There are currently a few ways to make money off an NFT or NFTs, but in this article, we will be discussing two of the more common methods.
- The actual NFT or NFT Collection is being sold at auction.
- The percentage of a sale of an NFT that is paid as a commission or as royalties.
But first, let’s talk about what exactly a non-fungible token (NFT) is and how it differs from a cryptocurrency token that was issued as a result of an initial coin offering (ICO) or an airdrop.
The difference between crypto and digital art NFTs
Cryptocurrencies and non-fungible tokens (NFTs) belong to the same family of digital assets. In other words, the NFT was born out of the development of a particular kind of Ethereum smart contract known as an ERC1155 contract. This signifies that the NFT was initially conceived as a result of this development.
In contrast to the majority of cryptocurrencies, which are typically derived from the ERC20 smart contract, which is responsible for the creation of the vast majority (about 90 per cent) of all cryptocurrencies that are issued as a result of projects conducted on the Ethereum blockchain.
The ERC1155 contract is distinct in its own right because it can manage multiple token types, including both fungible and non-fungible tokens. This ability to manage multiple token types distinguishes it from other smart contracts. Because each NFT is distinct from the others, these digital assets are referred to as non-fungible tokens.
This is because no two NFTs are ever the same. They are also capable of being handled on an individual basis.
For instance, if you had a deck of cards made entirely of NFTs and they disappeared, you would be in a precarious position. Because you have control over the ERC1155 contract that was used to generate the pack of cards, you can easily cancel that lost card without having to cancel the pack of cards as a whole.
To summarise, non-fungible tokens, or NFTs, are a method for tokenizing an asset and maintaining control over that asset in a digital format on the blockchain from which it was issued. In this particular scenario, we are going to be discussing Ethereum.
Do creators of NFTs make money?
Since I can remember quite a way back, I’ve been hearing how difficult it is for artists to make money by creating art. I can’t say that I’m surprised by this information. How different things are now compared to back then. My memory takes me back to the days when the only way to learn about new artwork was to visit a local gallery; however, this was only possible for the privileged few artists who possessed the financial resources and social connections necessary to do so.
Since the introduction of NFTs, there has been some sort of levelling of the playing field, and the industry as a whole has been completely flipped on its head. In just a few minutes to a few hours, anyone can now create and showcase their art to an audience that spans the globe, sell their art for tones of money and accomplish something so difficult to do in the past but can now be done in just a few minutes to a few hours by anyone. The following are two common methods that the creators of NFTs use to make money.
The actual NFT Collection is being sold at auction
Creating a piece of artwork, minting a few thousand different variations of the same artwork, and selling them on a platform such as Opensea is likely the method that generates the most money from NFTs and is also the one that is the simplest to implement.
This strategy of making money has been utilised by a great number of NFT creators over the years. Some people have been able to make millions off of it, while others have only been able to sell a couple of copies and end up losing money in the process. Up until the day that your NFT collection is made available for purchase, the success of your marketing efforts will determine whether or not you can sell all of the items in your collection of NFTs and make money.
The percentage of NFTs resold and paid as a commission or as royalties
The ability to earn passive income, commissions, royalties, or whatever else you might want to call it, is, in my opinion, the most exciting aspect of NFTs. This income can be generated from the resale of an NFT collection that you have created. This was never the case with traditional cryptocurrencies, and back then, exchanges were typically the major players in the game, earning a percentage here and there for every token that was traded on their platform.
With the implementation of NFTs, the NFT creator is now in possession of both the power and the wealth generated by their work. For instance, a collection might sell out during the launch for a few hundred thousand dollars, but as time passes and the collection gains traction and the price increases, the same NFT collection might go on trading for millions of dollars a day of the same NFT collection. resulting in a percentage of the total value of the NFTs being resold being distributed to the creator. In certain circumstances, this can result in the NFT creator making millions of dollars as a direct result of the process, both from that point forward and also into the foreseeable future.
How much do artists make off NFTs?
NFT creators stand can sometimes make a lot of money from an NFT, we have seen this from NFT creators such as Michael Joseph Winkelmann, known professionally as Beeple. In February 2021 started selling NFTs which the first two NFTs sold for $66k and would later sell on for $69,400,000. There are also other NFT creators like Yuga Labs, who are continuing to generate make money, even thousands from the successful NFT brand called Bored Ape Yacht Club. They have also expanded into the metaverse, where each NFT is now an avatar and each NFT holder of a BAYC has access to not only purchase NFT land in their metaverse but also receive perks from owing the NFT. Welcome to the NFT gold rush.
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All investment/financial opinions expressed by NFT cable are not recommendations. This article is educational material. As always, make your own research prior to making any kind of investment.