Non-fungible tokens, or NFTs, are becoming some of the most profitable blockchain-based experiments in history. High-profile influencers, like Twitter CEO Jack Dorsey, have recently made the news auctioning off NFTs. Although the cryptology behind NFTs is quite tricky, understanding what they are and how to make quick money off of them is not!
We’ll look at what an NFT is, how you can sell NFTs and make money, where they’re exchanged, and recent examples of NFT sales. Let’s dive in.
What’s an NFT?
“Non-fungible token” means a crypto asset that cannot be altered or reproduced. You can think of these tokens as the digital equivalent of artwork in a private collection. Each piece of art in the collection is unique and valued differently.
Like pieces of art, an NFT can be sold for money or cryptocurrency. However, the token’s asset transfer is recorded in the blockchain just like cryptocurrency. This establishes who currently owns it.
Each NFT is tied to a digital (or in some cases, physical) asset of the original owner. Technically, anything in digital form can be turned into an NFT. Famous tweets, Facebook posts, Instagram pictures, and more can be turned into NFTs and sold by anyone.
What Gives an NFT Value?
Just like pieces in our hypothetical art collection, consumer interest drives the value of an NFT. Similar to trading cards, the rarity and base of interested consumers influence their worth. While an image can be converted into an NFT, that doesn’t prevent the image from being freely shared. However, it does definitively show who owns the asset through the blockchain.
How Can I Buy an NFT?
Some platforms allow credit cards to be used, but the vast majority of sites where you can buy and sell NFTs require you to use cryptocurrency. You’ll need to establish a wallet for the currency of your choice. Blockchain.com is one popular platform that allows users to create wallets for free.
After verifying your identity on one of these platforms, you can purchase the currency directly around its market value. Once you’ve acquired a decent amount of a popular one like Bitcoin (BTC), it’s time to look at an auction site.
OpenSea is a popular trading post for NFTs of all sorts. It’s similar to sites that sell collectors’ items like eBay. You can find cheap digital art to make uniquely yours.
Important for those new to cryptocurrency: You’ll be charged a fee when using cryptocurrency to check out. The fee varies by how congested the blockchain is at the moment and by what currency is being used.
How Can I Show Off My NFTs?
Mark Cuban’s Lazy.com is the first service that enables you to show off your NFT collection. All you need to do is make an account and follow the on-site prompts to prove ownership. In a couple minutes, you’ll be able to show off the unique digital content you own to the world!
There are alternative ways to do it, but Lazy.com is by far the easiest method.
How Can I Sell an NFT?
First, you’ll need an original piece of media to which you own the copyright. This can be a picture you took, a gif you created, a song, or pretty much any other form of media.
Next, go to Rarible.com. Click on the “Create” button you’ll see on the top-right portion of the page. You’ll probably want to start by selling a single file, so hit the “Single” option when prompted. Then, you need to think of a sale price for your item. You can choose however much cryptocurrency you’d like and enter it in.
You’ll then be asked about royalty payments in case someone buys your asset and uses it elsewhere. This is optional, but it’s a good idea to set a small rate equivalent to a few cents or so per view of your digital asset. Keep in mind that Rarible retains a 2.5% service fee for items sold.
Last, you’ll need to pay a miners’ fee, also called a “gas” fee, at the time of the listing. To do so, you’ll need to connect the crypto wallet you’ve made. Send over the appropriate funds, and it’ll make a sales page on Rarible for you. Your Rarible listing will automatically propagate to other listing sites like OpenSea.
How Do I Know if My NFT Sells?
Since these sites tend to not use traditional email, you’ll need to check the sales page for updated offers on the asset you’re selling. If you see an acceptable offer, or if a user pays the full price you’ve requested, you’ll be able to accept it.
The crypto funds offered will then be transferred to your wallet. You’ll be able to withdraw this and either use it to purchase other products through crypto or exchange it for cash.
What’s the Easiest Way to Profit Off of NFTs?
For more complex NFTs, you should consult a professional. At the moment, since NFTs are relatively new, your best bet is to use a site like Upwork to hire a freelancer.
For simple, single pieces of media, you can do it yourself on Rarible or a similar site. However, to sell more complex assets, knowledge of the fundamentals of cryptocurrency and experience in that realm is necessary.
You can also profit off of NFTs without ever touching one! Some users treat them like stocks. By purchasing an NFT of something potentially profitable early on, you may be able to make a decent profit later on. Keep in mind that, unfortunately, the opposite could happen with your investment, as well.
In short, the best way to make money off NFTs will vary by person. If you have the money to spare, your best bet may be to buy an asset that will obviously garner interest as time goes on. While some higher-profile NFTs are overpriced right now, the NFT market is just beginning, so you’ll have far less competition. If you’re a content creator or influencer, you would likely be best off creating your own original NFTs and selling them.
What Are Some Examples of High-Profile NFT Sales?
The viral Nyan Cat gif’s author, Chris Torres, created an NFT to sell ownership of the animation. Even though Nyan Cat was first put on the web a decade ago, the recent influx of interest in NFTs drove Torres to auction it off. He ended up netting the equivalent of approximately $590,000 in the cryptocurrency Ethereum (ETH).
One of the first NFT sales to make the news was Twitter CEO Jack Dorsey selling his first ever tweet as an NFT. With the proceeds going towards charity, it ended up going for $2,500,000.
The most expensive NFT sale happened at Christie’s auction house. It was the famed house’s dive into blockchain auctions. The image was a large JPEG file with 5,000 unique pictures the graphic designer had taken. Though he wasn’t particularly famous, it sold for just shy of $70,000,000. Part of the reason it sold so well was because it was also the first-ever public auction of an NFT. However, NFTs are still novel enough that “unicorn” sales like this still happen.
What Is the Future of NFTs?
Like most blockchain experiments, the future is relatively unknown. However, prominent publications indicate that NFTs aren’t going away any time soon. Now that wealthy investors are pouring money into them, it’s likely they will become more and more mainstream.
With an ability to sell the right to use assets without giving up ownership, this may even become the new way to sell music to consumers. To jump into the market with the least risk, anything creative that you own is potentially valuable. Game sprites, music you’ve recorded, pictures you’ve taken, prominent accounts on various sites and forums, and pretty much anything else you can think of could be an NFT.