What are NFTs? how are artists making money from them?

Money is just paper. An ordinary paper that has no intrinsic value. Same as every other asset we perceived to have value. Gold, diamond, silver, bronze, and other mineral resources are only naturally occurring elements. But the moment we started attaching some use to them, they began to gain value.

Bitcoin and altcoins have redefined the concept of value, shifting it from the physical to digital. This then brings us to the concept of digital assets and NFTs, how people define them, how people make money from them, the reason people invest in them, and also some examples of NFTs.

Find out how the NFT craze is helping African artists grow and how you can get into the NFT niche.

Introduction to NFTs

The concept of NFTs can be very interesting, funny, and at the same time complex. NFTs is an acronym for Non Fungible Tokens. To fully understand what Non-fungible tokens are, there are basic terms we need to understand first.

The first is ‘asset’ which is any property owned by an individual or a company, which can be used to pay debt, commitment, and can be converted to cash since it has an economic value. An asset is digital if it exists in a digital form.


The second term to understand is ‘fungible’. Fungible means when something is replaceable by another thing of similar feature and function. For example, if you purchase an Apple laptop online, you will be given a unit out of the thousand units produced by the manufacturer. That means the Apple system you bought is fungible or replaceable.

The same thing is applicable when you buy bitcoin, you only have a unit of the millions of bitcoin in circulation. Therefore your BTC is also fungible or replaceable.

On the other hand, if for example, you have an Apple laptop which you have used for some time, you love the laptop’s functionality, shape, and color, and you have created an emotional and psychological attachment to the laptop. The laptop is now unique and is now non-fungible, and to you, the laptop then has a value that you have given to it.

Lastly, we need to understand what a ‘token’ means. A token literally means a thing serving as a tangible representation of value, feeling, fact, etc. However, in the crypto world, a token is a type of cryptocurrency that represents an asset residing on the blockchain.

Tokens are used for investment purposes, transactions, and stores of value. Non-fungible tokens can then be simplified as non-replaceable tokens.
So basically, an NFT is more like a piece of art made by an artist, though it can be copied, the original piece is one and unchangeable. This makes it non-fungible.

Although most NFTs are part of the Ethereum blockchain, it is possible for other blockchains to have their own. NFTs act as proof of something you own; a real or virtual asset. A digital representation of an
asset.

How do people make money from NFTs?

What are NFTs? How are Artists Making Money from them?

This is the most important part of this piece. The NFT niche is a fast-growing one. Creators have started developing interests in it and they see it as a means to earn money online.

Get into an NFT project early

The year 2020 was tagged the year of Defi because of the numerous decentralized finance projects that were launched and the enormous adoption they received. It is safe to call 2021 the year of NFTs because of the insane number of NFT projects out there and the NFT craze
in the crypto space.

To understand how lucrative the NFTs are, you need to check projects like Beeple NFTs and the HashMasks. Each project is a milestone for the NFT niche. Beeple NFTs are personal projects created by a digital artist, Mike Winkelmann. One of his NFTs tagged “The First 5000 days” sold for an incredible 69 million dollars in ETH.

Due to Beeples’ uniqueness and creativity, early investors rush to buy into his projects.

The perfect example of buying early into an NFT project is the case of HashMasks. HashMasks are digital arts created by artists across Europe and there are over 16,000 unique pieces of Hash Masks. Upon the release of these NFTs, the first 3000 pieces were sold for as low as 0.1ETH, while
the last three pieces were sold for 100ETH.

Interestingly, 16,000 artworks were sold out in less than 48hrs. Imagine getting in early and buying one of these NFTs for 0.1ETH and sell
them on NFT marketplaces like Rarible and OpenSea. The average price for a Hashmask on OpenSea is now 0.55 ETH while the cheapest on Rarible is 1.1 ETH. Do the calculations yourself.

So how can you make money with NFTs?

Buying and selling of NFTs

The first and the most common way to make money with NFTs is through the buying and selling of NFTs. We have defined them as digital assets, a means of exchange, and a store of value. You buy them and hold them just like you buy bitcoin and HODL. Their prices appreciate with time and their value increases.

There are various sites where you can buy your NFTs and they include OpenSea, SuperRare, Marketplace, etc. 

Creating NFTs

The second way to make money from it is to become a Creator. This isn’t very common because for you to become a producer of NFTs you have to be a digital artist, blockchain savvy, or be very influential.

An example of that is Jack Dorsey putting up his first tweet for sale for a huge amount. Another example is Lebron James putting up his dunking skit for sale, and hundreds of others. However, not everyone can put up something for sale because not everyone is popular like LeBron or Jack.

Should you buy Bitcoin or NFTs?

In conclusion, the question of should you buy bitcoin or should you buy Non-Fungible Tokens is very relative. Although the risk of buying NFTs is much lower than buying bitcoin or altcoins in terms of volatility, however, some NFTs might subsequently generate low returns.


If you’d like to get featured on our Entrepreneur Spotlight, click here to share your startup story with us.


SUBSCRIBE

Get latest Technology news, reviews, business-related content with a deliberate emphasis on the African narrative and insightful analysis in Nigeria – straight to your inbox.


Related Posts