Are NFTs profitable? One Saratoga Springs business is finding out – Times Union


SARATOGA SPRINGS – The opportunity to dive into the NFT business was “too attractive to pass up,” and now Chris Thompson is all in, consumed by the latest digital money-making trend.

NFT stands for non-fungible token. An NFT is typically a digital piece of unique artwork, often cartoon-like, that purchasers can buy online.

Rather than a painting or sculpture, though, the original exists solely online as a unit of data that the owner keeps on a blockchain – a digital ledger that tracks and stores records of transactions in cyberspace. An NFT has a limited number of versions, analogous to limited print editions of an art piece.

Thompson, who operates the Branded AF marketing company, is carving out a niche in helping the creators of NFTs bring their artwork to the virtual marketplace.

“We’re signing three to five clients a month right now for (NFT) projects,” the managing partner said. “I’m doing five to 12 business development calls per day … including Saturdays sometimes. And it doesn’t seem to be slowing down.”

In the past year, Thompson has found more and more NFT creators who want him to handle their websites and other online functions.

While Thompson says Branded AF has been profitable without the NFT action, the serial entrepreneur felt the virtual tokens were too enticing an opportunity to forgo. Client inquiries have grown so much he had to bring on a partner to shoulder some of the work.

“There’s no shortage of creativity when it comes to clients and what they want to do (with NFTs),” Thompson said.

Many NFT artists don’t want to have to worry about managing the technical aspects of their business, which is why they rely on firms like Branded AF to do so.

“They just will focus on the dream, the vision, the art and the creation of it,” Thompson explained.

He likened NFT creation to a startup. Branded AF doesn’t create art pieces for clients but launches their presence in a blockchain.

After coding a script or software code that duplicates the artwork into a series of 10,000 pieces maximum, Branded AF uploads the collection to a distributed blockchain with a contract connecting buyers to the network to facilitate the purchase and subsequent validation process. When a person buys an NFT, the investment needs to be proofed through a special computer code, or key, to authenticate the ownership.

A single launch can take up to about a month to complete; however, Branded AF is presently turning over four to six launches a month and yielding solid revenue from it in return, according to the firm.

Branded AF charges a base fee for its services on NFT projects and receives a percentage of the client’s primary sales, usually between 20 and 30 percent.

For example, a client may offer a piece of NFT art for sale priced at half an Ethereum, a form of digital currency similar to Bitcoin. Ethereum was worth approximately $2,600 as of Thursday afternoon. If the artist sells 1,000 pieces, he stands to make about $260,000, based on the Ethereum rate. 

Thompson said NFTs have doubled, if not tripled his company’s profits in 2021. He declined to say how much he is making from his work with NFTs but said he expects greater growth this year.

Yet, Node40 co-founder Perry Woodin doesn’t think NFTs are very profitable for everyone. Node40 is an Albany-based cryptocurrency accounting and tax firm providing users with independent blockchain audits. 

From his standpoint, NFT-makers profit from the business but those who are trading them often don’t because there’s no liquidity backing the tokens. Woodin said to think about NFTs as physical artwork. And the price of cryptocurrency can vary widely on a given day. That $2,600 Ethereum token could go up or it could drop drastically.

“You have to find a buyer that appreciates that work of art and then you have to agree upon a price,” he explained. “So, that’s very different from traditional equities or even traditional cryptocurrencies.”

So-called “gas prices” – trading fees on the network – also make NFT-buying expensive, which can stymie buyers from trading. 

Thompson agreed. He said the fees can be anywhere from $75 to $150 per transaction in addition to the token’s cost. The NFT connoisseur buys them thinking he’ll sell the art, but sometimes never does.

“That’s prohibitively expensive for the majority of people,” he emphasized. “For collectors like myself, it’s the cost of doing business.”

Moreover, the intrinsic artistic quality of most NFTs isn’t very high, according to Woodin. Many look like crude digital cartoons, but what drives the market is their advertising and promise of exclusivity. 

“It’s really these personalities who can talk up what they’re doing, and you want to be connected with them,” Woodin said. Recently an NFT of an image of Paul McCartney’s handwritten notes for “Hey Jude” was sold for over $76,000. 

Since Thompson’s whole operation is hinged on marketing, he may find himself on the lucrative end of the NFT business. But, even he acknowledged that an NFT’s popularity heavily depends on how it is presented to the world.

Thompson is launching his own brand of virtual skateboard characters called Bit Street NFTs. Branded AF design director Joe Arcuri started creating the art in Thompson’s NFT collections several months ago and has watched as the space started “exploding like crazy.”

Arcuri boiled down NFTs’ popularity to a “collector’s kind of mentality.” He said what makes NFTs unique is the process behind their creation, asserting they’re like trading cards. An NFT is composed of multiple layers, traits if you will, that the maker creates and are randomly assembled through a script. 

Some of those layers are only present in 2 percent of the 10,000 minted in the collection. And the rarer the traits that you have increases the value of your NFT, Arcuri noted. Much of the desire for NFTs stems from the stories behind them. 

“Having certain NFTs from certain designers is a really big deal,” he said, pointing out how the National Basketball Association (NBA) has started working with them for marketing campaigns.

Thompson’s collection was completed in the fall, although he put the launch on hold because he didn’t know how to market it. 

Twitter is home to a wealth of NFT enthusiasts but the platform bars traditional advertising for the tokens because it’s considered a financial instrument. Thompson has had to resort to Instagram ads that will move traffic toward his website. 

He and his partners are building the community to market the art with hopes of having an official mint day in May, at which point he’ll start selling his NFTs.

“It’s a great business. It’s a lot of fun, (but) it’s not for the faint of heart,” Thompson said. And he conceded that NFTs have all the making of a classic marketing fad or bubble.

“When (the) NFT bubble pops and goes away, which it will someday… I have the other side of the business, which is just steady,” he added. 

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