NFTs have improved the way digital assets are valued. Artists and celebrities can now easily monetize their arts and works online. All they need to do is to create NFT which represent the real-world asset and then offer it for sale in NFT marketplaces. You will learn all about NFTs, use cases of NFTs, ways to make money from NFTs, how to mint and trade NFTs, how to spot legit and fake NFT projects, etc.
What is NFT?
NFT means Non Fungible Token. Like the name implies, it cannot be replaced, interchanged or split because each NFT has unique features. This what distinguishes NFTs from fiat currencies (USD, GBP, EUR, etc.) and cryptocurrencies like BTC, ETH, etc. These physical currencies and cryptocurrencies are therefore fungible. But NFTs are created using the same programming used for building cryptocurrencies. NFTs consist of digital data stored in a blockchain, and they represent real-world assets like music, videos, arts, etc.
The Future of NFTs
In the first quarter and the beginning of second quarter of 2021, we saw a huge boom-and-hype for NFTs. Many NFTs are sold for thousands and millions of dollars. However by the end of second quarter of the same year, there was a huge drop in the average price of NFTs, by over 60%. Many people concluded that the NFT bubble has finally burst.
But by third and fourth quarters of 2021, new use cases for NFTs started merging, and we saw a self-correction for NFTs, which indicates that the future is still green for NFTs and blockchain technology as a whole. But which use cases will keep NFTs relevant in years to come and what are some of the challenges that are delaying the mass adoption of NFTs? These are some of the things you will learn in this section.
Use Cases of NFTs
Virtual Reality and Metaverse
Metaverse is a 3D world of shared virtual spaces linked together, but you can easily teleport between these virtual spaces. You can also call it a “Virtual Universe”. In a broader sense, metaverse does not only refer to virtual worlds, but also covers the internet with the entire spectrum of augmented reality. If you had played “Second Life” game, then you will better understand what metaverse is all about and how it works.
You can also view the metaverse as an internet-enabled virtual world where people have avatars, interact with digital assets (including corporate assets with augmented reality). For example, you can walk into a virtual shopping mall and buy a new outfit for your avatar.
Now the blockchain technology is taking the metaverse to another height, where you can use NFTs and cryptocurrencies to buy virtual spaces and even properties in the space.
There are also some 3D virtual reality games you can play and earn NFTs which can be sold or used to buy weapons in the game.
From many indications, NFTs will be the main revenue model for the metaverse.
Music and Videos
Music artistes now utilize NFT to make money from their music albums, likewise video bloggers. They simply mint their music and video albums as NFTs and sell them in various NFT marketplaces, and get paid in cryptocurrencies ETH, BNB, etc. They can even attach some stipulations to their NFTs so that they can earn some proceeds whenever the NFTs are resold.
Some NFT projects like Audius have helped many music artistes and TikTok video creators to monetize their albums.
Real Estate
In the nearest future, real estate companies will auction off a real apartment or physical property as NFTs. That is to say, NFTs will serve as proof of ownership of real properties soon.
Trading Equities of Companies
Also, some companies will use NFTs to trade their equities. These NFTs will represent the equities of those companies.
Barriers to Mass Adoption of NFTs
Lack of true market (especially buyers)
The transaction volumes of most NFT marketplaces are not real. The amount of funds raised from most NFT marketplaces is not realistic when compared with the number of wallets involved in the transaction. For instance, in July 2021, during the token sale of “Yield Guide Games” $12 million was raised from just 32 wallets. This implies that few whales were just minting the NFTs and then buying them up, all by themselves.
It was also discovered that the number of people offering NFTs for sell far exceeds the number of buyers. With time, NFTs will gain more use cases and adoption, then the market will balance and be more realistic.
Energy consumption
Most NFT projects still use Proof of Work (PoW) model, which consumes more energy than Proof of Stake (PoS) model. But since Ethereum powers most NFT projects, once it fully switches to the Proof of Stake (PoS) Consensus model, most of these NFT projects will also switch from PoW to PoS. This will solve the excess energy consumption problem because PoS consensus model consumes 99% lesser energy than PoW model.
Challenges in determining authenticity of some NFTs
Many people are just utilizing this NFT boom period to make random profits, they just mint arts and other stuffs that have no real use cases, offer them for sale. Then some newbies who don’t know much about NFTs might just fall prey and buy these “shit” NFTs. Most of these randomly minted NFTs will even withstand the test of time. And these “shit” NFTs flood most NFT marketplaces, making it difficult to determine the authentic NFTs.
