rarely grow.
That’s why we’ll focus on buying the token before it hits the exchange, on presales, in other words. Pick out promising projects, exchanges promote them on their own on their main pages:
On such blocks, platforms advertise large and promising projects even before the NFTs technically enter the exchange.
Preparing for the presale
Once you decide which project to invest in, you need to prepare for the presale:
- Get whitelisted. The demand for NFTs is insane, which is why developers sell tokens to people who are active in their projects. Check the list of requirements and meet them. This usually requires you to subscribe to the author on social media and meet a couple of other conditions;
- Set an alarm 10 minutes before the start of sales so as not to lose track of time. Be on the website and wait, you have to be among the first buyers. The demand for NFTs is huge, new tokens from large projects are sold out in seconds;
- If you want to buy more than 10 NFTs, prepare a few more accounts. Developers rarely sell more than 5-10 tokens to a single person.
And that’s about it, now you just need to wait for sales to open and buy the tokens. Reaction time is crucial at the start — many NFTs are sold within seconds. If you manage to purchase tokens, you can immediately put them up for sale.
When setting a price, focus mainly on how rare the token is. For ordinary tokens, a 30% margin will do, for rarer ones, the markup can reach several thousand percent.
Also, check the offers of other players on the exchange to adjust the cost. Reduce the price gradually if your NFTs aren’t selling.
This is a way to earn on NFT without investments. The income from this method is minimal, but in the long run, it can become quite impressive.
An airdrop is a free distribution of tokens to active users on the channels of the project developers. The mechanic is similar to getting whitelisted because you also have to subscribe to accounts and be active.
The conditions may include:
- Being subscribed to the developers’ resources;
- Being active in the comments and on forums;
- Inviting friends;
- Being creative, for example, making a cryptocurrency-themed drawing.
If you have met all the conditions, you may get rewarded with cryptocurrency or NFTs credited to your account. Generally speaking, tokens from airdrops are almost of zero value, developers give them out as a symbolic reward.
You can scale your Airdrop profits if you set up an account farm. That will enable you to take part in drops several times, helping you accumulate assets more quickly. Keep in mind that organizers will have requirements for accounts — don’t think you can take part in Airdrops without warm-ups and a normal-looking friends list.
Here’s where to look for information about upcoming drops:
After making your NFT, you can immediately put it up for sale. If the price on the exchanges is high, no need to wait, secure that profit immediately. Otherwise, it is better to wait, often projects can grow dramatically and bring in hundreds of thousands of percent of profit.
Please note that taking part in the airdrop doesn’t guarantee you an NFT or cryptocurrency. Developers reserve the right to decide who they pay and who they don’t. They also determine the size of the remuneration on their own, since sometimes there are more participants than prizes to go around.
NFTs are a new digital technology that is only starting to become popular. There are many ways to make money on NFTs, from investing in existing ones or designing them yourself. Now you know how to make money on one of the most promising and rapidly developing technologies.
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