Creators Legal registered logo

How Creators Can Make Passive Income with NFTs?

Search

Popular Posts

Tags

Share

Non-Fungible Tokens (NFTs) are the newest addition to Web3 and Blockchain Technology. We know that they have been extremely popular, and many have gotten in early. However, we are still at the beginning stages of the NFT world and there are quite a few ways that NFT Creators are earning money and passive income. This article will break down what exactly NFTs are and how creators can earn income.

Although you can make lots of money with NFTs by working on the NFT market full time, they are also a wonderful way to make passive income. You can make these unique digital items work for you and earn lots of money without sacrificing your daytime job.  

What Is an NFT? 

Non-fungible tokens – or simply NFTs, are digital assets that allow you to prove ownership of a store of value. This could be a non-tangible item like a virtual drawing or something physical such as real estate or fine art. NFTs are a way of registering a one-of-a-kind image, video, or any form of digital, or indeed, physical item on a blockchain. 

In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain. However, unlike Bitcoin – which is fungible (interchangeable), each NFT token is unique from the next. 

They are bought and sold online, frequently with cryptocurrency, and they are encoded with the same underlying software as many cryptos. Today, most NFTs are purchased with ether (ETH), the native currency of the Ethereum network, which can be converted from U.S. dollars on exchanges like Coinbase, Kraken, and Gemini 

NFT

The Market:  

The frenzied excitement around NFTs comes from the feeling of ownership of something scarce – typically a digital asset. NFTs create scarcity since each NFT is unique. There are several types of digital assets, from the basic NFT like the Bored Ape series which are fetching substantial amounts, to NFTs in the music space. Snoop Dogg recently partnered with a production company to offer music via NFTs to experience NFTs which offer countless benefits to the holders of NFTs.  

In 2021, the NFT (non-fungible token) market has grown into one of the biggest sectors of the cryptocurrency industry. Over the past year, users around the world have purchased $12.6 billion in NFTs, surpassing the 2020’s number of $162,4 million.  

And while a vast majority of NFTs are created, bought, and sold using Ethereum, high gas fees can make the process incredibly expensive.

Minting a single NFT on Ethereum costs around $98.69 in gas fees while minting NFT collections will cost $900.  

Learn how to make and sell your own NFTs 

The NFT Community:  

Building a passive income with NFTs requires many vital facets to be successful. And, regardless of the type of NFT you are making, community becomes an important key. Between the millions of NFTs projects available on the internet, how can someone stand out from the crowd?  

NFTs are evolving to the point where you either now need to offer a service or a community. For instance, some projects are offering tokens where users get exposure to a range of NFTs. Investors need to know that there is a credible team behind the project and a community around it.

SuperRare, for instance, is a curated NFT crypto community with onboarding policies and quality guidelines for artists and collectors. This helps to attract like-minded people to their platform, creating an informal social layer that facilitates buying and selling more than anything else.  

Understanding the importance of a strong community will help both new and existing teams ensure the long-term success of their project. So, if you have many questions and need help from experts, you can join the top 10 NFT communities on the internet.  

Now that you understand what NFTs are and their importance in today’s cryptocurrency market, you can start planning a strategy to win passive income with NFTs.  

NFT Legal contract

4 ways to make passive income with NFTs:
What is passive income?  

Passive income is a cash stream that requires little or no daily effort to maintain, unlike active income, such as cash earned from working at a full-time job. With these tools and strategies, you can have a consistent passive income with NFTs in 2022: 

1. Rent or delegate NFTs

Today, there are various games where users can rent NFTs, which enhance their gaming experience. This is becoming a very lucrative trend because these NFTs include powerful weapons, helpful tools to advance faster in the game, skins to personalize their favorite characters, or the ability to sell these tools to other players if not needed.  

The wonderful thing about this strategy is that the transactions are all automated via smart contracts. You simply enter the duration you want to rent out your NFT and the cost, and the blockchain will automatically find you a renter, making it a great passive income for beginners.  

