NFTs (non-fungible tokens) have exploded in popularity recently, with some selling for millions of dollars. This has led many people to wonder – how exactly do people make money by creating and selling NFTs?
In this article, we’ll break down the process step-by-step and look at real world examples of people making thousands, or even millions, from creating and selling NFTs.
What are NFTs?
NFT stands for non-fungible token. Non-fungible means it is unique and not interchangeable. For example, bitcoin is fungible – trade one for another bitcoin and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.
NFTs are digital assets with unique identification codes and metadata that distinguish them from each other. This gives them value and makes them verifiable digital collectibles that cannot be duplicated. NFTs can represent digital files such as art, audio, video, and other forms of creative work.
How NFTs Work
NFTs exist on a blockchain, which is a distributed public ledger that records transactions. This allows the ownership and validity of each NFT to be tracked accurately. Ethereum is the most popular blockchain for NFTs currently, although other blockchains support them as well.
Each NFT has a unique identification code that distinguishes it from other NFTs, even if they are copies of the same underlying asset. For example, an artist could create and sell several NFTs of the same piece of digital art. Each copy would have a unique ID and metadata that makes it one-of-a-kind, verifiable, and valuable as a collector’s item.
The digital assets themselves are not stored directly on the blockchain. Instead, NFTs contain a link that points to where the asset is stored, which could be a centralized server or decentralized systems like IPFS. The NFT metadata contains ownership details, timestamp information, and other relevant data.
Why Do NFTs Have Value?
At a basic level, NFTs gain value for the same reasons anything gains value – scarcity and demand. Their unique, verifiable nature makes NFTs scarce digital commodities that people desire to collect and own. More specific factors that drive NFT values include:
– **Provenance** – The origin and history behind an NFT establishes authenticity and prestige. NFTs verified to be the original work of a desired artist tend to be valued higher.
– **Community** – Some NFT communities like CryptoPunks and Bored Ape Yacht Club have cultivated status, giving their NFTs shared social value.
– **Utility** – NFTs that give access to experiences, assets, or platforms gain intrinsic utility value.
– **Speculation** – Some buy NFTs hoping to resell them at a profit as their popularity increases.
As with any market, values fluctuate with trends, hype cycles, and people’s willingness to pay top dollar to collect rare & desired NFTs.
How to Create an NFT
Here are the basic steps to create an NFT:
1. **Create the digital asset** – This can be any file like an image, video, audio clip, 3D model, etc. You can make it completely from scratch or tokenizing an existing work.
2. **Add metadata** – Create a title, description, image, and other relevant data. Include identifiers if it’s part of a collection.
3. **Choose a blockchain** – Popular options are Ethereum, Tezos, Flow, Solana, etc. Each has advantages and costs.
4. **Connect a crypto wallet** – This allows you to securely list and sell the NFT through a marketplace. MetaMask is the most widely used wallet.
5. **List the NFT** – Choose a platform like OpenSea or Rarible to list your NFT and put it up for sale.
6. **Sell the NFT** – Once listed, buyers can bid on and purchase your NFT via the marketplace.
There are more advanced strategies as well, but these core steps are all you need to mint a simple NFT. The creativity comes in with making or acquiring valuable digital assets and marketing them effectively.
How to Make Money with NFTs
Here are some of the key ways people generate income from NFTs:
– **Sell original NFT artwork** – Artists create unique digital art like drawings, animations, 3D sculptures, music, etc. and sell them as individual NFTs or limited editions.
– **Sell utility NFTs** – These provide access to a product like a game, an event, a community, or other benefits that give them ongoing value.
– **Earn royalties** – NFT creators can earn royalty fees when their NFTs are resold on secondary markets. Typical royalties range from 5% to 10%.
– **Flip NFTs** – Buy NFTs you believe are undervalued and resell them later for a higher price as demand increases.
– **Earn for playing games** – Some games allow players to earn tradable NFT assets like character skins simply by playing.
– **Lend NFTs** – Lend your NFTs to other users for a rental fee. NFTfi and NFT Locker are examples of lending platforms.
– **NFT staking** – Stake certain NFTs to earn cryptocurrency yield from your holdings over time, like earning interest.
– **Create collections** – Curate and sell batches of themed NFTs in limited edition drops. This builds hype and demand.
The creator’s imagination and business savvy are the main limits when monetizing NFTs. Let’s look at some real world examples next.
Real World Examples of Profitable NFT Projects
Here are just a few examples of creators making serious money from NFTs:
Beeple – $69 Million from Single NFT Sale
Digital artist Mike Winkelmann, better known as Beeple, made history when his NFT artwork “Everydays – The First 5000 Days” sold at Christie’s auction for a staggering $69.3 million. This price set a new record for the most expensive NFT ever sold at a single auction.