But soon, the boom-and-burst cycle of NFTs will die off a little and those “shit” NFTs will phase out, then NFTs with useful use cases will emerge. But one thing is certain, NFTs have come to stay!
Scalability
Transaction speed has always been a major concern. Most NFTs are still on layer-1 networks, which have lesser transaction speed than layer-2 networks.
Check:
Different Ways to Make Money from NFTs
Every day, new business opportunities are being discovered in the blockchain space. NFTs have been one of the latest trends in the blockchain space. Many people are making good fortunes from NFTs. Artists, gamers, etc. are utilizing the blockchain nature of NFTs to make more money and create more awareness for their brands. You shouldn’t be left out! Here are the various ways you can key into the NFT trend and create a passive income channel for yourself.
Minting and Selling your NFTs
One of the aims of NFT is to help digital creators and artists monetize their talents and works. As an artist, you can make money by minting some of your paintings into NFTs and offer them for sale in any NFT marketplace. Generally, NFTs are built and powered by blockchain networks. Some of the popular NFT blockchain networks include: Ethereum, Flow, BSC, etc.
You will need a Web3 digital asset wallet like MetaMask, Trust Wallets, etc. You will also need to have some of the native token of the blockchain network where you wish to mint your NFTs, which you will use to pay gas fees for minting the NFTs on the network. Once you have minted the NFTs, you can then sell then sell them via any NFT marketplace for cryptocurrency or fiat via smart contracts. Some of the popular NFT marketplaces include:
- Opensea.io: Top NFT marketplace with huge asset selection.
- Bakeryswap.org: Binance Smart Chain (BSC) first and largest marketplace.
- Niftygateway.com: Best NFT Platform for Rare Drops.
- Rarible.com: Top NFT art marketplace.
- SuperRare.com: A marketplace for digital creators.
- Mintable.app: NFT marketplace that allow you to mint for free.
Note that all NFT details and transaction histories are stored on the blockchain network where they are minted.
Licensed Digital Collectibles
With the help of the NFT technology, collectibles can now be tokenized. Many business brands who sell physical collectibles such as trading cards, sports cards, etc. can now create a digital version of these collectibles and sell them. Since everything in the world is going digital, it very likely that the digital versions of these collectibles will sell more than the physical versions, and with time, the digital version will become more expensive. Also, the blockchain nature of NFTs will be an advantage to these digital collectibles, since these NFTs are securely stored on the blockchain, their quality will never deteriorate with time.
Currently, one of the most popular type of licensed NFT collectibles is sports cards. Licensed cards of footballers were the first NFT digital collectible created. Recently, NBA followed suit, and launched its NFT cards collection. With time, other popular sports organization such as baseball, hockey, etc. will also follow the trend.
There are other digital NFT collectibles available such as: digital houses, music exchanging cards, augmented reality sneakers, future reels, etc. You can auction your NFT collectibles at Lazy.com.
You can also create your own digital collectibles on any of the above named websites. NFT Kred allows you to create your first hundred collectibles for free at https://www.nft.kred/influencers/digital-collectible. After which you will be charged 5 cents per NFT you mint, or you subscribe to their monthly plan which starts from $10.
Investing in NFT Start-ups
Another indirect way money from NFTs is to invest in legit NFT start-up companies. With time, these companies will reward their early supporters and investors. Some NFT projects offer NFT airdrops and collectibles to early investors. These free NFTs could worth millions in future.
Trading NFTs for Profit
NFTs are similar to stocks of companies. You can make money from NFTs by buying them when they are still undervalued and then selling them when they are valued. This can also be referred to as Flipping. A Miami-based digital art collector, Pablo Rodriguez-Fraile flipped a Beeple digital art piece for a price almost 1000 times of its initial price within 6 months.
You can also buy the native tokens of some of these NFT projects and sell them later for huge profit. For example, the price of the native token of Axie Infinity game (AXS) skyrocketed from less than a dollar to almost $200 as at the time of writing.
Also note that not all NFTs will be valued in future. Some of them will worth absolutely nothing in future. So you need to be careful when trading NFTs for profit.
Playing NFT Video Games (Play-to-Earn or P2E Games)
Before the NFT trend, gamers only play to win, but with the introduction of blockchain-powered games, gamers can now play to earn. You can earn some digital collectibles, which can be traded for cryptocurrencies or fiat. Alternatively, you can purchase in-game items and trade them for profit.
