Ways to Profit From NFTs
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NFTs are a little weird. You can debate round in circles about the scarcity and parallels with more established and well-understood forms of collecting (fine art, comics, trading cards and so on). You can explain why right-click-saving an image is not the same as actually owning the associated token, and it brings up art fraud and provenance. And, you might explain that anyway, NFTs as we currently know them, collections of 10,000 ape images, for example, are only an early phase iteration of genuinely transformative technology.
Nonetheless, when people look at that collection of apes, in which each piece now costs hundreds of thousands of dollars, it is reasonable for them to be initially baffled. They might also wonder how to go about profiting from a clearly booming market, and there are several ways that anyone can do this, with a little application.
Flip NFTs
This is for those who are uninterested in the art, the community or reflections on how web3 will transform society and feed starving creative wastrels who have nothing to eat but dried paint.
Flipping NFTs means you buy cheap, in bulk if possible, and sell at a profit without hesitation, and with neither emotional attachment to the assets you are handling, nor consideration of their long-term prospects (which will, more often than not, be slim).
This is the most intensive and demanding way to profit from NFTs. You need to be on top of what is dropping, who is involved and how much demand there is likely to be. This means, basically, monitoring everything all the time, which requires hanging around in as many Discord channels and Twitter feeds as you can manage and getting on whitelists where you can.
You do not actually have to be very discerning about the projects themselves, but rather, you have to get a feel for what other people will fear missing out on, along with an intuition for the rolling hype cycles and intense greed that fire up the NFT markets.
Invest in NFTs
Whereas when you’re flipping NFTs your only concern is whether or not supply will, even if only for a very short time, outstrip demand, and how intensely, investing in NFTs is closer to traditional art investment.
This way, you are in it for (by NFT standards) the long-term, and so it is best if you’re more appreciative of the work itself, or at least of what causes some creative works to appreciate in value and desirability over time, or due to their place in history.
This is a less degenerate, more zoomed-out approach, but does not bring the roller coaster thrills associated with uncouth flipping. It also requires that you can invest with no need for short-term, quick returns, and since it tends to be bluer chip projects that will work over longer time spans, invested amounts could be relatively (or actually) high.
Join DAOs and Index Funds
Decentralized Autonomous Organizations are still a nebulous concept, and the best way to get a handle on emerging new entities is to jump in, explore, and become involved. There are many flavours of DAO, but of interest here are those oriented towards NFT acquisition.
Some comparatively well-known examples are Jenny DAO and PleasrDAO, or if you prefer something more akin to an index fund, there’s Index Coop’s Metaverse Index.
Through these methods, you can gain exposure to NFTs and metaverse projects, without having to be so personally active in keeping track of every development. At the same time, though, if you do want direct involvement, then part of the essence of a DAO is that it hard codes community steering and democratic governance.
Invest in the Infrastructure
You might look at some incomprehensible NFT artwork, soak up the collective insanity that appears to fuel the entire NFT industry, let an NFT in-joke fly over your head, and then decide that while you would like to make some money from all this, you want as little as possible to do with the actual NFTs themselves.
In which case, invest not in fickle, fly-by-night JPEGs, but instead, in the logically engineered infrastructure upon which the upper frenzy plays out.
Primarily, there are the blockchains themselves. If you’re looking at NFTs and where they might be heading, the obvious investment may be ETH, but, with Cardano and Solana both making moves in the NFT world, ADA and SOL would also have to be on your radar.
Additionally, you might want to pick up some IMX (the Immutable X token), and it would be remiss not to pay attention to LOOKS, the native token powering the new LooksRare marketplace, which is aiming to disrupt the dominance currently enjoyed by OpenSea.
Intersecting Approaches
For those looking to profit, how to approach NFTs depends on individual circumstances and to what extent the assets themselves hold direct appeal. Someone coming from the art world might have a better intuition of what makes for a desirable collection, while buying into the infrastructure may be of more interest to experienced tech investors. Ideally, an approach that takes in all angles could be advantageous.
A particularly striking aspect of NFTs is that they exist at a point where many different sectors and personality types intersect. This brings unpredictability, a riotous pace of change, and some often extreme turbulence but also the opportunity to effectively apply a wide range of trading and investment techniques.
