nft guides

As an evolution of cryptocurrencies, NFTs enable digital representations of physical assets, advancing the reinvention of financial infrastructure.

Non-fungible tokens are becoming more widely accepted, yet many prospective investors remain uncertain of their long-term prospects. The biggest obstacle to NFT adoption is usability, not technology.

NFTs with Utility

The field of NFTs is presently in its early phases of uncovering any value-based real-world applications for NFTs.

Investing in the best utility NFTs might be an excellent way to get started as a collector. Usually, utility NFTs tend to keep their value significantly better than art or hype-based collections, making them a less risky investment.

Utility NFTs provide token holders exclusive access to real-world use cases. These digital assets are a class of NFT that go above and beyond the typical smart-contract tokens. They provide advantages like redeemable incentives, memberships, event access, and passive income prospects.

While ordinary NFTs have market worth, such as art, utility NFTs provide instant and direct value to their buyer upon purchase through rapid access to specific rights.

The discussion on the future of NFTs focuses on the evolution of utility in non-fungible tokens. However, it is vital to highlight that advocating for usefulness is not explicit. Indeed, many popular cultures and businesses have already embraced the utility aspect of NFTs.

An intriguing aspect of utility NFTs is that many projects developed utility long after launch.

One of the best examples of an NFT collection launched without specific utility is the Bored Ape Yacht Club collection. However, BAYC NFTs have fulfilled several use cases with time, including rewards for minting new NFTs or offering exclusive event passes.

The defining component of utility NFTs is that the usage of non-fungible tokens extends beyond the realm of visual art. NFTs are still in their infancy, but the possibilities of adding utility to them in different aspects are increasingly apparent.

NFT with Passive Income

Using cryptocurrencies to earn passive income has been a massive hit in the crypto world. Earning passive income is an excellent strategy to maximize the value of your existing assets.

Let’s take a look at five passive income strategies that these holders use to earn money from their assets:

  1. Staking NFTs: Staking is essentially locking or depositing your NFTs to earn passive revenue. The yield created by staking is commonly in the form of tokens. More often than not, you can reinvest these coins into other yield-generating protocols.
  2. Renting NFTs: Renting out your NFTs, particularly ones in great demand, is one method to generate passive revenue. reNFT is a prominent example of a platform that allows users to rent or lend NFTs. While NFT owners can select the loan rate and term, many platforms put an upper limit on both.
  3. Royalties from NFTs: NFT creators can receive royalties even after their artwork gets sold. Whenever the creator’s NFT gets traded in the secondary market, they earn passive income through royalty fees. The smart contracts that include pre-filled royalty data from NFT creators automatically send the passive revenue from NFTs to the creators.
  4. Liquidity Pool: Multiple platforms reward users that offer liquidity with NFTs in return. The owner can sell this NFT reward to exit the liquidity pool. A liquidity pool is a collection of digital assets bound in a smart contract and committed by several investors. The platform can leverage the locked pool of assets to issue loans.
  5. Yield Farming: By leveraging yields from one platform and investing them in another through methods like stakes, yield farming with NFTs allows investors to earn returns on top of their previous returns. NFT farming can benefit both project creators and end users equally since it benefits both parties.

NFTs with Music

From records to cassette tapes to CDs and mp3s, the way we listen to music has always been in constant flux. And today, with the near-ubiquitous popularity of music streaming services and some royalty schemes that unfairly favor record companies over musicians, NFTs are poised to shake up the music industry.

On the surface, music NFTs appear to be the blockchain equivalent of buying music from iTunes. But when you buy a song on iTunes, you only get the right to listen to that song.

iTunes does not provide asset ownership but only a license to listen. Music NFTs, on the other hand, allow anybody to listen to music while still conferring ownership over that file via an NFT.

The storage of NFTs on a blockchain assures that only the buyers receive the rights to music, films, album artwork, or other exclusive content. And the artists can also engage directly with their fans and generate cash without intermediaries.

NFTs with Royalties

The underlying technology that powers NFTs enables creators to impose royalty fees anytime their NFTs change hands on the secondary market. In other words, the creators can get passive revenue even after selling their works to collectors.

This allows them to earn a percentage of the NFTs’ sales price indefinitely. For example, if a digital artwork’s royalty is set at 5%, the original author will get 5% of the total selling price each time their artwork is resold to a new owner.

Some NFT markets, such as Sudoswap, LooksRare, and X2Y2, have either removed or drastically reduced their NFT royalty structure. This trend started in the summer of 2022 when there was a push to make royalties optional, with markets implementing a “tipping” system. However, because many artists get passive income from their work, this shift in trend caused financial turbulence.

While there has been a backlash against markets that attempt to decrease or eliminate NFT royalties, it is crucial to highlight that this is not the case for all NFT marketplaces. For example, OpenSea is a well-established marketplace that continues to maintain the royalties system.

NFTs for Real Estate

Due to smart contracts and their ability to prove ownership, NFTs have the potential to revolutionize the real estate sector. The layers of middlemen engaged in the real estate market, from estate agents and banks to notaries and attorneys, raise the expense of what should be a simple transaction between two parties.

NFTs can drastically speed up the process by replacing these intermediaries with smart contracts that allow for the secure and straightforward transfer of ownership. Likewise, NFTs may enable fractional ownership of the real estate, allowing owners to quickly unlock value from previously illiquid assets and acquire funds without resorting to a bank.

An example of Real Estate NFT is the case of Michael Arrington offering a flat as an NFT on the real estate portal Propy in May 2021. Interestingly, Michael bought the same property in 2017 using Ethereum smart contracts. It became widely regarded as the world’s first real estate NFT, and it sold for more than $93,000.

How to convert NFTs to USD?

We covered some use cases of NFTs and ways to generate passive income from these assets. But how do you ‘convert’ these NFTs to US dollars?

All you need to do is follow these steps:

  1. Select an NFT marketplace to sell your NFT.
  2. List your NFT for sale.
  3. Once someone buys your NFT, you will get the quoted crypto (most likely ETH) in your wallet.
  4. Transfer the crypto into your centralized exchange.
  5. Once the cryptos are in your exchange account, you can sell them in exchange for US dollars.

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