Okay, let’s get things straight. You hear it here, there, and everywhere “NFTs can make you a shit ton of money”. Cool but you’re still very skeptical and, honestly, you have every right to be. Knowing how to make money with NFTs is one thing, and whether it actually works is another. You also hear the catchphrase ‘generational wealth’ thrown at you like the road to salvation. Spoiler alert, it’s actually the ultimate FOMO weapon. Makes you feel that you’re lazily existing while others are printing money in their sleep. Anyways, chill, because I will lay it all out without filters. You’ll know the ugly truth and figure out whether the whole NFT money-making hype is a myth or an actual possibility.
5 Legit Ways to Make Money With NFTs
Let’s cover the basics first, I’ll assume you know what an NFT is, and if not check this guide. Now, there are many ways NFTs make you money but here’s a to-the-point summary of how to make money with NFTs in 5 ways. They’re in order from most profitable to the least according to 2023 market trends.
1- Trade NFTs
The most successful way to make money from NFTs is by trading them. This my dear friends is the world of degenerate gambling, where you get addicted, hyped, and allegedly “rich”. Long story short there are three ways you can go about trading NFTs:
1- Mint:
One of the best ways to make money from an NFT is to mint the promising ones early before they skyrocket in value. Many of the best NFTs were initially minted at a low price, with their value increasing exponentially in the weeks and months after launch. One of the best examples is BAYC, it was available for mint at 0.08 ETH in 2021 and now sits on the floor of 51 ETH with an ATH of 150 ETH!
2- Flip:
Flipping NFTs happens on the level of secondary marketplaces like OpenSea and Blur. It refers to the process of buying an NFT at a low price and then selling it for a higher price. This method has a short time frame and happens very quickly. It’s known as floor sweeping when you buy the right NFT at the right time and sell it for the right price in a matter of hours or a few days. The critical distinction between flipping and other trading strategies is its short-term approach, contrasting with the HODL strategy.
3- HODL:
One of the clever ways to make money from NFTs is to trade in the HODL method which stands for ‘Hold On for Dear Life’. It’s a strategy where you simply do not sell, regardless of what happens. This is where the phrase “generational wealth” is used the most, which means money passed on through generations. You need to have so much patience and thick skin for losses. I’m serious because you need to hold an NFT for at least 20 months no matter how much its price fluctuates.
The best example is always Cryptopunks. Back In 2017, when CryptoPunks were initially released, they cost between $1 and $34 each. In 2021 they reached an ATH of 125 ETH, so around $562,500! Can you imagine the profit? It’s insane.
2- Web3 Domain Names
This is the most convincing way to make money with NFTs for those of you familiar with web2 domain names. Trading and investing in Web3 domain names is very smart. Most web2 domain traders make anywhere from $300 to $1500 a month. In web3 this price can easily triple because the currency is Ethereum and the technology is very novel. Check this full guide on how to make money with web3 domain names.
3- Invest In NFTs
The third way you can make money with NFTs is by treating them as an investment that generates passive income. This may sound similar to the HODL method of trading, so let me clarify the difference. By HODLing your NFT you don’t earn a single penny until you sell it at the right time later on. However, when you invest in your NFT by staking you are constantly generating money until you sell it. There are two common ways you can go about investing in NFTs:
1- Staking:
NFT staking can come in various forms. The primary mechanism used is to ‘lock up’ your digital asset on a DeFi platform and receive rewards in return. This usually occurs on Proof-of-Stake (PoS) blockchains that reward the owner with the network’s native token. If you own valuable NFTs and store them long-term on a platform or in a protocol, you can earn interest on them. You can know more about staking here.
2- Fractional NFTs:
One interesting way to invest in an NFT and stake it at the same time is to own a fraction of an NFT, often a blue chip like BAYC or Cryptopunks. By splitting the NFT into thousands, millions, or billions of tokens, many people can purchase and own parts of the NFT. If the approach is successful and there is enough interest, this can raise the value of the NFT to extremely profitable numbers. Consequently, makes you profit as well.
4- Create NFTs
This method is no longer as profitable as it used to be. However, you can always try giving it a shot, but keep in mind that it’s most likely a losing game in 2023. Creating NFTs earn makes you money through two routes. The first is when collectors mint your NFT. The second is through royalties when they sell it on secondary marketplaces.
Lost on what kind of NFT to make? Here are 10 ideas to kick your inspiration butterflies. However, keep in mind that creating NFTs is not as simple as it sounds. There are many costs to keep in mind and a whole process to follow, but don’t worry I got you covered with this guide.
5- Play-to-Earn Games
This method used to be very popular and lucrative as a means to make money from NFTs, but right now it’s slowly fading out. Play-to-earn (P2E) games were first popular in 2017 with Cryptokitties. Then hit the world in 2020 with Axie Infinity where players generated millions! Making money from P2E is a topic on its own, so check out this guide if you’re curious about giving it a shot. The only game that still didn’t fully die and has a slither of hope is Wolf Game, if you’re interested.
Explaining The Difference Between Trading Methods
Now that you know how to make money with NFTs you may be finding it quite simple. But let me make this as clear as possible, trading NFTs is not a walk in the park.
