Non-Fungible Tokens (or NFTs) have become a sensational topic of discussion and exploration in the world of both finance and virtual reality. Ever since blockchain technology has taken the world by storm with its application and scalability, alternative uses of blockchain have been constantly evolved and evaluated. NFTs are the product of techno-financial innovation that have captured the attention of people across continents. 2021 was the year of inflection for NFTs, and more than around $12 billion were spent on purchasing NFTs, especially on secondary marketplaces like OpenSea. So, you can potentially make money and earn free crypto coins through NFTs. But, first let us understand what NFTs are.
Non-Fungible Tokens (NFTs) are digitally tradable pieces of information that are encrypted on the blockchain. These pieces of information are unique, that is they cannot be funged and hence the term non-fungible. They are technologically stored data, mainly on the Ethereum blockchain, that are intangible but carry a lot of potential value because they have an underlying trait of being the well-thought brainchild of some creator. Since, information stored as NFTs are not interchangeable at all, and are unique, they cannot be traditionally traded the way cryptocurrencies are traded. NFTs are usually of artworks, creations, music, memes, content or some item which carries historical, political or cultural significance. Therefore, an NFT is not the actual creation – it is simply a digitally encrypted version of it stored on the internet.
Let us now learn about the possible ways in which you could earn money from NFTs.
The most profitable way to earn from NFTs is to create digital art or content, tokenize them as NFTs and sell them on marketplaces. To create an NFT on a marketplace like OpenSea. Rarible, SuperRare, CryptoPunks etc. you need to connect a permissible crypto wallet to the platform and start creating. The platforms conduct auctions for NFTs and people can bid for your creation. The final bid price is then delivered to your crypto wallet in the form of cryptocurrencies. Even if some NFTs are essentially devoid of any value, some NFTs are super valuable. In March 2021, Christie’s, one of the most prominent auction houses conducted its first-ever auction for a digital work of art. The artwork, by an artist named Beeple, was sold for more than $69 billion. It changed the techno-financial landscape forever.
NFTs can also be traded with the help of a crypto wallet. You can buy NFTs and sell them at a higher price to book a profit. For this, you need a dedicated marketplace and you can transact NFTs using your wallet. Whenever a sale is verified, the particular NFT will reflect on your wallet. Everytime an NFT changes hands, the original creator earns a percentage of the sale value in the form of royalty. Therefore, even after selling, the creator can ensure a steady stream of income for him/herself.
You might be aware of crypto staking. But, the truth is, even NFTs can be staked in return for interest to the staker. NFT owners tend to generate a yield by locking away their NFTs with decentralised finance (DeFI) protocols. The rewards and incentives are generated usually in the protocol’s native tokens. Some of the DeFi platforms which allow NFT staking include Splinterlands, NFTX, RPlanet, Kira Network etc.
Blockchain-based video games are also providing impetus to the NFT ecosystem. With the advent of the metaverse, virtual items in virtual landscapes can be owned through NFTs. The games allow you to purchase in-game items through tokens and this can potential propel the techno-financial system further. Games like Axie Infinity, CryptoKitties, The Sandbox etc. use NFTs for their gameplay.
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