The non-exchangeable assets segment is one of the fastest-growing sectors of the cryptocurrency market. Big brands, media personalities and well-known auction houses are interested in digital tokens.
What are NFTs and can I make money from them?
NFT is a non-exchangeable digital asset, the first transactions with which were made in 2017. The unique token cannot be divided into multiple parts and exchanged for a similar token.
An NFT is a record in a distributed ledger that contains a digital object and its owner’s details (cryptocurrency number). In addition, the non-exchangeable token contains information about the rights of its owner (playing a music track, displaying a picture, etc.).
How to earn on NFT? The market for non-exchangeable tokens is not regulated by the Central Bank. The prices of digital assets are formed based on the supply and demand ratio.
A buyer can resell NFTs profitably and make a profit by changing the exchange value of the tokens. The author of the intellectual property can earn royalties from the sale of books, songs and musical compositions.
Staking is another type of earning option. This option involves the temporary blocking of a token in a special account. As compensation for “freezing” the asset, the investor receives additional income.
The interest rate is set by the specific project. The trader can not only resell other people’s NFTs, but also create their own to be sold.
Transactions with tokens can be made using a computer or tablet. If you want to earn NFTs from your phone, you need to create a cryptocurrency wallet and download the appropriate app.
How do I create my own NFTs?
You can create your own token on a specialised online platform. First you need a cryptocurrency wallet and one or more files with digital content.
After that, you need to connect the digital storage to the NFT-marketplace and upload the information to a special form. Then you need to click the Create button.
The created token will be sent for verification. Some marketplaces create NFTs with a delay: the process is completed after the content has been purchased.
Platforms charge the author or buyer a commission for creating tokens. The amount of the platform’s fee is up to 10% of the transaction price. The user can create any number of tokens.
Other methods of earning money
The market for non-interchangeable tokens is not regulated by the state, so many NFT projects are outright frauds. The owners of “promising” projects create them solely for the purpose of embezzling money.
There are some problems with legal regulation of the market as well. NFT is not a patent or a trademark. The distributed registry technology does not allow full protection of intellectual property rights.
There is no definition of NFT in the current law. As a result, token holders experience problems with legal protection of their property rights.
The value of NFTs fluctuates in line with current market trends. High price volatility can lead to significant losses. Along with the increasing volume of the NFT market, the activity of hackers who seek to steal other people’s digital assets is increasing. Hundreds of millions of dollars are stolen each year.
How do I get tokens for free?
Is it possible to earn money from NFT without investing? You can get tokens as rewards for supporting cryptocurrency startups and new marketplaces. NFTs are transferred to users on the condition that they perform targeted actions (reposting, subscribing to a group on social networks, registering in the project, etc.).
If the startup will actively develop, the value of the tokens received will increase by orders of magnitude. In this case, the recipient of the NFT will be able to sell them on the open market at a large profit. The opposite situation may also arise: the owner of tokens will not make a profit due to low interest of users in the project.
How to build an NFT portfolio?
According to the above approach, 5-7 NFTs from collections with maximum market capitalisation should be selected for the portfolio.
If an investor plans to increase his capital by orders of magnitude, he should pay attention to works of unknown authors. A portfolio should include dozens or hundreds of works by young but promising artists and musicians.
Such an approach somewhat resembles venture capital investment. Most projects are likely to fail, but 1 or 2 are sure to be popular and profitable.
The combined approach involves acquiring both blue-chip NFTs as well as second- and third-tier assets. A separate type of investment is the purchase of gaming tokens.
To acquire such assets, you need to be a professional gamer and understand which virtual artefacts are most popular.
A concentrated investment portfolio involves purchasing assets belonging to a single digital art trend.
A diversified approach to buying NFT involves purchasing graphics, gaming, music and other types of tokens in equal proportions.
How do you promote your own NFTs in the crypto market?
To promote one’s own digital creativity, it is not enough just to put it on the pages of a marketplace. A novice author will have to put in a lot of effort before his or her NFTs will interest the end customer.
You need to develop a base of subscribers and periodically showcase your work in chat rooms and general groups. An effective strategy for aspiring writers is to participate in collaborations with more established colleagues who are creating in the same style. Try to get the attention of bloggers and media personalities. They will spread the word about your work to millions of people, among whom there are likely to be potential buyers.
Types of NFT fraud
Buying an NFT involves the risk of fraud. One of the cybercriminal techniques is to create a website that looks similar to a well-known cryptocurrency marketplace (e.g., OpenSea).
The aim of such a resource is to steal passwords and personal information. Before proceeding, make sure you are on the right website.
Another common scheme is to defraud investors directly. Fraudsters create a “promising” token and promise a “guaranteed” growth in the value of the asset. The dubious project is actively promoted in social media and professional communities.
In addition, criminals may bribe prominent bloggers to market “promising” NFTs. As soon as investors buy a significant volume of tokens, the advertising stops abruptly. The price of the asset falls and traders are left with nothing.
NFT buyers are often subjected to phishing attacks. Investors receive emails asking for the cryptocurrency password and passphrase.
Such messages are usually written by scammers on behalf of the NFT marketplace’s “technical support”.
Another typical criminal technique is organizing a fake prank. To get a “free NFT”, you need to enter your personal information into a separate form and provide your cryptocurrency wallet credentials. The criminals then gain access to the account and steal the crypto-assets.
The NFT market will see rapid growth. The scope of application of the technology will gradually expand beyond the field of electronic art. Improvements in the technology of non-interchangeable tokens will be closely linked to the development of meta-villages (Sandbox, Decentraland, etc.).
There will be a sharp increase in demand for NFTs, which give the right to own virtual real estate and game objects.
The improvement of the legal framework will make NFT a legitimate tool used for copyright protection. Investors can expect numerous collaborations of famous creative people.
Analysts at Morgan Stanley are predicting the NFT market will grow to $240 billion by 2030. Up to 8% of this amount will be the value of collectibles produced by global brands.
NFT is a risky financial instrument that can generate millions of dollars in net profits.
Before buying or creating tokens, investors should familiarise themselves with the technical side of things and study the latest trends in blockchain gaming and digital art.
NFT should not be invested with all available funds. The share of non-interchangeable tokens in a diversified portfolio should not exceed 5-7%. Be prepared for significant price volatility and do not trade assets on emotional impulses.
How do I make money with NFT from scratch? In order to get tokens for free, you should regularly monitor the giveaways that new projects arrange.
In doing so, the investor should take into account the rules of information security and not fall for the tricks of fraudsters.
When building a portfolio of non-exchangeable tokens, it is better to use proven online venues that are trusted by investors.
How much does the most expensive NFT cost?
As of June 2022, the most expensive token is a digital painting, The Merge, created by an artist with the nickname Pak. The asset has a market value of nearly $92 million.
Which NFTs are popular on internet exchanges?
Digital picture tokens, music, game items and animations are very popular.
Where are the NFTs stored?
Tokens are stored in cryptocurrency wallets that are compatible with NFT technology. The highest level of security is provided by hardware stores that are not permanently connected to the internet.
What is an NFT Airdrop?
This is a free asset giveaway run by the creators of new cryptocurrency projects. How to earn NFT tokens in Airdrop format? To receive NFT tokens for free, you need to perform certain actions (write a review, register, connect a cryptocurrency wallet to the system, etc.).