Generally speaking, the trading process gears toward making incremental capital gains over the long term rather than getting in and out of the market as quickly as possible through flipping. Investors interested in NFT trading will often buy and sell an NFT for a small profit and then repeat this process again and again. Ultimately, this requires much more patience and market knowledge than HODLing, which relies on purchasing undervalued NFTs and then selling them at the right time.
Flipping collectibles is very risky, and there is no manual or science behind the art of flipping. The best way is to be active in the NFT community on Twitter and get to know the NFT space well before making rash decisions.
The HODL approach can result in exponential capital gains over the longer term, which is why this approach is so popular amongst experienced investors. You just need to know which NFT is worth holding no matter what happens to its price. The amount of insight and NFT market understanding required is not a joke. It’s a full-time thing.
Will NFTs Actually Make Me Rich?
Yes, NFTs will make you rich, but that’s easier said than done. You need to understand that becoming an NFT trader or investor means you have to make it part of your everyday life. Let’s say horse riding is your favorite pastime hobby, would you seriously consider professional racing without enough practice? OR if you’re all tough and pumped at the gym, would you fight a professional boxer in a ring? Kinda doesn’t make sense.
It’s the same thing with NFTs. Dabbing into it once or twice for fun is not so harmless. But it will not make you filthy rich either. The only way NFTs make you rich is by doing tons of research and understanding the market. However, this comes with a wave of risks you need to be aware of.
The Risk of Trading NFTs
If you want to make money with NFTs you must be aware of their risks. Scams are always the biggest risk in anything not just NFTs. Their ripple effect is much more harmful in the NFT space. Here’s a detailed guide to look out for NFT scams. On top of scams, the risks I want you to be alert of are the following:
1- TIMING
In terms of trading, there is no rule on when it’s the right time to sell. Time is liquid, you can’t ever hold it, and more so in NFT trades. I’ll demonstrate with an example from Street Machine NFTs.
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- Release Date: October 7th
- Mint Price: 0.01 ETH whitelist – 0.03 ETH Public (between $13 to $40 at that time)
- ATH Floor Price: 0.5 ETH (around $650 at that time)
- Floor Price Now: 0.05 ($95 at the time of writing)
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- Person A → Minted StreetMachine NFT for 0.03 ETH through public mint → Flipped it in the secondary market when FP was 0.5 ETH → made a profit of 0.47 ETH → $611 in a week
- Person B → Minted StreetMachine NFT for 0.03 ETH through public mint → decided to HODL since the project seemed important → still holds to this day → made a profit of 0.02 ETH → $38 in 6 months
- Person C → Minted 5 StreetMachine NFs for 0.01 ETH each through whitelist → Flipped them in the secondary market when FP was 0.5 ETH → made a profit of 2.45 ETH → $3,185 in a week
This collection had all the hype around it, and you can see how:
Person A played it safe but smart.
Person B played it wrong and shot themselves in the foot.
Person C knew the game like the back of their hand – or just a strike of luck.
2- GAS WARS
Buying an NFT is not like buying a tomato from a grocery shop. You don’t just pay for the NFT, you also pay for the people transferring ownership of this NFT to you. They are known as blockchain validators. That transaction is known as a gas fee, and during peak demand, the blockchain gets congested. It’s where gas wars emerge.
An NFT gas fee usually costs a minimum of $1. During gas wars, it can cost more than $500! Pay attention to the price you pay to get an NFT. Check out these guides for gas fee insights and setting gas limits.
3- ADDICTION
Making money from NFTs is called degenerate gambling for a reason. It gives you the same thrill poker gambling does but at an even higher dose. Basically because if you take high risks you can reap high profits beyond imagination. That’s why some big NFT Whales develop high-risk, high-reward behavior. They trade in bulk and manipulate market prices.
No matter how rich this method makes you, there will come a day when addiction gets the best of you. This is allegedly one of the reasons why NFT Whale Franklin retired from the Web3 scene. You can read about his unfortunate experience here.
4- PRESSURE AND FOMO
DON’T MISS OUT ON GENERATIONAL WEALTH! People tweet frantically, and yes NFTs can make you rich for generations to come. But don’t you ever fall victim to pressure and FOMO! If you want to make money with NFTs, you need to keep a balanced mindset with a healthy dose of FUD behavior.
In the case of Street Machine NFTs, Person A had a balanced amount of FUD and FOMO and made $611 in a couple of days. It takes serious guts to trade like Person C, imagine if he sold at the same time Person B did. It would have been an epic fail. However, imagine if you were the person who never bought Street MAchine NFTs, you missed out on A LOT of money.
Oftentimes major blue-chip NFT projects fall victim to pressure and end up disappointing their community. That’s why Doodles, Clone X, and Moonbirds are slowly fading. Just find the healthy middle, if it exists.
Making Money With NFTs: Myth or Possibility?
I think by now you know that making money with NFTs is a huge possibility. The only myth is that there could ever exist a detailed guide to tell you for sure how to become rich with NFTs. This is the ugly truth, there is no telling what kind of NFT investment or trade could make you money for sure.
For example, someone traded with Whale Seedphrase a 60 ETH Cryptopunk for 2 ETH wolf game lands. That trade had its own convincing logic, but no one would have ever encouraged it. So, there is no bible to enter the sacred heaven of generational wealth. Just be careful, and do tons of research. Welcome to the world of degenerate gambling, I hope you survive!