More features are being introduced in NFT video games which add value to their in-game items. A good example is the metaverse feature, where a player can buy weapons for fighting and securing its territory in the game. Also, more play-to-earn blockchain games are being created every day and their developers are working tirelessly to improve these games. With the huge number of fans the gaming industry has already, there is no doubt that play-to-earn video games might be one of the major use cases of NFT technology.
Also, you can follow up some of these upcoming play-to-earn games, play the games once launched, so that you will get rewards as some of these projects reward their first couple of players with their collectibles.
Staking NFTs and Staking your Coins for NFTs
You can stake your NFTs in some platforms and earn new digital collectibles as rewards. One of these NFT staking platforms is R-Planet.
Alternatively, you can stake your crypto tokens in some platforms like SuperFarms and earn NFTs as rewards.
With time, more NFT earning and money making opportunities will be discovered. Just know that we are still just scratching the surface of the NFT technology. The technology has a lot offer, which are yet to be discovered.
Making Tutorials on Play-to-Earn (P2E) Games
This is an indirect way to earn passive income from NFTs and GameFi technologies. P2E games are the one of latest trends in the gaming industry which allows online gamers not only to play to win, but rather playing to earn passive. This is a way to reward them for the time they spent online playing these games.
Every month, hundreds of new P2E games are launched, with interesting features like metaverse, augmented reality, etc. The income earning opportunities created by GameFi technology are not meant only for online gamers, online content creators can also gain from it. If you are an online content creator (article content blogger or a video blogger), you can utilize this play-to-earn gaming trend to earn passive income source. Most of these online gamers are looking for tutorials on how to play these P2E games.
So as a video blogger on YouTube or any other video social media, like TikTok, you can make research on some popular, trending or newly launched P2E games and then make tutorial videos on how these games work and how to earn from them. Also, as an article content blogger, you can also research and write tutorial articles on these popular and new P2E games on your blog, and then optimize these articles for higher ranking on search engines. Since P2E games are one of the latest trends on the gaming industry and internet as a whole, you can generate huge traffic from those tutorial articles once you optimize them for search engines, and then monetize the traffic. Check out this article on How to Write Articles that will Rank High on Search Engines.
As a video bloggers you can monetize your YouTube channel(s). Once these channels become popular and have met the minimum requirements by Google, you can apply for YouTube AdSense. Check out this article on How to Optimize your YouTube Channels and Apply for Google AdSense.
You can also earn more income directly by collaborating with the project teams of these p2E games. Feel free to contact these teams and the agreement has been signed, you can create special tutorial videos for their projects, and then get paid either in cryptocurrencies or in dollar.
Also, as an article content creator, you can also monetize your tutorial contents once your blog becomes popular by applying for Google AdSense and other legit ad networks like Adsterra.com, Media.net, Coinzilla.com, etc.
How to Mint, Buy and Sell NFTs in any NFT Marketplace
Below is a general guide on how to mint, buy and sell NFT:
Select a Marketplace and Mint your NFT
Some of the recommended NFT marketplaces include: OpenSea, Rarible, SuperRare, Foundation, Nifty Gateway, Mintable, etc.
You can check out this article to help you know the best NFT marketplace that will suit you most.
Once you have selected a suiting NFT marketplace, next is to select the “Mint an NFT” option and then upload your digital file. Your NFT could be picture file, music file, video game file, app file, etc. The minting procedure might differ slightly for different NFT marketplace. But with few clicks, you should be able to mint your NFT. Also note that the marketplace may charge you minting or transaction fee, which you will pay with the native token of the blockchain network powering the NFT marketplace.
Another interesting aspect of NFT is that you can earn passive income from your work over time via royalties. Here, you will receive a percentage of each subsequent sale of your NFT on the secondary market. Note that you need to set the royalty amount or percentage during the minting process of your NFT.
List your NFT for Sale
After you have minted your NFT, you will see an option to list it for sale on the NFT marketplace where you minted it. But you can also transfer your NFT to another marketplace and sell it there. But it might cost extra fees.
