Digital technologies develop very quickly and, for a lot of us, it can be difficult to keep up. Many of us have just finished understanding what blockchain technology is about and there is already a new digital trend, NFT.
The main reason for the popularity of blockchain is that it was used to create crypto-currencies, virtual money you can pay with on the Internet or convert into real-world assets.
As crypto-currencies aren't controlled by any official body and so give you a certain degree of freedom, a lot of people got interested in buying them. As a result, some of them experience exponential growth. For example, the value of bitcoin rose from 1 USD in 2011 to 65,000 USD in 2021.
As you can imagine, those who invested in Bitcoin in the early stages eventually made plenty of money out of it by reselling their crypto assets for thousands of times their initial price. This made crypto-currency not only attractive for those seeking more freedom but also as a way to get rich.
Now, what is the relation between blockchain technology, crypto-currencies and NFT? Well, similarly to crypto, all operations with NFTs are recorded on a particular blockchain that is often publicly accessible and managed by the digital community.
Due to this similarity, in the beginning, some users even thought that NFTs was a new type of crypto, similar to Bitcoin or Ethereum. However, if we look at NFT in more detail, we will notice a huge difference between them.
As its very name "Non-Fungible Token" indicates, NFTs are very particular digital entities. While one bitcoin or ether (the coins used on the Ethereum blockchain) have exactly the same value as any other bitcoin or ether, NFTs are unique and all cost a different price.
What's more, NFTs are not just virtual currency but are attached to digital or even physical assets. Each token represents a particular asset and when sold transfers the ownership rights to the buyer.
This makes NFTs an excellent means to trade digital art and other kinds of creations. The value of your token is normally proportional to the popularity of the item it stands for. As an artist, NFTs can help you be fairly rewarded for your creations, whereas art collectors can invest in promising works of art and reap benefits once it has been widely recognised.
You can also create your own NFTs and sell them.
However, a lot of people may wonder why anyone would ever invest money in digital art and other items when most of them are already freely accessible on the Internet. Are there any other ways in which NFT can be useful to you and what areas can it serve in? That is what we will look at in detail in the present article.
Protect and trade your assets
As we have already mentioned, NFTs can represent not only digital art but also a variety of other digital and real-world assets. Here are some examples of items that can be minted as NFT by their owner:
- video clips
- audio recordings
- tweets and other publications on social media
- documents
- physical real-world assets
When you create an NFT, it becomes a sort of an ownership certificate that proves your rights over the item. Why is it important?
First of all, as we have said, many digital creations are freely accessible for anyone around the world. When you create an image or, say, a piece of electronic music, and publish it online, there is always a risk that it could be stolen and sold by someone else.
The creation of an NFT will precisely not let this happen. When unique non-fungible tokens are minted, their owner is recorded on one of the public blockchains, such as Ethereum, Tezos, Flow and so on. Since that moment, any internet user can check out who is the actual owner of the digital or physical asset in question, so you will be less likely to be robbed.
What's more, NFTs make it easy for artists to sell their assets whenever they want.
When someone has the intention to trade a digital item, the transfer of the ownership rights to the buyer can become a problem. Given that digital works and documents can be easily copied, the actual sending of them doesn't mean or prove anything.
This is where NFTs come in. Unique tokens inscribed on a blockchain are in themselves sufficient proof for the seller and the buyer.
As a result, NFT can simply the life of both artists, who'd like to get a reward for their creations, and collectors interested in purchasing art.
On top of that, NFT marketplaces are easy to use and offer a good choice of NFT tokens in one place. A collector can browse through the items for sale, compare their prices and choose the most promising ones among them.
There are several popular NFT marketplaces on the Internet dedicated to particular kinds of items and creations. If you want to learn more about them and pick the right one for you, you can have a look at our article on the subject.
NFT for prestige
People may purchase works of digital art for two main reasons. One of them is financial. If you have some extra Ethereum on your account, investing in high-quality pieces of art is never a bad idea. Art tends to become more expensive with years and may be sold for several tens or even hundreds of times the initial price in the long term.
Another reason to buy unique pieces of art is prestige. For hundreds of years, paintings and sculptures were sold to rich people who exposed them in their houses to mark their wealth. Find out more about marketplaces to find good NFTs.
Of course, digital art cannot be hung on a wall but there are other ways to display it. For example, a collector can upload the works of art they possess on social media. As we visit one another's social media pages more often than homes, it can be even more visible there.
Another popular way to highlight your status using NFT is NFT avatars. The most famous example of this kind of token is the CryptoPunks project created by Larva Labs on the Ethereum blockchain. It consists of 10,000 digital characters that were initially handed out for free but whose price skyrocketed later on.
Nowadays, the cheapest CryptoPunks NFT costs over 170,000 USD and the most expensive one over 20 million USD. This is the most striking example of NFT avatar tokens but there are also other similar projects, like The Bored Ape Yacht Club whose tokens are being sold at pretty high prices, too.
Upon the purchase of an NFT avatar, you get its ownership and can use it to make your social media or video game account truly unique.
NFT tokens for gaming
Another area in which NFTs play an important role is video gaming. The best example of a game involving crypto tokens is Axie Infinity. It is probably the most successful "earn-to-play" online video game in which gamers can earn real money.
To join the Axie universe, players need to buy characters, each attached to a non-fungible token sold on the Axie marketplace. Then, as you level up your character, its value will grow and you can auction off its ownership whenever it suits you.
In addition to characters, Axie players can purchase in-game items to make their characters stronger and level them up quicker.
Since it was launched in 2018, Axie Infinity has become the most profitable NFT game and some of its character tokens were sold for over 100,000 USD.
Aside from Axie Infinity, there are numerous other NFT games on the Internet, including Splinterlands, The Sandbox, CryptoKitties, Ember Sword and many others. Earning money while playing a game has been the dream of numerous gamers for years. Now, it has become possible thanks to NFT.
Earning money with NFT
As we have seen, NFTs can be used in a lot of ways and bring in pretty good revenues. The most obvious way to earn from NFT is still trading. What you need is to spot a promising asset, buy it at the right moment and then resell it, once it has become more expensive. For example, people who bought CryptoPunks avatars back in 2017 has made fortunes on them since then.
In this sense, NFT investment is similar to purchasing real art by promising or famous artists. To make it really profitable, you will need good artistic taste and knowledge of current tendencies in the world of art.
An alternative way to earn money on non-fungible tokens is to rent your coins. This is especially relevant to NFT gamers. If you have a good character in some game and aren't using it at some point, you can pass its ownership to another user for some time and be paid in return.
To conclude, NFT is a quickly developing phenomenon that can become an excellent source of revenue if you work out how to use it. If you want to find out more about earning money from NFT, you can find even more interesting methods in our article.
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