How My Goofy Digital Pictures Are Paying Me Real Money

Laugh All You Want… But I’ll Be Laughing All the Way to the Bank

So, how much money did I earn from all those goofy digital pictures I own?

As we approach the end of the year, I figured now is good time to update a passive-income project I began back in January: building a portfolio of income-producing NFTs.

These NFTs are the non-fungible token version of cryptocurrencies. Instead of being ethereal and unseen digital currencies like bitcoin and Ethereum, NFTs are visible. They’re pieces of digital art, no matter how childish they appear. Like these:

Those are, in order, from Banx, Degen Fat Cats, and DeFi Bookie.

All have been paying me very real money in 2023.

I began this income project for one primary reason: To demonstrate that the NFT space can generate income from the businesses underlying these wacky looking pieces of art. I did so because I know lots of people scoff at NFTs. How can something goofy and seemingly ridiculous looking generate income?

Well, I’d like to turn that question around and show people this picture:

And I’d like to ask: How can this picture of a bunch of Disney characters generate income?

Of course, the answer is, “Well, Jeff, you dimwitted bag of rice—that’s a Disney stock certificate. You own a piece of the company. They pay you dividends from corporate profits! Really—why I do I read your drivel every day??”

Ah, yes, Dear Reader—a stock certificate, indeed.

That is precisely the analog with NFTs. They are effectively a share of stock, only in an entirely different form. While they don’t represent partial ownership of the underlying company, they do represent a share of the profits earned by that underlying company.

And those companies are earning real dollars providing real services to businesses and consumers.

Banx provides NFT lending services. Degen Fat Cats runs a gaming site in which players wager on certain types of games. And DeFi Bookie runs a popular sports-gambling site. Others in the space are offering investment services, running real-world retail, or providing tech services.

People like me, who own the NFTs of the various projects, collect a piece of their income on a regular basis. Sometimes that’s once a week, once a month, or every few days.

But onto the big question: How much did I earn over the last year?

Well, I have been keeping track of all my income NFTs in a big spreadsheet, including their payouts. And I can now report that I have earned just over 215 Solana, one of the top-10 cryptocurrencies in the world and a major crypto network. (The NFTs I own are all on the Solana network, so almost all of them distribute their income as Solana, though some distribute at US Dollar Coin, a crypto that shadows the dollar basically 1-for-1.)

Solana, or SOL as its known, is instantly convertible back into U.S. dollars, or pretty much any other major world currency, so getting paid in SOL is as good as getting paid in dollars. Only, I never converted any of my SOL over the last year. I allowed it to amass in my digital wallet, and I used it over time to add to my collection of income NFTs.

I did so because I knew back in January, when SOL was in the $10 range, that this particular cryptocurrency was going to see a massive rebound. It had plunged because of the bear market in crypto and, specifically, because of the implosion of the FTX crypto exchange run by Sam Bankman-Fried, the recently convicted mop-haired fraudster.

I was right in my belief.

SOL today is north of $63 per coin, a 6x return (I also called the bottom for Solana in a late-January Field Notes dispatch in which I recommended readers add SOL to the portfolio).

The result is that those 215 SOL I collected just by owning goofy pictures is worth more than $13,500 today. I mean, that’s not a bad outcome—more than $1,100 per month, on average.

When I first wrote about my NFT income experiment in January, I noted that my goal was to collect 333 SOL from my investments. I fell short of that because some projects fizzled, or because some projects saw their income decline. I fully expected that. This is the bleeding edge of technology, where the mantra among developers is: “We tried some sh**. It didn’t work. So, we tried some other sh**.”

Back in January, that 333 goal would have meant an expectation of collecting about $3,300 in annual income.

Instead, I collected more than $13,500 from only 215 SOL.

I won by losing.

In terms of yield, well, I invested about $21,000 in my NFT portfolio. So, my annual yield is in the 64% range. The value of the portfolio is down sharply in SOL terms, but in dollar terms it’s off by less than $2,000. (NFT prices in SOL generally go down as the value of SOL goes up; that way the dollar price of the NFT is relatively consistent.)

Ultimately, my experiment shows the power of NFTs and just how they’re reshaping the concept of investing as we now move into the middle years of 2020s. The world is rapidly adopting NFT technology for everything, from a new form of digital ID to the tokenization of real-world assets such as stocks, bonds, and real estate. Indeed, Fidelity, JP Morgan Chase, and others are racing to digitize all kinds of assets and move them onto the blockchain as NFTs.

This is where we’re going as a society. It’s a done deal. The fat lady has sung. She has left the stage, showered, and is heading home after her performance.

Time has come for investors to become accustomed to NFTs as investments.

Yes, the pictures are loony and sometimes stupid.

But the underlying businesses are very real, and so is the income.