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What NFT is and how to make profit on it

The growing value of cryptocurrency, the appearance of the Clubhouse social network, where users actively discussed NFT, as well as the entry of celebrities and artists into the market have caused a lot of noise around the technology, developed back in 2017. But while Clubhouse lost its popularity rather quickly, NFT does not give up its position and continues to grow consistently. According to Nonfungible, in the first two months of 2022 the growth of sales has already exceeded $2 billion.

NFT — Non-Fungible Token

NFT is a new kind of digital collectible that has a unique bit of code on it that serves as a permanent record of its authenticity and is stored in blockchain, the distributed ledger system that underlies bitcoins and other cryptocurrencies. These collectibles can be bought and sold like securities, and the nature of blockchain technology means that once a token is created, it cannot be removed or counterfeited.

Who and what sells on the NFT

NFT technology is especially useful for artists, musicians, and others who want to create digital goods in limited editions.

The Weekend

The Weeknd has put up for NFT auction a collection called ‘Acephalous‘, which consists of three audio-visual installations and four static images. The authors from Strangeloop Studios claim that their art symbolizes the victory of a decentralized community over hierarchies. The most expensive item – ‘The Source’ – was sold for $490,000.00, and the artist made $2 million from the sale of all content.

New York Times

Kevin Roose, a technology columnist for The New York Times of America, released his own column titled “Buy this column on blockchain!” He turned a screenshot of this column into an NFT and auctioned it off. The proceeds of $920,066.00 Roose promised to donate to a charity, the Neediest Cases Fund, which helps non-profit organizations.

CryptoPunks

In 2017, the Larva Labs team launched the CryptoPunks project of 10,000 NFT images measuring 24×24 pixels. The developers were inspired by London’s punk culture, the fashion of the time, cyberpunk and zombie aesthetics. Originally, anyone with an Ethereum wallet could request them for free. Now you have to buy them from someone through a trading platform that is built into the blockchain. CryptoPunks was conceived as an experiment in combining NFT and art. As a result, the creators of the project managed to popularize what is now called crypto art and is worth tens of millions of dollars.

Top 5 Largest Sales of CryptoPunks

Ways to make money with NFT

1. NFT holder airdrop

When you buy an NFT, you become its holder. Platforms, in turn, try to come up with various plushies in the form of other free NFTs so that you keep it on that marketplace, thereby maintaining the popularity of their platform.

2. NFT platform airdrop

You don’t have to be a bidder to get a free NFT from a marketplace. Drops are used as a marketing tool for companies to attract more new users and promote the project.

3. Airdrop for all

To get attention, new projects are even giving away their own NFTs for free. If you want to get such a token, you have to fulfill certain conditions. Usually, they are limited to subscribing to the project’s social media. One such case study is just CryptoPunks, which we mentioned earlier.

4. Creating your own NFT

This method will not work for everyone. Because there are millions of works lying on the sites, which never found a response from investors. To make money selling your own NFT, it is not enough just to know how to create it. You should understand how the NFT market works and have a strategy for project development. If you do not have all of that, it is better to contact an experienced team to help you implement it. Or invest in an existing project and sell it more expensive. But this also requires careful monitoring of the market.

5. Play to earn

Blockchain technology makes it possible to play and earn tokens at the same time. Each blockchain-based game has its own ecosystem and economy. Players can earn various NFTs for their achievements, which can then be sold on secondary markets. One such project is Axie Infinity, which has total in-game item sales of $2.53M. You can find such games in the public domain by searching ‘nft play to earn games’.

6. Stacking

Stacking is a way of passive income in which holders pledge their NFTs, thereby ensuring that the blockchain works. For this, investors receive their fixed rewards. In its principle of operation, staking resembles a bank deposit, only in cryptocurrency. When choosing such a service, be sure to pay attention to the reward for staking, withdrawal terms and minimum deposit.

7. Twitter airdrop

Projects that do not have large budgets conduct drawings in their Twitter, where you have to fulfill certain conditions: re-tweet, subscribe to the channel, tag your friends, etc. Anyone can participate, but the chances that the NFT you win will be profitable in the future are very small.

NFT value drivers

Before getting involved in any NFT project, think about what adds value to it. This question is difficult to answer because NFTs are a very diverse and broad group of assets. Many of them are subjective and difficult to evaluate. But we were able to distinguish the following concept for evaluating NFTs according to their categories.

Collectibles — the value is determined by the narrative around the asset.
Game assets – the value is determined by the utility of the asset in its “universe”.
Virtual land – the value is determined by its location, parameters and content.
Crypto art – the value is determined by the reputation of the artist.
Domain names, insurance, property titles (basically everything else) – the value factors vary because the category itself is variable.

Flaws of the NFT

NFT is a future that has not yet fully arrived. Only time will tell what will happen to these assets. But the fact that this system is not perfect is already known.

An NFT token can be linked to any picture without proof of authenticity.
Marketplaces do not respond to complaints from authors.
Bots create NFTs from the tweets without the consent of the authors.
Low earnings for beginners and one-size-fits-all work of low quality.
The unfairness of the NFT projects creators, which close them immediately after collecting investments.
The use of NFTs as a way to launder money.

Closing thoughts

We hope that all the above principles of the NFT ecosystem will help you to complete your own representation hereof and our article will help you make an informed independent decision whether to become a part of it or not.

Please pay attention to the fact that the NFT market is just developing. And that means that there will be new markets and factors in the future that will affect the determination of the value of these assets.

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