How to Make Money with NFTs

Investing in NFTs is tricky, considering how many collections there are. Read on to find out how to make money with NFTs.
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The timing of this article couldn't have been better. Yes, the crypto market is in a downturn. Some would say it's akin to a dumpster fire. But what about NFTs? Turns out, as an alternative asset class, NFTs are in the middle of a bull run. 

In fact, the valuations of blue-chip projects have increased massively. NFT collections like Degenerate Ape Academy, DeGods and Solana Monkey Business are crushing it on the Magic Eden marketplace.

Since you're reading this article, we assume you already know what NFTs are. Like him or not, as the OG of investing, Warren Buffett has this to say: "Don't invest in something you don't understand."  So if you don't know anything about NFTs and don't understand the hype around them just yet, this article breaks it all down for you in simple terms.

But since we’re here, in this article, we discuss how to make money with NFTs, the legal and ethical way. No scams. No rug pulls. Nada. So if you're looking for tutorials on how to scam people with NFTs, this ain’t it, chief!

Now that we’ve gotten that out of the way, let’s look at how we can make money with NFTs.

Why Invest in NFTs, rather than crypto?

“Aren't NFTs and crypto the same thing?” No, and in fact, since crypto is fungible, and NFTs are not, they can be viewed as opposites. Sure, they’re both built on the blockchain, but that's where the similarities end. 

Since NFTs are non-fungible tokens, this means that no two NFTs can ever be identical. We can also think of NFTs as proof of ownership over a digital asset. So it’s not feasible for NFTs to be exchanged with one another, assuming equal value. For instance, 1 NFT from the Degen Ape Academy isn't equal to 1 NFT from the DeFi Pirates NFT collection.

Compare this against cryptocurrencies and physical cash, which are fungible. This means that they can be traded for one another, and are equal in value. For example, one Bitcoin is always equal to one Bitcoin, and thus, they’re interchangeable.

Now that we’ve gotten this out of the way, let's move onto the topic at hand: Why invest in NFTs when you can invest in crypto? Aren't these markets correlated? 

In this new and limited time period that cryptocurrencies and NFTs have coexisted, many papers have been published on the topic. Turns out, there's little spillover between these two asset classes. And in fact, NFTs seem to stand alone as an asset class compared to crypto.

Moreover, they enjoy a negative correlation to cryptocurrencies. When the broader crypto market takes a dive, the value of NFTs goes up. This can be due to several reasons. 

First, when the crypto markets are down, the blockchain network fee is lower, thus rendering NFT trading more affordable. Second, NFTs can be used as a store of value, in a manner similar to traditional works of art, which have performed well in terms of value retention over time.

Image credit: Tezos  |  Unsplash

However, while investing in NFTs can be considered a hedge against the broader crypto market, it doesn’t come without its tradeoffs. For example, investing in an NFT can require a much greater commitment than simply investing in a cryptocurrency like Bitcoin. 

Your mileage may vary, of course, based on the NFT you purchase, but in general, when you buy an NFT, what you're actually buying is access to a community of holders, and that can be a good thing, depending on what you’re looking for. 

You could network with people from all walks of life anywhere around the world and talk to them about your shared passions. But NFT projects that require a time commitment are a lot more challenging to manage and track. You'll need to stay in touch with the NFT community, follow the project's floor price, and track the price movements in the broader crypto market.

For example, if you're buying a crypto gaming NFT, you'll need more time and money upfront. Afterward, you'll have to invest hours into playing the game, so that you can get back your ROI.

Obviously, investing in a cryptocurrency meant for HODLing is a lot easier to manage. (Buy SOL, hold SOL. Easy!) All you need to do is track the price and buy the dips. 

Although investing in NFTs may require greater commitment, it can get quite lucrative because of the myriad brands getting involved, from recognizable sports brands like Overtime’s BracketX and NBA Top Shot to actors like Johnny Depp and celebrity-backed projects like Alejandro Salomon’s Rude Golems.

