How to Generate Infinite Passive Income From Selling NFTs
The virtual world vs. the real one.
Which one would you bet on?
Surprisingly enough, there are strong arguments for each.
My entire livelihood is made through the virtual world — so is that of video game designers, YouTubers, web developers, social media marketers, influencers, and even pornstars.
Our world is trending towards Ernest Cline’s Ready Player One. And to quote his acclaimed novel, “Going outside is highly overrated.”
This leads us to NFTs, or non-fungible tokens, which are the next step in revolutionizing culture. Yes, it’s that big and it’s only just getting started.
Even with little-to-no cryptocurrency experience, you can easily sell anything as an NFT. This includes art, music, collectibles, and even writing — as Tim Denning pointed out in a recent article —which can all be tokenized and sold for passive income.
So let’s explain in simple steps how to break into the NFT space.
First, understanding what an NFT is
Non-fungible tokens are unique digital assets that represent a wide arrangement of tangible and intangible items. This could be everything from digital collectible sports cards to virtual real estate and even digital artwork.
“Non-fungible” means the asset cannot be readily interchanged for another of its kind. It’s unique. One of a kind. And that’s what makes them crazy valuable.
Ok, but I still don’t get it
What makes an NFT special if it’s entirely virtual? After all, I can copy and paste NFT artwork like Nyan Cat or the first tweet all over the internet in less than 5 minutes.
To answer this question we need to get meta. What makes any original artwork special?
What makes an Eric Clapton guitar priceless or an original Banksy invaluable (even after it's shredded)? Nothing. Nothing, except the history behind them. The history that they, in fact, were the first of their kind and can never be replicated.
Without any context, Eric Clapton’s guitar is just another guitar. I can easily buy a better, less expensive one at the music shop down the street. Even Banksy realized the hypocrisy of originals and burned one of his originals turning it into an NFT instead.
Why every artist should be obsessed with NFTs
NFTs are entangled with cryptocurrency, namely Ethereum, the second-largest token behind Bitcoin. With Ethereum you can create entirely unique assets that cannot be replicated. This is done through the blockchain.
The upshot is each block is locked by a cryptographic hash and each NFT is minted on the blockchain by an ERC-721 token standard.
As per Ethereum’s official website —
If you own an NFT:
- You can easily prove you own it.
- No one can manipulate it in any way.
- You can sell it, and in some cases, this will earn the original creator resale royalties.
- Or, you can hold it forever, resting comfortably knowing your asset is secured by your wallet on Ethereum.
If you create an NFT:
- You can easily prove you’re the creator.
- You determine the scarcity.
- You can earn royalties every time it’s sold.
- You can sell it on any NFT market or peer-to-peer. You’re not locked into any platform and you don’t need anyone to intermediate.
A lifetime of passive income
NFTs are like owning the rights to a piece of music. It doesn’t matter if your image was used thousands of times on the internet, none of them have the OG copy that you own.
Moreover, you earn lifetime royalty fees on any NFTs you sell. That means every time your work is resold you earn a percentage of the sale. This is a mic drop moment.
Even cooler is that your NFT can be tracked in real-time. This is why physical assets like real estate, cars, and physical collectibles are also expected to become NFTs. You’ll always know how much something is worth.
How to get started: Creating a wallet
There are many exchanges to sell NFTs on today, but one of the easiest is Rarible, a decentralized exchange with minimal fees.
First, you need to create a digital wallet that holds Ethereum tokens. NFTs work through Ethereum’s blockchain, so you need to use their currency (Ether) to access this space.
Second, use Coinbase or Binance or Coinbase Pro (smallest fees) to purchase Ethereum. Then download a digital wallet like Rainbow or Metamask which easily allows you to transact Eth. I’d recommend depositing at least $100 to start off due to high transaction fees on the Ethereum network.
Third, just a quick reminder that as Ethereum continues to upgrade transactions cost will go down.
And fourth, you’re going to want to head to Rarible and connect your wallet. If you’re using Metamask it’ll connect your wallet in a matter of seconds. For Rainbow users, a QR code will pop up and you’ll have to scan it with your camera. Nice and easy.
Formatting images as NFTs
If you’re uploading music you can do it straight through Rarible.
Artwork is a different beast.
Fully edited, effect-heavy artwork stands out most on NFT marketplaces. Artists seem to have extensive experience editing in Adobe Photoshop or other online photo editors.
Think Ready Player One once again. The protagonist Parzival had snow-white K-pop hair, drove a Delorean and wielded a lightsaber. It wasn’t very subtle.
NFT artwork is one-note right now — leaning heavy into the post-modern — but I do believe that will change. As the market matures more subtle modern art is sure to pave a lane.
Meanwhile, once you upload a high-quality JPG or PNG of your image into Rarible you can go through the steps to price and sell your artwork.
NFTs for writers
The best platform for writers as it stands is Mirror.xyz.
Their mission: “Through a decentralized, user-owned, crypto-based network, Mirror’s publishing platform revolutionizes the way we express, share, and monetize our thoughts.”
Mirror.xyz is built on the Ethereum network. As I understand it, 10 writers are voted into the community each week based on a highly competitive poll. When you’re voted in you’re given a $WRITE token and gain the ability to publish on the platform.
Some writers have made upwards of $30,000 for their work.
I plan on getting coffee with one of the $WRITE winners soon so I’ll report back anything else I find out.
NFTs do something that no other innovation has done in the past. For the first time, the artist has full ownership over their work. It’s miraculous.
Jack Dorsey already voiced his interest in decentralizing Twitter. I wonder what platforms will follow suit? All we know for sure is that there will be fewer starving artists in the world if this giant NFT experiment pans out.