Since 2020, Non-Fungible Tokens or NFTs have seen a steep rise in adoption. NFTs are digital assets with each asset being unique in its existence. What makes them unique is the metadata that gets stored on the blockchain. NFTs mainly represent ownership, giving the respective owners status and title.
What is NFT Flipping?
A value of an NFT is basically based on market conditions of demand and supply. Recently, NFTs have opened the way for people to make some additional money via flipping the NFTs. According to the official data, the average monthly trading volumes of NFTs jumped from $64 million in the first half of 2021 to more than $750 million in the second half. Flipping essentially means buying an NFT at a low price and selling it at a higher one to gain a profit.
Flipping has become a passive income source for a lot of individuals. In 2021, an NFT was sold was $69 million. Similarly, Twitter founder Jack Dorsey’s first tweet NFT was sold for over $2.9 million proving it to be a huge money-making opportunity for people.
How to Flip NFTs
- Go on to NFT marketplaces such as OpenSea, Rarible, Magic Eden, etc, and search for trending NFTs listed on the platform. Search for items starting at the lowest price.
- Choose NFTs on the basis of -
- Popularity (of all, the artist, the NFT, and the NFT collection)
- Founding Team
- Identify NFTs that are in your budget range, which you think are currently undervalued. You can estimate this by considering the factors mentioned above and can compare it with their competitors/similar NFT projects or other NFTs under the same project. This is the most important step and requires time, experience, and intelligence to do so.
- Once this is done, check for the properties of the selected NFT. Properties shall include its uniqueness, other associated benefits, and liquidity of being traded on the platform.
- Click to buy the same. Once you’ve bought an NFT for let’s say 0.1 ETH, now you can mint and list the same NFT for a higher price which essentially means flipping your NFT.
Types of NFTs you can flip
- Music collections
- Memes and GIFs collection
- Profile pictures (PFPs)
- Miscellaneous, which shall include any other digital collectible asset
Risks associated with NFT flipping
- The most significant risk in NFT flipping is the liquidity risk. Imagine you buying an NFT which isn’t traded actively and there’s no one to sell to. The owner gets locked with the asset and invested money.
- Scammy projects and founder is another risk that users should account for. Proper research should be done before investing money in an NFT project.
- Fake NFTs are one of the common risks that every user faces. A famous NFT project’s artwork can be copied and listed on the platform for a lower price.
- Other risks include hacking and theft, and no underlying project utility.
NFT flipping though seems to be a lucrative money-making opportunity, but it comes with its associated risks. NFTs are at a nascent stage of development, though their adoption is rising rapidly. With more use cases and practical applicability, the future and the road ahead seems long and bright.