That's because NFTs are revolutionizing several industries concurrently. For instance, NFTs are gaining incredible popularity among singers, rappers, as well as singing rappers. That's because musicians make very little money from their works, with the record labels siphoning off most of it. Artists can secure 12% in royalties if they are lucky. 🤢

NFTs have changed the game. Just look at Steve Aoki, who claims he’s made more from NFTs this year than he did from 10 years of making music. With every sale of your digital token, secondary and otherwise, you receive a percentage of royalties forever. 

And the best part? You, as the artist, have the ability to determine how much you should make per sale. (On Solana, stay tuned for Wuki’s Wobblebug project. You can check out the official Wobblebug twitter account for more info.)

There are also amazing NFT projects for writers. Best-selling New York Times author Neil Strauss created the first decentralized book that will reside exclusively on the blockchain. Anyone can read it, but to actually own it, you have to buy one of Neil's NFTs. 

How to Make Money with NFTs

While NFTs have countless applications, the limits of which are quite possibly our own imagination, making money from them is actually quite straightforward.

You have three main approaches to profit from these virtual assets:

  1. Trading
  2. Staking
  3. Creating

Let’s look at each one closely.

Trading NFTs

Trading NFTs is one of the easiest ways to make money. You don't even need to be familiar with the blockchain technology on which they operate. Hell, you don't even need to understand art theory, or any of that fancy mambo jambo.

To become a successful NFT trader, though, you will need to follow the industry closely, so that you can wrap your head around the space and the narrative forces driving it.

But hey, since you’ve got to start somewhere, this is an excellent place to start. So here's how you can trade NFTs.

Step 1: Buy Crypto.

Buying NFTs is not like buying stocks. There’s no fiat on-ramp, so you can't just input your credit card deets and deposit funds directly into an NFT marketplace. (Wen lord!) 

Instead, to start trading NFTs, you'll need to get some funds into a digital wallet. If you’re comfortable using an exchange, CoinbaseBinance, and Crypto.com are the best options for buying crypto. (In our example, we’ll be using SOL.) 
Step 2: Choose the right network.

For our purposes, the right network is Solana. Sure, Ethereum remains a popular option, but it also comes with eye-gouging transaction fees. 

Solana, on the other hand, is economical and settles transactions fast. We recommend working with Solana here, especially if you're a beginner. It’ll be a lot lighter on your wallet compared to the other chains, and the user experience is shockingly smooth. 

Step 3: Get a digital wallet.

Now that you’ve got some SOL, you need to arm yourself with a crypto wallet to become a fully qualified NFT trader. This is where things can get a little funky. Be extra careful when sending crypto from one cryptocurrency wallet to another. This isn’t your typical transaction where, if you mess up, you can call your bank to reverse the charge. (Try calling blockchain support!) 

If you mess up a crypto transaction, there’s a real good chance you’ve lost your crypto and won't get it back. (Here's a short article on the best wallets you can use for Solana.)

Step 4: Choose a marketplace and connect your wallet.

Image credit: Tanyo Gochev

There are tons of NFT marketplaces you can choose from, with many more launching each day.  But for Solana NFTs, Magic Eden offers the smoothest experience for traders. 

It's super simple to get started on Magic Eden. Simply click the "Select Wallet" button on the top right-hand corner to connect your wallet, and you're ready to buy NFTs.

Step 5: Buy an NFT.

We’ll need to find the “right” collection for you to get started. This largely depends on your goals. Are you here to turn a quick profit by flipping NFTs? Or are you here to play the long game? 

Once you figure out the answer to this question, you'll need to research different collections. It helps to think of the type of NFT as well. Do you want to flip real estate? Art? Trading cards? Crypto gaming collectibles?