To list your NFT for sell on the NFT marketplace, click the “Sell” button, and then follow the screen to screen guide. You will required to add some transaction details such as the listing price or auction time limit and then your preferred cryptocurrencies to receive payment from buyers. You will be charged a “gas fee” for recording transactions on the blockchain, which will be estimated by the blockchain network powering the NFT marketplace. The gas fees vary, depending on how congested the blockchain network is at that point in time. Also, most NFT marketplaces charge a listing fee, which is usually a percentage of the final NFT listing price.
Manage your Listing
After completing the listing process for your NFT, it will now be available for purchase on the NFT marketplace. Optionally, you can promote your NFTs to get more bids via social media platform or your website. If for any reason, you decide to make changes to your NFT or move it to another marketplace, it will incur another non-refundable gas fee.
Note that you can also buy and sell NFTs for profit, just like crypto trading. You can buy and resell on the same NFT marketplace, or move it to another marketplace and sell there, or just store it in your personal wallet. Note that any process that involves recording a new transaction on the blockchain attracts a gas fee.
See:
YouTube Video Tutorial on How to Create, Sell, and Transfer NFTs on OpenSea
You can learn more on how to mint, buy and sell NFTs from various marketplaces in these tutorial guide:
How to Spot NFT Projects with Powerful Potentials
There are tons of NFT projects out there in every NFT marketplace. How can you discover NFT projects that have massive potentials, which will give you good returns in future?
NOTE: NFT investments are riskier than cryptocurrencies investments because they are not liquid investments like cryptocurrencies (like Bitcoin) which have liquidity in most exchanges. Once you buy NFT, there’s no guarantee that you will be able to sell it. That is why you need make thorough research before you invest in any NFT project.
Below are some of the helpful tips to help you spot NFT projects with potentials.
1. Rarity Factor
NFTs are most times driven by rarity factor, which means that the rarer an NFT is, the more potential it has (price-wise).
Each NFT has unique attributes or properties, such as: background color, body color, head, wear, etc. Some of these properties are rare, and it is these properties that define the rarity level of the NFT. Search for NFT collections like “CryptoPunks” or “CryptoKitties”. Click on each of the NFTs, you will see the properties of the NFT.
The easiest way to determine the rarity level of any NFT is to use rarity tools. These rarity tools help you to check the rarity score/level of any NFT. There are many factors that determine the rarity level of any NFT. Some of these factors include: properties, type, edition, etc. Also, you can use these tools to find new NFT projects that will be launched soon.
Some of the recommended NFT rarity tools include: Rarity.tools, Upcomingnft.net, etc.
2. Healthy Community
NFT marketplaces are community-driven, unlike cryptocurrency exchanges that have liquidity for most crypto projects. Therefore, a good NFT project that has potential must have a healthy community backing it up. The more engaging the community, the higher the chances that most of the NFT projects will be successful. The Bored Ape Yatch Club is an example of NFT projects that were successful, credit to its healthy, engaging and interactive community. The NFT project created a culture, then the culture were followed by its community.
Note that social media presence is not an indicator of a healthy community. Don’t just be fooled by the amount of followers on the social media accounts. If there is no strong engagement and activities from the founders and followers, then the community is not a healthy one.
3. Legit Project Website, Strong Roadmap and Founders
A good NFT project should have a legit website, whose contents have red flags such as spelling errors, lack of some important information, their whitepaper, founding team members, developers, partnerships, etc.
Don’t invest in a project that is too secretive to the extent of not having some basic and important information about the project on their website. Don’t forget to check the project’s team members to know if they have relevant experience in the field. Also, check the project’s roadmap and know what they plan to offer in future, and also know if they are really following their roadmap.
4. Is the Project Undervalued or Overhyped?
There are tools you can use to check trending or hyped projects. One of the most recommended of such tools is Nansen.ai, which is a data aggregator that gathers information of buyers from Opensea and then summarizes it in various ways for its audience. The tool can also show you what top NFT collectors (whales) are holding or buying. So with the help of this tool, you can see some of the trending NFT projects and collections that have very high price bids. This will help you know if an NFT project is actually trending or overhyped.
Another good NFT project analysis tool is RyzeNFT, which helps you to quickly spot undervalued NFT projects. The tool has a pretty cool Chrome extension which quickly shows you the rarity rankings for some NFTs on popular marketplaces like Opensea. The tool is quite expensive, around 1.35 ETH. But it is sold as an NFT, so you can always resell it anytime you wish.
5. Unique Utility and Level of Innovation
NFT projects with potentials should give you more liquidity than being a more collector. What extra utility do you derive from purchasing a specific collectible? Does it give you exclusive access to certain features like NFT club? Does it include yield in the form of staking and early access to Web3 technologies or other virtual or physical industry events?
