Since the NFTs wave of 2021, everyone can’t stop talking about them. The concept seems pretty straightforward – get a wallet, understand gas fees, mint, and start making money off NFTs by selling at a higher price. Or is it?
The truth is, making money with NFTs requires tons of research to understand the concept and find profitable NFT projects. Even after understanding the nitty-gritty of digital arts, there are still possibilities of you losing funds to crypto fraudsters.
So, if you’re looking for how to make money with NFTs as a beginner, care must be taken and certain things must be put in place. I’ve listed out 20 dos and don’ts of making money with NFTs to guide you as you venture into the space.
10 things to do while making money off NFTs
1. Conduct extensive research before buying an NFT
Note that you can’t invest in every digital asset you find. But when you find an NFT that catches your interest, you should carry out proper research on them. This increases your chances of buying a digital asset with great profit potential.
It’s not just the profitability of the digital art that you should analyze before buying it, you should also look at the following:
You have to consider the marketplace where the creator lists the assets. Opensea is the most popular and runs on the Ethereum blockchain.
However, most Ethereum-based NFTs are quite expensive. So if you have a limited budget, you might want to consider other options including Solana, Polygon (be wary of scammers though), or even Ethereum layer 2 projects like Arbitrum.
You should also run a background check on the creator(s) including popularity, previous accomplishments, projects, etc. The more famous an NFT creator is, the more likely his digital asset would yield interest.
Most profitable NFTs have strong communities behind them. So, before buying any digital asset, check out how much buzz it’s generating on Twitter and Discord. If there’s little activity, then it’s probably not going to be so profitable, unless they’re just starting out. You can just hang out in these places for a while and see how the project grows.
2. Buy at the floor price
If you wish to make money on NFT, it’s always advisable to buy it at the floor price. Simply because the floor prices are usually at their lowest when the project first launches.
So when you buy at the floor price and the NFT steadily rises, then you could make a good profit from it on the secondary market. However, understand that prices can also tank after the initial launch.
3. Invest in an NFT you find attractive
Another thing you should do to make money with NFTs is to go for a project you’re personally attracted to. This keeps you motivated to see the project come to life and push you to actively support the growth.
Plus, you won’t see it as a waste of your time in the unlikely event that the project doesn’t succeed. You can sit back and just look at your beautiful piece of digital art if the prices tank without feeling like you made a bad investment.
4. Be willing to hold your NFT for long
As an NFT investor, you should be familiar with the term HODL (hold on for dear life). You aren’t an NFT investor if you don’t have a collection of valuable NFTs in your portfolio. You should be able to hold your acquired NFT for a very long time without being tempted to sell off.
One way to master this habit is to set a target. Since your tokenized asset is likely to appreciate in value, you can choose to hold on to it till it rises to a particular price. This helps reduce the temptation of selling when there’s a slight increase in the market. But you should also be wary about HODLing for too long so the market doesn’t crash on you.
5. Sell your NFT to make a profit
Besides the aesthetic value of tokenized assets, our main goal is selling them to make profits. So once you’ve held your non-fungible token asset for a while and the price has increased a bit, you can list it for sale in the secondary market.
As a rule of thumb, the best time to sell your asset is when it hits mainstream media or when Youtube and Twitter influencers start feasting on the NFT project.
Just ensure to calculate gas fees and other charges to know how much profit you got from the sale. Besides the regular blockchain gas fees, exchanges like pancakeswap and poocoin have a swap fee. All these fees may eat into your profit thereby reducing your overall gains.
6. Flip (Re-invest your profit).
Flipping is when you re-invest your profit into other upcoming NFT projects. A good cryptopreneur knows that the best way to improve their portfolio is putting back their profits into the ecosystem.
You can either wait for the NFT collectible price to depreciate before buying or go for a completely different project. Just make sure to check the floor prices and DD before re-investing so you don’t blow your profits on a shit project.
7. Be security conscious with your wallet
Since your wallet does most of the heavy lifting when trading NFTs, always ensure to keep it secure at all times. Firstly, ensure you store your secret keyphrase somewhere safe – preferably offline or in a hard wallet.
Secondly, do not disclose this keyphrase to anyone and try not to misplace or forget it. You can’t recover it once lost, meaning that wallet – and everything in it – is gone. FOREVER!
Furthermore, avoid clicking on unverified links and unconfirmed airdrops sent to your mail. Most of them just want to harvest your info and clean your wallet. While Metamask is the go-to wallet, you can add a hard wallet like Ledger Nano for added security.
