How to make money on NFTs
*Not Financial Advice
It sure is! In fact, if you’re new to this space, you might be surprised to learn how much money a single NFT can cost.
In December 2020, the total trading volume of NFT artwork alone hit an all-time high of $8.2 million — so while the industry itself is still green, there’s already quite a lot of money in it. Here are just some of the examples:
- A digital painting of Ethereum co-founder Vitalik Buterin wearing a ruff and some Ether-themed harlequin clothing sold for 260 ETH (almost $142,000 at the time).
- An NFT artist auctioned his collection for $3.5 million — a single artwork from that portfolio cost its new owner as much as $777,777.
- A rare Axie (a playable collectible from Axie Infinity, a blockchain game), was sold for 300 ETH (worth approximately $130,000 USD at the time) — and was immediately relisted for over twice its initial cost.
- F1® Delta Time’s race track segment in-game NFT, created in official partnership with Formula 1, was sold for $223,000.
Remember that an NFT can take many different forms: it can be an image, a GIF, a video, an in-game item or even audio. Currently, the most prominent industries in the NFT world are art and blockchain gaming — but there could be new ones, as things move fast in crypto (and perhaps even faster in the NFT world). For instance, it’s even possible to tokenize real-world assets like real estate — and why wouldn't NFTs eventually become an acceptable form of proof that you own a certain piece of land, given that it's technically impossible to forge them?
Collectability is a huge part of human psychology: people like to collect things they enjoy, and most importantly, to own them.
NFTs derive their value from scarcity, along with existing market valuations. Generally, the rarer a particular NFT is, the higher the value it might be traded for in an open marketplace. Remember when CryptoKitties was a thing? The rarer your avatar was, the more money you could get from it.
Other factors are often also thrown into the mix, like the reputation of the artist and the various functions their NFT might serve. Think of it as traditional art valuation, which might seem odd to outsiders.
No! The beauty of the NFT market is that anyone could stand to benefit from it. From artists and developers to art collectors, traders, and even gamers – there are plenty of opportunities for everyone.
In other words, if you’re not too confident about your drawing/creative skills (which you really shouldn’t be), you can always analyze the market and see some flipping opportunities. Alternatively, if you’re into blockchain games, you can sell a rare item that you farmed — in other words, the NFT industry is much more than just crypto artwork.
Yes, they’re getting in — which is also a major sign that the industry is growing by leaps and bounds. Corporations and organizations as big as NBA, Nike, Formula 1, Samsung, and Vodafone have all been involved in NFT-related product development or registered NFT-related patents (wouldn't it be cool to own some of Nike's "CryptoKicks"?).
Perhaps the most evident example of an NFT product backed by a popular organization would be NBA Top Shot, an officially licensed crypto-collectibles game developed by the team behind CryptoKitties. It allows users to collect and own digital “moments” of different scarcity, which are essentially highlights from real NBA games — for instance, the most valuable highlight ($7,300) is currently a dunk performed by Lakers’ forward LeBron James. Users have spent a total of $5 million on the platform, making it the world’s most successful sports blockchain product.