7 Biggest Problems with Trying to Make Money with NFT’s (And How to Avoid Them)
Whether you’re about to start minting, buying, or selling your very first NFT, I’m sure you are wondering what some potential problems you will encounter. So in this article, we’ll look at some of the biggest problems associated with making money with NFTs and how to avoid them.
Many people see NFTs selling for a lot of money, and they see jpeg files selling and changing people’s lives overnight, but it is not that easy to make money off one. Here are 7 of the biggest problems you will face when trying to make money off your NFT collection.
1. High Gas Fees
Gas fees are the fees miners get paid to authenticate and authorize transactions. Gas fees fluctuate wildly based on the current cost of Ethereum and the demand on the network. As Gas fees can be almost a couple hundred dollars for a single transaction. This can sometimes make it impossible for an artist to pay for the minting of their NFT collection and deter a buyer from buying an NFT.
The good news is that some sites like Mintable and Opensea have the option to list the NFT before it is written to the network, so it is only until your NFT is purchased before gas fees are incurred.
Although it is a big problem we still have to deal with, gas fees prices are expected to significantly reduce once Ethereum fully transitions to the version 2.0 proof-of-stake transaction method. But for now, using the option to delay gas fees till after the transaction is complete will help.
2. Counterfeiting and Copyright Theft
Counterfeiting and copyright thefts are happening every day, and it is bothering a lot of artists. Technically, the concepts of NFTs protect the originality of the artist’s work, but what if someone steals your work, tokenizes, and sells it? That would be a major problem for anyone.
There is some good news, though. The blockchain can track ownership of an NFT back to when it was created; this helps if work is ever stolen.
If a buyer does his homework well, he might recognize that the NFT is not an original and would save the buyer from being scammed.
Although this is obvious, certain high-end pieces should not sell for a particularly low amount, a sure indication that they are counterfeits. For example, common sense should say to stay away from a Beeple NFT selling at a low price.
We hope counterfeiting doesn’t remain a problem for too long because the gas fees it costs to mint items should deter counterfeiters from copying other people’s work. The marketplaces also have several ways to report copyright claims.
Copyrighting is and may always be a problem, as even artists who are not involved in NFTs also suffer from it. Overall, do your own research when it comes to determining original pieces of work, and use your best judgement based on market conditions.
3. Lack of Support on Open Platforms
The idea of decentralization appeals to many people, but when a problem occurs, there aren’t any resources or support to make a complaint or seek help.
Several forums are filled with complaints from users about how their Ethereum never showed up in their wallets or their transactions froze from a network glitch. However, most of these complaints come from users using several different wallets.
To overcome this issue, the MetaMask wallet is highly recommended by almost every platform.
These complaints are usually resolved in time but can take several days of uncertainty-filled anxiety till you get your cryptocurrency back.
Most of us are used to having a court system or customer care representative attending to customers, but the concept of decentralization moves very far away from that.
There is not a lot of help available if you need to troubleshoot something or help navigate a market. Thus look to use decentralized platforms that at least offer some base-level form of customer care.
4. Too Much Competition
SuperRare and Niftygateway are some of the more exclusive sites to buy & sell NFTs on, but it is pretty hard to get NFTs on them because of too much competition. A new artist or someone who has never made an NFT before can’t just get on Nifty gateway and starts selling their NFTs; it doesn’t work like that.
Alternatives like Mintable and Opensea are somewhat easier to get on. Mintable gives out the first 50 NFTs minted on the site for free; although gas fees need to be paid from the sale when an NFT is sold.
As easy as it is to mint an NFTs on Mintable, selling it is super hard, difficult, and competitive; a lot of luck and some really good marketing is needed to sell NFTs on Mintable successfully.
Overall, the free market is very competitive, thus making money at it, just like anything, takes lots of work. But the reward to work ratio is one of the best in history.
5. Congested Platforms
The un-curated open platforms are a mess. Thousands of people are uploading art that could and should be considered garbage, drowning out most quality art.
These sites don’t have a great way of organizing, filtering, or organizing projects to make it easy for buyers to find the specific art they are interested in.
Buyers usually have to sort through several pages on these sites trying and frequently failing to find NFTs of interest.
The best thing to do is to use as much metadata as possible to search for prospect NFTs or buy directly from the artist of choice outside one of the open platforms. And if selling NFTs, know there is so much garbage out there and include as much metadata as possible to encourage easy search queries, and promote directly to collectors to avoid these congested platforms in the first place.
6. Having Unrealistic Expectations
This next one is less tactical and more psychological. Many see reports of life-changing money from a single transaction and expect that will happen to them. What is not reported is that person tried upwards of 50 times before that life-changing transaction. So don’t give it one attempt and expect to be rich. The first attempts will be more test runs of completing the process successfully, and less about becoming rich. And if you have ever tried to sell an NFT, you can attest to the fact that it is not so easy to have buyers clamoring to buy your work. Artists who make a lot of money selling NFTs usually already have a huge social media following and fan base and partner with someone who has experience conducting NFT transactions. Consider this arrangement when conduct business with NFTs. Other artists who successfully sell their NFTs also get exclusive listing deals with marketplaces like SuperRare and Nifty Gateway, and others, by giving a share of the profits to their partner who secured the listing.
Because every NFT is just one out of thousands and millions, the likelihood of someone rich enough finding it is low, let alone buying it over another piece. Ultimately, it’s better to have expectations that after 25–50 transactions, some life-changing money will come your way.
7. Environmental Concerns
Finally, our last problem to avoid is the environmental concerns of the Ethereum blockchain. Because NFTs are primarily created, bought, and sold on the Ethereum blockchain network. Authenticating and authorizing NFT transactions on blockchain technology use a huge network of decentralized computers. As such, millions of tons of carbon dioxide emissions are generated by the cryptocurrencies used to buy and sell individual pieces of NFTs. Although Ethereum plans to transition from its current proof-of-work to the proof-of-stake method, this will help increase the efficiency of the network and reduce the amount of electricity wasted by creating NFTs that end up not selling and the carbon emissions produced. This environmental concern could eventually increase gas fees as a carbon tax. Nothing has happened, but something to keep watch of.
There is no solid guarantee that you will make a fortune from NFTs. But with these avoiding high gas fees, doing research to not get scammed from counterfeit NFTs, knowing how to use certain tools to rise above the competition, how to get found or find profitable NFTs on congested platforms, staying in control of your psychology, and aware of future risk, you should do better than most in making money from NFTs.
If you liked this article, please consider following me for more articles on the Metaverse, NFTs, and cryptocurrency as I’ll be writing here more often. And it’s an asymmetrical risk for you. No downside, and all upside. Anyways, cheers :)
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