How to Successfully Lend and Earn Money with NFTs

Image by mohamed Hassan from Pixabay

Throughout history, we have witnessed humans’ urge to collect and store valuable assets. These assets could range from artistic pieces of jewelry to an autograph by a celebrity. Each of these assets carries a unique value and cannot always be exchanged for another asset. In a Bitcoin Trading, the authenticity of such assets can be verified. It could range from physical paper documents or any other digital system confirming authenticity.

Fast forward, a true example of an art piece is non-fungible tokens.

Understanding NFTs

(NFTs) are digital assets created using blockchain technology. Most NFTs are developed on the Ethereum blockchain enabling easier transactions.

Before indulging further into NFTs, let us understand their fundamental meaning. NFTs are those assets that cannot be exchanged or distributed to another token. For example, you can buy Ethereum using Bitcoin, or any crypto token. This is not possible for NFTs. these assets are unique and assign an individual value to each asset.

NFTs could be gaming avatars, artistic works including painting, sculpture, gaming cards, etc.

Each of these tokens is assigned a unique value based on certain critical factors. It includes edition number, design, availability, and other factors. Each NFT is unique and the price of these tokens depends on its unique features.

Other than the above, there are a few other features that make NFTs unique. It includes the ability to transfer, is easily verifiable using cryptography, and is unique.

How do you create non-fungible tokens in the blockchain platform?

If you are an artist or a digital creator then you can easily create your token. It is a similar process to that of data mining in cryptos. Through minting, the token owner creates and outlines the details and specifications of the token. Such tokens are then published in the blockchain network. The smart contract feature on the network allows for creating and mint tokens. Once the token is created, you can go ahead and list the same in crypto exchanges.

The benefit of NFTs is that the token owner earns a percentage of profit every time the token is purchased.

Can you earn money with NFTs?

There are two ways that you can earn money through NFTs. the first option is the classic or traditional approach. You can create your own NFT, mint the token, and sell it on exchanges. You earn a reasonable profit every time someone makes a purchase. However, the process of creating your own NFT is not easy. There is a lot of complexity involved that makes this process difficult. While buying and holding NFTs is easier, the process of minting is not easy as it sounds.

The second option to earn money through NFT is by lending. Yes, if you are an NFT holder you can easily earn some passive income through NFT lending.

Let’s understand how NFT lending works. If you are interested in NFT lending then your tokens can be held as collateral. As against a traditional loan system, the network makes use of a smart contract to execute it. The lender and recipient agree on a certain set of terms and conditions. These conditions are monitored through the use of smart contracts. Now, if the recipient fails to honor these terms, the NFT is going to be written down. The lender on the other hand will earn quite a few tokens if the recipient fails. This way, you can earn additional income on your existing tokens. This is quite an advantageous way for lenders to earn money. There is no dispute or other legal formalities involved. As a lender, you use the available token as collateral. The smart contract capability in the network works for you to ensure that you receive your share of passive income.

But, like any other crypto investment, you need to understand how NFT lending works. Do not lend your tokens under the rosy picture of what’s available on the web. Make time to learn this process before making any lending on your tokens. You also need to ensure that you do not lose your tokens in this game. Hence, the need to study this investment model is important.

You can also learn more about cryptos using Bitcoin smart.