NFTs are a little weird. You can debate round in circles about the scarcity and parallels with more established and well-understood forms of collecting (fine art, comics, trading cards and so on). You can explain why right-click-saving an image is not the same as actually owning the associated token, and it brings up art fraud and provenance. And, you might explain that anyway, NFTs as we currently know them, collections of 10,000 ape images, for example, are only an early phase iteration of genuinely transformative technology.
Nonetheless, when people look at that collection of apes, in which each piece now costs hundreds of thousands of dollars, it is reasonable for them to be initially baffled. They might also wonder how to go about profiting from a clearly booming market, and there are several ways that anyone can do this, with a little application.
Flip NFTs
This is for those who are uninterested in the art, the community or reflections on how web3 will transform society and feed starving creative wastrels who have nothing to eat but dried paint.
Flipping NFTs means you buy cheap, in bulk if possible, and sell at a profit without hesitation, and with neither emotional attachment to the assets you are handling, nor consideration of their long-term prospects (which will, more often than not, be slim).
This is the most intensive and demanding way to profit from NFTs. You need to be on top of what is dropping, who is involved and how much demand there is likely to be. This means, basically, monitoring everything all the time, which requires hanging around in as many Discord channels and Twitter feeds as you can manage and getting on whitelists where you can.
You do not actually have to be very discerning about the projects themselves, but rather, you have to get a feel for what other people will fear missing out on, along with an intuition for the rolling hype cycles and intense greed that fire up the NFT markets.
Invest in NFTs
Whereas when you’re flipping NFTs your only concern is whether or not supply will, even if only for a very short time, outstrip demand, and how intensely, investing in NFTs is closer to traditional art investment.
This way, you are in it for (by NFT standards) the long-term, and so it is best if you’re more appreciative of the work itself, or at least of what causes some creative works to appreciate in value and desirability over time, or due to their place in history.
This is a less degenerate, more zoomed-out approach, but does not bring the roller coaster thrills associated with uncouth flipping. It also requires that you can invest with no need for short-term, quick returns, and since it tends to be bluer chip projects that will work over longer time spans, invested amounts could be relatively (or actually) high.
Join DAOs and Index Funds
Decentralized Autonomous Organizations are still a nebulous concept, and the best way to get a handle on emerging new entities is to jump in, explore, and become involved. There are many flavours of DAO, but of interest here are those oriented towards NFT acquisition.
Some comparatively well-known examples are Jenny DAO and PleasrDAO, or if you prefer something more akin to an index fund, there’s Index Coop’s Metaverse Index.
Through these methods, you can gain exposure to NFTs and metaverse projects, without having to be so personally active in keeping track of every development. At the same time, though, if you do want direct involvement, then part of the essence of a DAO is that it hard codes community steering and democratic governance.
Invest in the Infrastructure
You might look at some incomprehensible NFT artwork, soak up the collective insanity that appears to fuel the entire NFT industry, let an NFT in-joke fly over your head, and then decide that while you would like to make some money from all this, you want as little as possible to do with the actual NFTs themselves.
In which case, invest not in fickle, fly-by-night JPEGs, but instead, in the logically engineered infrastructure upon which the upper frenzy plays out.
Primarily, there are the blockchains themselves. If you’re looking at NFTs and where they might be heading, the obvious investment may be ETH, but, with Cardano and Solana both making moves in the NFT world, ADA and SOL would also have to be on your radar.
Additionally, you might want to pick up some IMX (the Immutable X token), and it would be remiss not to pay attention to LOOKS, the native token powering the new LooksRare marketplace, which is aiming to disrupt the dominance currently enjoyed by OpenSea.
Intersecting Approaches
For those looking to profit, how to approach NFTs depends on individual circumstances and to what extent the assets themselves hold direct appeal. Someone coming from the art world might have a better intuition of what makes for a desirable collection, while buying into the infrastructure may be of more interest to experienced tech investors. Ideally, an approach that takes in all angles could be advantageous.
A particularly striking aspect of NFTs is that they exist at a point where many different sectors and personality types intersect. This brings unpredictability, a riotous pace of change, and some often extreme turbulence but also the opportunity to effectively apply a wide range of trading and investment techniques.
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