As NFTs continue to rise in popularity, so is their price. Therefore, many gamers cannot afford to own one. This is where you can earn a huge profit by renting them out. In this case, everybody wins, because the gamers fully enjoy their game, and you get passive income from your NFT.  

Tip: Make sure to buy or make an NFT with multiple use cases. This way if the game you invested your NFT in loses popularity, there are other games where you still can rent it out. 

2. Earn royalties from your NFTs

You may know royalties from other creative assets like music, film, and art. Well, NFT royalties function very similarly. On every occasion someone uses your NFT or sells it, they must pay you a percentage of it. These royalties are built into a smart contract. This way, every time a transaction gets executed on the blockchain, you will automatically receive your royalty!  

The most usual form of NFT royalty is the percentage that is charged every time your NFT is sold. The most common royalty is between 5% and 10%. For example, if you sold your NFT for $20,000 and you have a 5% royalty, you will receive $1000. Every time your NFT is sold, you will continue to receive royalty payments, and these passive income payments will continue to rise as the asset gains popularity.  

Tip: When you sell an NFT make sure to use a contract to ensure that the parties making the agreement will have all the proper terms and conditions laid out in advance.  

I want to download an NFT Digital Art Purchase Agreement

3. Stake NFTs to earn passive income

Staking is where you pledge your NFTs to a blockchain network, and as a reward for doing this, they will pay you cryptocurrency, which you then can trade, swap, sell or collect. Although, while you stake your NFTs, you cannot sell or move them. Staking is one of the most popular passive income ideas for NFTs. That’s because investors still retain ownership rights of their NFTs, and they can earn an income while holding their NFTs.  

Tip: Hold your NFTs for many years, staking them is a wonderful way to generate a long-term profit.  

 4. Invest in Promising New NFTs Early

Invest in promising new collections before they skyrocket in value. For this, you may have to take risks and follow your guts on the best collections you see out there. Minted at an incredibly low price, many of the best NFT’s values increased exponentially in the months after launch.  

A fitting example of this is CryptoPunks, which users could purchase in 2017 for $74. When the NFT frenzy exploded in 2021, these ‘Punks’ became incredibly valuable due to their first-mover status within the space. This culminated in these NFTs being purchased by celebrities and other high-profile names – with one Punk even selling for $2 million! 

Tip: Look for middle-tier NFT projects. The high visibility projects are usually impossible to get into, whitelists are closed and extremely overpriced. In contrast, lower-end projects tend not to take off or gain traction although they are much easier to get in.  

 

Risks:  

Every investment has its risks. Looking to earn passive income with NFTs can be quite lucrative. But there are also some risks you may have to consider before taking the first step:  

  1. NFTs are volatile in ownership: Does an individual still retain ownership of the NFT they bought? When someone purchases an NFT, a smart contract on the blockchain assigns the buyer as the owner of the said digital asset. However, if the digital asset sits on someone’s computer and it shuts down, does the buyer still have the ownership? It remains a question of what happens if the token points to nothingness. This can create ownership disputes as well since NFTs are not tangible.  
  1. They are not recognized by federal laws: Different countries have different policies regarding NFTs. In the US, the government is catching up with the latest trends where NFTs could be recognized as a commodity or a service, thus attracting prohibitions, regulations, and rules accordingly. 

 

Make everything easier with Creators Legal 

Protect yourself with industry-standard, professional-level NFT contractsThese customizable contracts will help you secure all the rights you need for worry-free production. Securing all the rights in one place makes for a clear Chain-of-Title which is essential for a distribution deal or acquisition. The NFTs Package covers all the essential contracts to get the digital asset that represents real-world objects. Like art, music, in-game items, and videos. 

I want to buy the NFTs package 

Also, explore:  

NFTs and Copyright: What to Do If Someone Steals Your Artwork 

Why Do Creators Need Contracts? 

Why Do Creators Need a Press or Media Kit? 

Recent Posts

Do you want to leave?

You are about to leave the current page. Please note that your changes will not be saved if you are not logged in. If you would like to access the draft of your contract please login in or register before leaving this page.

creators cookie

We use cookies to personalize content and ads, to provide social media features and to analyze our traffic