Have you ever imagined yourself retiring early without thinking of how you could live by every day without working? Imagine just sitting on the beach, sipping your favorite long island iced tea, while the fresh ocean breeze caresses your face and the sound of the waves serenading you to tranquility.
Sounds good? Well, you are not far from achieving it. There are actually young millionaires who are living the best of their lives blissfully somewhere out there, doing things of their own volition. You can too. Having a good source of passive income takes you a step closer to that dream.
Although you have several passive income source choices, the newest and the most-talked new way to retire is through NFT investments. Have you heard of them yet? If you haven’t, here’s a teeny-weeny overview of what a non-fungible token is!
Non-Fungible Tokens Wrap-Up
NFTs, or non-fungible tokens are unique, non-replaceable tokens that cannot be duplicated. There’s a common misconception surrounding these special tokens— it’s often perceived as a piece of art. But technically, it is not.
Digital arts are simply paired with token id on a third-party website, like OpenSea, that claims token representation or ownership of the art. However, there’s no real image or art data behind the actual blockchain.
The token id is just used for the formality of NFT ownership, and the real file is uploaded to a certain server where owners can make changes of their own preference. These non-fungible tokens are not limited to just digital arts. House deeds, car titles, and even domain names can be NFT-nized.
Passive Income with Non-Fungible Tokens
For a starter, let’s take monetized YouTube channels as a model. Monetized YouTube channels play adverts before each video then advertisers pay Google for playing the ads, Google gets their cut then pays the rest to the YouTubers.
Let’s say own a YouTube channel, and you created an NFT from one of your videos. Now that you made a non-fungible token, you can sell them to the public. In return, you promised that those who will buy and own them will receive a cut from the ad revenue of the NFT-nized video.
For instance, you promised to give 20% ad revenue to anyone who purchases the video NFT. When the video earns $100 for 20,000 views in a month, anyone who held the NFT will be given $20 for that month. The same process goes for the following months. The income possibility will be unlimited since views can get up every single month and ownership will remain forever.
The example mentioned is the core idea of non-fungible tokens— a digital representation of a virtual or physical asset that adds value over time and earns in some ways. NFTs allow owners to benefit from investments short-term and investors long-term.
Non-fungible tokens are definitely here to stay. So, if you don’t want to get let behind and overwork yourself for the rest of your life, here are the NFTs you could earn passive income from:
Music NFTs
Recently, an American electronic dance music producer and DJ David Blau, better known as 3LAU, set up an NFT drop of 333 tokens, representing 50% ownership in the streaming royalty rights of the song called Worst Case. This means that 50% of his profit from all streaming platform that plays that song will be given to the NFT holders. Each and every token tied to 3LAU’s NFT is unique.
There are currently 257 items in OpenSea, which has a floor price of 2 ETH. Calculating the items to the floor price value (1ETH=$4000), we would see that Blau makes about $2,0560,000 for half of his streaming royalties. However, he wouldn’t earn much from merely selling streaming royalty rights though.
What these artists can do is require a transaction fee for every non-fungible token that gets traded. To put it simply, NTF holders will obtain passive income from the streaming royalty, and the artist will passive income for the transaction fees in addition to the other 50% royalty fee.
Non-fungible token technology will definitely revolutionize the way artists are promoted. This is the future of music.
Real Estate NFTs
The non-fungible tokens can also come in form of adaptation to real estate. For instance, a condominium building can be turned into 100,000 NFTs. Rather than needing millions to be one of the owners of the condo complex, you can join with only a small amount of money through the technology this NFT brings. There’s no guarantee of the implementation of this idea, but we could not ignore the possibility.
However, despite the endless opportunity of earning and technological advancement that NFTs can offer, some problems still need to be addressed.
Modern Art, Modern Problems
Success stories of NFT investors may get your blood boiling, and you may be enticed to ride the wave of trends in the space. At first glance, there don’t seem to be any drawbacks of purchasing non-fungible tokens, but quite a few problems actually exist with this tokenization technology.
The high gas fee is among the problems both sellers and buyers face in trading and minting NFTs. Whenever gas fees are high, sellers earn less since NFT prices can be reduced to accommodate gas prices. Hence, the perceived value of the non-fungible token diminishes. In addition, since gas prices vary from the actual variation of the digital assets, the cost may be higher than the actual cost of the asset sellers are trying to put into a sale.
Buyers also experience issues concerning gas price since nearly all undertakings incur gas fees, from placing to canceling an order, gas fees are required. Such high fees hinder passive income NFTs from rolling as the next big financial opportunity.
Another problem that should be neglected is it can enable money laundering. Since there’s really no rule in the NTF space that prohibits users from creating two different accounts, those who badly want to make hefty profits from the marketplace can auction-off low quality art and buy from themselves to funnel ill-gotten gains into pretendedly legitimate transactions. Because NFT marketplaces are freely accessible, differentiating legal and illegal transactions can be a tough job.
NFTs surely pose a bright future, but if you want to get into it, make sure you’re not buying into the hype.
