Is it possible to earn a passive income from NFT?
Blockchain technology has been the backbone of one of the hottest topics this year. Bitcoin is supported by and works on blockchain technology. Another outcome of Blockchain technology is NFTs.
What is an NFT?
Non-fungible tokens or better known as NFTs, are virtual assets that can be bought or sold. The non-fungible tag means that it cannot be traded like any other object. Some NFTs are sold for as high as $ 60 million. Not all of them can be sold for that much.
The highest NFT sold till now is by Beeple. This digital artist earned a whopping $ 69.3 million on this particular NFT.
The form of NFTs can differ by a great deal. You can have images or pictures and, most commonly, game items. These items are one of their kind and can be displayed on game characters to make them special or stand out. Many people consider this as an unnecessary trade system, but others have a different opinion.
NFTs can be bought or sold with cryptocurrencies. Ethereum is commonly used for trading.
Now, to the main question- Can you make a passive income from NFTs? Yes, you can earn from NFTs even when you are sleeping. You can earn when you are eating or when you are taking a vacation.
How can you earn passive income from NFT without any active participation?
1. Staking –
It is a form of investing where instead of money; you are investing your NFT holdings. You are locking away your virtual assets in a platform. And over time, you will be receiving a return based on the value of the NFT that you have staked. A rarer NFL will obviously fetch you more passive income from NFT than a more common one.
As you must be aware, the technology of blockchain is a transparent one. It is visible for everyone to see. But, for that, it needs to have certain individuals validate every transaction that takes place. Only after these people ascertain the validity of a transaction it is added to the blockchain ledger and made official.
These validators are determined by their contribution to the blockchain network in the form of NFTs. In return, they regularly receive payment in the form of cryptocurrency.
Another way you can stake your NFT assets is by investing them in different projects. It is similar to how you would invest in a real-life project with the hope of high returns. For NFTs, the investment projects are usually online games. Not just any games, these are the play-to-earn games such as Sandbox.
2. Royalty –
Just like with any other form of art, NFTs can also produce royalty fees for the creator. In some ways, this way of passive earning is similar to offline royalty earnings.
A musician earns every time someone listens to their music or buys their albums. Just like that, a creator can earn every time their created NFT changes hands. During the minting process of passive income from NFT, the creator sets a percentage such as 5 % on the NFT. So every time that particular NFT is sold to another person, the creator gets 5 % of that money.
The best part about this method is that it is fully automated. You do not need to do anything or enforce it. The whole system has been created in such a way that the NFT creator will receive that percentage of the sale money. It cannot be interfered with.
3. Rent –
NFTs are just like any other asset that you can own but virtual. This is proved by the fact that you can rent it out like a product or property. The owner and the one who wants to rent the NFT need to abide by a contract that determines the duration of the renting period.
Renting is mostly used for gaming items. Avid gamers rent items that can improve their gaming. For example, in card trading games, the player can rent high ranking cards that will greatly improve their chances of winning. This is also a good way to earn passive income from NFT.
It is important to note that if you are looking to invest in a particular project. Then you must look up the project requirements before buying NFTs for that. Some projects have specific criteria for accepting NFT contributions.
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