Non-fungible tokens, created on the ethereum blockchain, have opened many opportunities for artists and other content creators to earn passive income. By definition, Non-fungible tokens (NFTs) are digital assets existing on the blockchain which show ownership of a rare, unique and scarce product.
Although NFTs are built with the same cryptography as cryptocurrencies, each of them is completely unique. This means that every NFT is totally different from another. In contrast, cryptocurrencies of the same nature such as BTC are similar in every respect, thus you can exchange one for the other.
However, people can store NFTs and cryptocurrencies in similar wallets, depending on the blockchain they exist on. Since most NFTs are built on the ethereum blockchain, we can keep them in ERC20 wallets.
People can develop NFTs associated with artwork, videos, pictures or music. Therefore, each unique NFT is a symbol of ownership, despite the fact that we can transfer it through trading or charity.
Artists and other content creators who turn their creative work into NFTs benefit because they can sell them to the entire world, thereby being able to generate huge revenue.
Creating passive income with NFTs
NFTs give artists an opportunity to earn passive income. Here is how it works. An artist who creates a physical piece of art earns once when he/she sells each artwork. This is because by selling it there is total change of ownership.
This is different with digital assets in the form of NFTs. Although an artist sells a piece of art, he/she will earn every time that NFT changes hands. The reason is that when someone else buys the same digital artwork (NFTs), the artist or creator gets a commission. Usually, the commission is charged as a percentage of the selling price. Currently, the commission is mostly pegged at 10%.
Therefore, this is a unique development which enables creators of “tokenisable” artwork to earn much more, for a very long period of time.
Musicians are examples of creators who can tokenize their music, as they can release a limited edition of their songs, which they have the right to promote. This eliminates the role of a middleman in the music industry.
In addition, people can also tokenize special events or cameos, such as a beautiful goal in soccer or netball. However, this is particularly so with basketball. For example, the NBA has its own NFTs, which show special moments of certain matches.
In summary, the emergence of NFTs has created great opportunities for talented individuals to earn passive income. Most notably, the NFT market is expanding day by day as many blockchain companies get involved.