Let’s assume we’re going with an art NFT. Here's how you can buy an NFT on Magic Eden once you’ve connected your wallet:

  • Click the “Collections” button on the left to review the most popular NFT collections on Magic Eden.
  • Choose a collection you like, and click on it.
  • Buy an NFT from that collection by clicking the “Buy Now” button. That’s it!

Step 6: Start selling your art NFTs.
Now that you have your first NFT, it's time to start trading. And to do that, you'll need to list your NFT on a secondary marketplace. For our example, we’ll be using Magic Eden (obviously).
Here's how we list our NFT for sale. Click on the button in the middle, between “Sell” and your wallet address, to view your profile.

Image credit: Tanyo Gochev

List the NFT you want to sell by clicking on the “List now” button.

Image credit: Tanyo Gochev

Input the amount of SOL you want for your NFT, and approve the transaction.

Image credit: Tanyo Gochev

If you see a green checkmark, this means you’ve listed your NFT for sale successfully. Now you can repeat this process as many times as you’d like. Just remember to keep track of your profits and losses.

Happy trading!

Staking NFTs

NFT Staking is another way to make money from NFTs. But how does one go about staking their NFT? 

Well, all it means is that you’ve got to deposit or “lock” your NFT into a smart contract to generate yield. The longer the lock-in period, the greater the rewards. Most projects allow staking for periods of 1 month, 3 months, and even up to a year or two.

Staking your NFT isn't as straightforward as trading, though. Not every digital artwork can be staked, for example. What NFT stakers do is identify NFT collections that do allow staking. 

But before you go off on your quest for the next NFT staking project, keep in mind that staking an NFT is a major time commitment. You should be a true believer because you're willing to lock your NFT in for a prolonged period of time. Make sure you do your own research before you start staking your NFTs.

Creating NFTs

If you think you’re the next undiscovered Van Gogh, this section is for you. Some of us want to make money with NFTs and really study the space. And creating an actual NFT will teach you more than reading any article can. 

The ease of creating an NFT largely depends on your industry. For instance, if you’re a digital artist, a writer, or a musician, you’ll have different types of NFT considerations and options available to you. 

But you don’t need to feel overwhelmed by all the options. Regardless of how complicated it may sound, making an NFT is actually a fairly straightforward process. 

Here's how you can create your very own NFT on Magic Eden.

Image credit: Tanyo Gochev

Step 1: Click on the “Creators” button to view your options.

Step 2: Apply.

If you’re actually thinking of getting a team together that wants to launch an NFT collection on Magic Eden, click on the “Apply for launchpad” button. (The button invites you to fill out this form.) 

If you’re a digital artist who wants to run auctions for your artwork, click on the “Apply for auctions” button to access this form instead. 

Want to create a collection quickly? Then click on the “Apply for listing” button. Let’s use this last scenario as an example.

Image credit: Tanyo Gochev

Step 3: Click the “Create New Collection” button.

Image credit: Tanyo Gochev

Step 4: Fill out the application.

Image credit: Tanyo Gochev

Step 5: If you’ve done everything correctly, you’ll see your collection in this tab. 

And now, all you’ve got to do is wait for approval from the Magic Eden team. Once it’s approved, your collection will go live.

How not to make money with NFTs

Making money from digital assets like crypto and NFTs is a novel activity, but it looks like we’re in it for the long haul. In this short period of NFT dominance we’ve been experiencing this past year, people have shown us time and again that buying “the right NFT” could change your life. 

Literally.

Quick example? How about these 18-year-olds who became millionaires with NFTs? Sure, while not everyone can become a millionaire, turning a profit with digital assets can be highly lucrative. You just have to follow the space like the other NFT traders, who invest hours into crypto Twitter, only to miss amazing mints like the one for Famous Fox Federation. (Argh no!) 

But hey, it happens to the best of us. If you find a collection you like and you’re confident that it’ll succeed, set your alarm for the sale. Try to get whitelisted. It isn’t easy to get on a coveted list, but it’s worth a shot! 

Who knows? That mint might be the one that changes your life forever. 

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