In this article, I’m going to explain to you how to make long-term passive income with NFTs in the future. And how blockchains could completely prevent the GME short-selling issues?
Table of Contents
What is an NFT?
NFT stands for the non-fungible token which is a face way of saying that it is a unique token that can not be duplicated and is special in some way.
Most of the NFTs you probably knew about are simply digital art NFTs. you think that the token is a piece of art. It’s not. The token is paired with an image URL on a third-party website like OpenSea. Where they say that the token represents the image.
Although there are truly technically no image data on the actual blockchain. The token ID is simply a pointer saying I represent that image over there. And then the actual image file is uploaded to a server that could easily change the image if they wanted to.
The thing is NFTs can be so much more than just art. For example, it could be house deeds, car titles, and even domain names. So now you have an idea about what NFTs are.
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How NFTs can use to earn passive income?
I’ll explain it using an example, think about a youtube channel. Each video on that youtube channel is monetized and that means that youtube ads play before each video. When they do, advertisers pay google who then takes a cut and gives us the rest. Now let’s say I made an NFT of each video on that channel. I could sell them individually and then I could also promise that whoever owned them would get 20% of the revenue from that specific videos and income during the past month.
For example, if a video got around 20,000 views and it earned $100. Then whoever held the NFT would be given $20 worth of USDC coin for that month. And this would continue forever so if the video made $5000 in the course of a few years. 20% of that would be paid out to the holder.
Example
In this example, the 20% is arbitrary. We can make it 100% or 2%, but the idea is the same. This allows our audience to invest in our project and also be able to earn a reward. If the videos do well basically allow you to have skin in the game for our success. Not only that, but these NFTs could quickly become somewhat of a gamble where users could pay more and more for each NFT expecting a certain video to pop off one day due to the algorithm.
This is the core idea of a passive income NFT. that is a digital representation of a physical asset that adds value and earns in some way. NFTs like this would allow creators to benefit in the short term and investors to benefit in the long term. This is exactly what music articles will soon be using them for.
The next example of a passive income NFT is real and it will be music artists. The artist Blau set up an NFT drop of 333 total tokens. All of these tokens combined represent 50% ownership in the streaming royalty rights of a song called “Worst case”. What does means for you is that 50% of all the money he earns from Spotify by playing that song, he is giving to the NFT holders. Also, each token had unique artwork tied to it so they are all different.
To put this into the perspective of how much the artist made, there are currently 257 items on OpenSea, which is an NFT marketplace. And the floor price which means the lowest possible trading price is 2 Ethereum.
257 x 2 Eth x $4000 (per Eth) = $2,056,000
for half of his streaming royalties. This doesn’t mean he earned all of that though. He only got the proceeds from initially selling them.
One trick that these artists can implement is to add a transaction fee to each NFT that gets rerouted back to the artist’s wallet. For example, Blau could add a 5% trading fee, so that if $100,000 of his NFTs got traded this month, $5000 of it would be deposited straight into his wallet. Simply for the NFT being traded.
To summarize, the NFT holders will be earning passive income, but the artist will also earn passive income for their works. And don’t forget about the other 50% of the royalties that Blau gets to keep for himself. I think this technology will revolutionize the way artists are created and promoted.
Real Estate
What if an entire apartment complex was turned into 100,000 NFTs. Where each NFT holder earned a percentage of the Complex’s profit. This way you wouldn’t need to have 100 million dollars to invest in these high-return buildings. But could join for a fraction of that.
I don’t know if this will ever happen. But it is fun to think about the endless possibilities of NFT technology even more. So what if the apartment complex started its one DOA where NFT holders could vote on changes like whether to allow smoking or not who to accept to rent to, or even which janitor to hire.
Stuff like this is already being done but that’s more about how DOAs work than passive income NFTs.
Problems
One of the main problems with this idea is who’s going to make the payment. Because it certainly won’t be the blockchain making the payment. Someone has to physically take all of that earned money, deposit it onto the blockchain and then send it to a bunch of different wallet addresses. Which, if you know anything about the ethereum network it could quickly eat up fees if they’re not careful.
It seems that this is the biggest problem, stopping passive income NFTs from becoming the next big financial opportunity. I don’t see why companies in the future or even DOAs wouldn’t sell shares of their company as an NFT one day. This would solve a big problem around the GameStop naked short-selling issues. If the NFTs were on the blockchain we could see who owned every single share issued, where they were, how often they were moving, and who does have diamond hands.
Comment your thoughts about passive income NFT!
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