It also marked the first time a major auction house like Christie’s sold a purely digital NFT asset. Beeple earned tens of millions overnight from interested collectors willing to pay top dollar for the now famous piece of crypto art history.
Axie Infinity – Over $1.3 Billion in NFT Revenue
The blockchain-based game Axie Infinity lets players earn income simply by playing. Users collect, breed, battle, and trade cute digital pets called Axies. These Axies are NFTs that can be bought, sold, and lent.
Axie has generated over $1.3 billion in all-time NFT trading volume and hundreds of millions in revenue for the parent company Sky Mavis. Top players can earn over 10 times the average local salary in countries like the Philippines just by mastering the game.
CryptoPunks – $7 Million Average Price
CryptoPunks are algorithmically generated pixel art portraits, with only 10,000 in existence. As one of the first and most famous NFT projects on Ethereum, CryptoPunks have become a sought-after digital status symbol.
The average selling price for a CryptoPunk hit $7 million in 2021. Rare alien punks sold for as much as $7.58 million at Sotheby’s auction. The full collection has generated over $2 billion in total sales.
Bored Ape Yacht Club – $1 Billion+ in Sales
BAYC is a set of 10,000 unique cartoon ape NFTs living on the Ethereum blockchain. Beyond the highly coveted digital art, BAYC gives members access to an exclusive online club. Top celebrities like Eminem, Paris Hilton, and Steph Curry have bought Bored Apes, further boosting demand.
As of January 2022, BAYC crossed $1 billion in all-time sales. The floor price, or cheapest available ape, sits around $200,000 currently. With continued hype driving prices higher, owning a prestigious Bored Ape remains lucrative for those lucky few members.
Tips for Making Your Own Profitable NFTs
If these examples inspire you to explore making and selling your own NFTs, here are some tips to give yourself the best shot at success:
– **Create authentic work** – Whether art, music, videos, or something else, ensure it is high quality, original, and personally meaningful. This gives it lasting value.
– **Spread on social media** – Market your NFTs across platforms like Twitter, Instagram, and Discord. Build a loyal community that supports your work.
– **Sell on reputable marketplaces** – Major platforms like OpenSea have the most visibility and volume for sales.
– **Leverage influencers** – Get established collectors or influencers to showcase your NFTs to their large audiences.
– **Offer special perks** – Consider tying your NFT to a meet and greet, special content, or other unique experiences.
– **Don’t just copy trends** – Adding to fads like profile picture collections or meme coins is unlikely to stand out on its own. Find ways to innovate.
– **Collaborate with other artists** – Team up with other creators to make co-branded NFT collections.
– **Pay attention to timing** – Be mindful of factors like gas prices on Ethereum when listing NFTs to optimize fees.
Is Creating and Selling NFTs Right for You?
If you find the idea of making and selling your own NFTs appealing, make sure to do your research before jumping in. Some key considerations include:
– **Upfront costs** – You may need to invest in software, hardware, minting fees, etc. Budget accordingly.
– **Time commitment** – Creating high quality work, marketing effectively, engaging communities all takes significant time.
– **Technical learning curve** – You’ll need to get familiar with crypto wallets, marketplaces, blockchain transactions, security protocols and more.
– **Market volatility** – The NFT market can rise and fall dramatically. Be cautious and avoid overhyping your launches.
– **Legal considerations** – Understand copyright laws, rights management, smart contracts, and other legal aspects before selling NFTs.
– **Tax obligations** – You may owe capital gains taxes on NFT earnings. Keep accurate records.
If you weigh the pros and cons and still want to tap into the opportunities of NFTs, go for it! Just be sure to manage expectations, start small, and learn as you build experience. Consistency and perseverance will be the keys to long-term success.
Conclusion
NFTs present new and exciting possibilities for creators to monetize digital content, gain recognition, access lucrative niche communities, and capitalize on emerging crypto trends.
Some artists and entrepreneurs have already earned life-changing income from NFT sales, with the potential to keep earning royalties over time. But like any opportunity, it requires dedication, thoughtful strategy, and quality work to maximize your chances of standing out and finding success selling NFTs.
While the market will inevitably see fluctuations, NFTs appear poised to grow as adoption spreads mainstream. As blockchain capabilities evolve, so too will the utility and appeal of NFTs for both creators and collectors.
By learning the landscape, carefully considering risks and rewards, and playing to your unique strengths as an artist or innovator, you too could develop profitable NFT projects that connect with eager audiences. Just don’t expect overnight results – sustainable earning with NFTs is a marathon, not a sprint.