Which unique innovative features does the NFT project offer? Most times, innovation is what drives NFT space. So if the project does not offer any new level of innovation, then it is not worth investing in. Some of the future innovations you should watch out for in new NFT projects include: automated smart contracts that will enhance user experience, high-tech creator identification and verification process to reduce the risk of frauds.
Finding NFT projects that have potentials is not easy, it requires much work. You need to stick to these simple rules: find what you like, do your research, and then invest what you can afford to lose.
YouTube Video Tutorial on How to Find Legit NFT Projects
Here is a video tutorial guide on how to spot NFT projects with powerful potentials early:
Check:
- How to Spot Crypto Projects with Powerful Potentials
- 4 Easy Ways to Make Money from GameFi/SocialFi Projects
How to Spot Fake NFT Projects
As NFTs are booming, NFT scams are also on the increase. That is why you need to be careful, and scrutinize any NFT project before buying. You need to avoid connecting your crypto wallet to fake websites. Also, do not give out any secret info about your crypto wallet (like your wallet secret key phrase), to avoid falling victim to these malicious scammers.
Here are some of the ways to spot some of these NFT scams and how to avoid them:
1. Fake NFT Marketplaces
Scammers can easily clone popular NFT marketplaces like OpenSea, Rarible, etc. in order to scam people of their precious NFTs and coins. If you don’t check well, you might not even differentiate between the original NFT marketplace and its cloned (fake) version.
The first thing you need to confirm before connecting your wallet to any NFT marketplace is the URL. Take time to check the spelling. Also take note of the URL extension of the original NFT marketplace, such as: “.com”, “.net”, “.io”, etc. If you are unsure about the correct URL of the original NFT marketplace, you can check their twitter handle, telegram or discord. Their official links are usually shared in each project’s locked social media channels.
2. Phishing Scams and Malicious Pop-ups
NFT scammers now target users of some popular wallets, such as Metamask. You might come across tempting NFT adverts, asking you to provide the 12-word or 24-word (as the case maybe) secret key phrase of your private wallet. Do not fall prey to such cheap trap.
Some scammers also trick users with fake NFT airdrops, especially on social media platforms like Discord and telegram. They might go ahead to share a phishing link that leads to a fake website, where you will be asked to provide some secret information about your wallet. Once they get the information they need from you, the rest of the story will become history.
No real dApp or NFT marketplace will ask for your key phrase before you can connect to it. Also avoid backing up these secret phrases online. Secure, offline backups are the best option.
Also, random links. Make sure you scrutinize the URL before you click the link. And don’t be too desperate to win it big with NFTs. This will help reduce your chances of wrecked by these deadly scammers.
3. Counterfeit or Plagiarized NFTs
Anyone can mint any file as NFT, even without having right to the intellectual property. These days, scammers steal artworks of others and list these plagiarized artworks for auction. Once you buy any of these plagiarized NFTs and later discover that they are fake, there is no way to get a refund, and NFTs will be valueless, because most NFT communities will eventually find out when you list them for re-sale in any NFT marketplace.
So before you buy NFT from any marketplace, do proper research and make sure that you are buying from the legitimate owner of the artwork. Do not be fooled by cheap price.
4. Fake Customer Support
Some scammers go to the extent of impersonating the customer support officers of some popular NFT marketplaces in order to win a user’s trust and get a sensitive information. This can also happen in social media like Discord, where the scammers faking a helping hand in order to wreck you.
Just know that no legitimate customer support officer will first DM you, unless you requested for it in the official social media group.
YouTube Video Tutorial on How to Spot NFT Projects & Avoid them
You can learn more on how to spot fake NFT projects and how to avoid falling victim in this video tutorial guide:
See:
Conclusion
From all indication, NFTs have come to stay, and will be one of the main revenue models in the blockchain space. But it will not just happen overnight, everything will unfold gradually. Solid use cases will keep emerging, while use cases that could not stand the taste of time will fade away gradually. Some serious research and development are already going on “behind the scene”. Many big companies are investing heavily in the development of NFTs for their companies so that they can tap from the opportunities that the blockchain technology and NFTs have created.
But how do you make the best use of NFTs? Always watch out for these solid NFT projects and invest in them. Avoid those shitty NFT projects as much as you can.