8. Be active in the NFT community
Engaging fully in the NFT community will help you decide if the project is right for you. You’d get first-hand information about the collection, roadmap, and what others think about it just by interacting with other members.
Plus, active participation in NFT groups, especially on Discord, can help you secure whitelist spots (reduced gas fees, lower floor price, and lots of other benefits)
9. Create NFTs with value.
If your interest lies in how to make NFTs than buying from others, ask yourself; does my NFT have value? What am I offering my potential investors besides jpegs? Note that people don’t buy tokenized assets because they’re breathtaking.
Well, some do, but that’s not the point.
People are buying because they want something bigger. For instance, you could be offering exclusive access to an event or something bigger.
Plus, ensure that you can sustain whatever you’re offering in the long term otherwise, people will just buy your project, make money, and dump.
10. Promote your NFTs.
People won’t buy your NFT if you just mint it on Opensea and leave it there. It’s like hiding under a rock and waiting for someone to find you. So, you have to get out there and get some eyeballs on your NFT collection.
You can advertise your NFTs on Twitter, Instagram, and other popular social networks. Run competitions, whitelist giveaways, and more to get people talking about your project. You can also partner with influencers or other successful projects.
10 things to avoid when making money with NFTs
1. Avoid buying and NFT at its peak price
If you want to profit from NFTs by buying and reselling, then don’t buy at their peak price. The best time to buy NFT is during its launch. That way, you know you’re getting it at the floor price before it hits the secondary market.
2. Don’t buy an NFT out of FOMO
FOMO is a popular acronym on the internet that means the fear of missing out. In NFTs, it simply implies that you’re buying into a project because everyone is talking about it or buying it.
Be very conscious when an NFT is being hyped because it might be at its “pump and dump” season.
3. Don’t spend your profit on unprofitable things.
After profiting from your previous ventures, try not to spend it on projects that won’t increase in value. If you want to be financially independent, then you should learn to re-invest in profitable ventures. You can either stake your coins or research a new project with huge profit potential to buy.
4. Don’t buy a collection you don’t support.
The best way to make money on NFTs is to stay away from projects you don’t root for. If you don’t actively support the project, you wouldn’t put in your best to see it grow. You might even miss the chance to sell off at its peak price.
5. Don’t undersell.
This is pretty obvious since you’re in the space to make profitable investment choices. You can’t possibly make a profit from your NFT when you sell below the price you bought it. So, try to HODL your NFT for a while until the floor price increase or you find a higher bid.
Before selling, take note of all the expenses made on the NFT including transaction and gas fees. This would help you keep track of what you’ve spent so far.
6. Avoid greed.
Greed comes with tons of bad investment decisions. For one, it can push you to ape into an NFT with a too-good-to-be-true value. Greed also holds you back from selling off at the right time.
For instance, you spend a total of $150 to purchase an NFT and it rises to $500. You’ve already made substantial profits at this point but you might get tempted to hold on for much longer.
Yes, there’s a chance that the price will still increase. But most projects don’t. So it’s important to have an exit strategy and avoid being greedy.
7. Don’t sell your NFT too quickly.
Sometimes, people might offer tempting deals on your NFTs. While it’s good to sell it off, you might want to hold on for a little longer, especially if the project has a higher potential of increasing in value.
The best way to hold on is to set a target price that you’d like to sell the NFT. Just make sure that you’re confident in the project’s roadmap and potential for growth in the long term.
8. Don’t expose your password or passphrase
Your passphrase and password are the securities to your wallet and anyone with access could break in. Always keep them safe, preferably on a hard wallet or on a sheet of paper perfectly kept in a secure place offline.
9. Don’t generate NFTs with the sole aim of making a quick profit.
If you wish to retain your relevance as an NFT creator in the digital world, then don’t do it for quick cash. Create an NFT with utility and in the long run, the value will go sky-high.
10. Don’t believe everything on the internet
As much as useful information exists on social media, so does misleading content. So before diving headfirst into NFTs, ensure you’re doing tons of research.
Most people who share info about non-fungible tokens online may want to prey on your limited knowledge of the space.
Make sure you’re following the right influencers, the official project handles, and staying away from suspicious emails and offers. Remember, if it’s too good to be true, then it probably is.
Investing in NFTs is a very tricky venture that needs a lot of research before delving into. It’s best to only invest in non-fungible tokens with huge potential. The best way to make money with NFTs is to be active in the community.