Non-Fungible Tokens: The Insane Record Sale Prices of NFT's
The only question worth asking about non-fungible tokens: Can you make money with NFT's, and if so, how?
Non-fungible tokens represents something unique and they are non-fungible, which means they are not mutually interchangeable. If you have a dollar, and I have a bitcoin it doen't matter if we switch the coins, they are interchangeable. This is not the case with NFT's.
Question: Can you make money with NFTs?
Answer: Yes, it is possible to make money with NFTs. Proof:
- Digital art sales, like this animated cat sold for $600,000
- "Buy" highlights in sports games, "own" the video clip or footage like this $208,000 LeBron James dunk.
- NFTs in games, like this $800,000 sale in the fantasy game Mirandus
Wait, but why?
Why do People Buy "Nonfungible Tokens"?
Short answer: Because they want to buy NFTs.
But why do people buy an NFT? Ask the buyers. Remember, buyers are not a collective group, they are individuals, real human beings, or companies perhaps, but in the end they are people, and people have reasons. Some reasons are valid reasons to buy, some reasons are stupid investment decisions. Why do people buy? Why do people buy art to hang on their wall? Why do people buy concert tickets? Why do people buy baseball cards? They buy for different reasons, millions of reasons. There are millions reasons to buy. Doens't mean these are smart investments. But they could be, if you think the NFT is worth owning, or if you can sell it at a higer price.
If you know someone is willing to pay $1mm for an NFT, and they are determined to own this thing, and it's currently selling at $100,000. Would you buy it? If you were certain that it would sell at $1mm, if you knew there was a buyer for this NFT, it would be stupid not to buy. But you never know.
The Market Determines The Price
It does not matter if there are just one buyer or a million buyers. Well, it does matter, but it's not the point. For the seller, the thing that matters is the price someone is willing to pay. If there are a million people willing to pay $1mm, or just one buyer willing to buy at $1mm, does not really matter. But if there are a million buyers, people will outbid each other, and the price might increase. For the seller, the one thing that matters is: What is the sales price? To find the actual sales price, you will have to ask the market. The market knows, and the market will give you the answer.
NFTs are Crypto Tokens
As you probably know, a blockchain account is not just for making payments, there are other use cases. One example is smart contracts, another is decentralized applications. Cash is usually not another name for contracts, just as coins is not another name for smart contracts. It makes sense to call these things something else. Something like, I don't know. Crypto tokens.
While cryptocurrencies are made by their own blockchain, cryptotokens are issued within a smart contract on top of a blockchain. For example, it could be on top of Ethereum.
NFT Marketplaces
If you want to make money with NFTs you will have to sell NFTs. You will make money only if to sell your NFT above your buy price. You will lose money if you sell at a price below your buy price. This is not rocket science. If you are the creator of the underlying asset of the NFT, you can make an NFT and sell, sell, sell.
But where do you buy or sell these things? You buy or sell NFTs at NFT marketplaces. See, this is not rocket science.
Some popular NFT marketplaces to mention:
