How to Invest in Crypto Tech Royalties
If you want to get in on a new wave of innovation to diversify your portfolio, then investing in crypto tech royalties is the way to go.
So, have you ever heard the term crypto tech royalties?
Presumably, if you're guessing they have something to do with crypto rewards, then you are definitely on the right track, but not quite there. Not to worry, we have got you covered, we'll show you how to invest in crypto tech royalties soon enough.
Rewards for Years of Hard Work
The crypto space has seen some big names come and go over the last couple of years. Some companies have even gone bankrupt or had their assets seized. Investors who bought into these companies at the beginning might now be left holding worthless stock certificates or millions of tokens worth absolutely nothing.
That is where crypto tech royalties come in. These are royalty payments from licensing agreements between crypto startups and large corporations. They typically pay out in timed schedules, it could be weekly, monthly, quarterly or annually. If you want to get in on this new wave of innovation on the ground floor, then investing in crypto tech royalties is a great way to diversify your portfolio.
What are Crypto Tech Royalties?
The term "royalty" refers to payments or rewards given to creators or owners of intellectual property (IP) such as music, movies, books, software, etc. In other words, crypto tech royalties are compensation paid to creators and owners for their creations or for the use of their assets.
Royalties are usually paid out in exchange for the rights to use someone else's IP. For example, if you write a book, you might receive a royalty payment from the publisher for every copy sold. You might get paid per play on Spotify if you create a song.
And that's how crypto tech royalties generally work too, but with a slight tweak. An investor stakes a certain amount of money in their targeted project, swapping Bitcoin, Ethereum, or some other crypto for the project's underlying tokens. The hope is that the project will blossom, and the investor will earn big time in the future and is paid in the project's underlying token. But not always. Let me explain.
We can define some crypto tech royalties as:
- Yield farming
- Renting Out NFTs
- NFT Royalties
In summary, crypto tech royalties are royalties just like in any other industry, but they are specific to the crypto industry which forces them to work a little differently. If you can own it and you can earn money from owning it on a regular basis, it's likely that this is a crypto tech royalty.
Let’s Take a Quick Look at the Five Crypto Tech Royalties Mentioned Above
- Yield farming. Yield farmers provide liquidity to various token pairs on decentralized swap exchanges such as Uniswap and PancakeSwap and earn rewards in cryptocurrency returns for doing so.
- Lending. Crypto lending is a DeFi process where investors lend out their crypto to borrowers, usually through a specialist crypto lending platform. Both centralized and decentralized lending platforms exist, and lenders are able to earn high-interest yields as compared with similar services from banks and other institutions.
- Staking. Crypto staking is a way to put your crypto holdings to work for you directly on the blockchain. Some crypto projects use a mechanism called Proof of Stake (PoS) to secure the network, process transactions, and find new blocks. For more info, here is a short crypto staking guide we wrote.
- Renting Out NFTs. While this is not a brand new concept, it's still a relatively unique and untested method for earning from crypto and NFTs. Think about it like this, in the real world if you own X-Men comic book #1 which is worth half a million dollars, you could rent it out to put it on display for viewers or you could rent it to movie and tv crews to show in their productions. NFTs are no different. Companies that are working on putting NFTs to work are Bored Jobs and reNFT.
- NFT Royalties are a percentage of the sale price that is given to the owner or creator each time an NFT is sold in a marketplace. These percentages can range anywhere from 5%-10%. If you mint an NFT, you, or the marketplace code that royalty into the smart contract and it moves forward into eternity!
How to Invest in Crypto Tech Royalties
What use would an investment avenue be if the process of investing is as hidden from the public as bigfoot? Below is a step-by-step breakdown of how to invest in the industry;
Scout for a Suitable Project
Yeah, the first step is slightly different from what's available online, and there's a good reason for that. One can't just opt-in and buy a cryptocurrency or NFT without knowing beforehand where they'll be committing. It's impossible to run before learning how to walk; not even African gazelles that have to escape the world's fastest animal do that.
The good thing with the blockchain world is that it's a rapidly evolving industry. The choice of projects is almost limitless, thanks to the 19,000 different cryptocurrencies, by the 3rd of June 2022 and counting. Of paramount importance when scouting a suitable project are;
- Check its white paper and roadmap; They offer a good glimpse of its future.
- Review its founders. It's the best way of avoiding scams like many infamous rug-pulls from the past.
- Check its community; a vibrant community is a good indicator of a project to go for.
- Assessing its social presence, an opaque project without any social presence and updates is a big red flag.
- Use other specialty project review tools such as Nansen for any crypto project's data summary and rarity.tools for NFT projects' rarity hence potential future value ranking.
Make the Crypto or NFT Purchase
Now comes the choice of what crypto to use as one's staking or royalty-earning option. All of the below will be dependent on which royalty program you are signing up for.
Common choices are the big two, Bitcoin and Ethereum, by far the largest cryptos and of course, many NFT projects are launched off of Ethereum but newer projects are turning to Cardano and Solana.
The choice is a little more complex than simply deciding to go for which crypto or NFT as if it's a team sport. Review the earning potential and check to see what others are saying.
First is the opening of an account on either an exchange, marketplace or other Medium. Remember, this all depends, what royalty program you are choosing to go with. Most require nothing much, just an email address and a few necessary identification details, while others want you to go through a detailed KYC process.
A bank account is often required to enable the actual crypto purchase (not always); crypto exchanges with a fiat-on-ramp ability have a slight edge here. One then has to secure the said account, usually using a 2-factor authentication method that involves a prompt sent to one's email address or phone number for verification.
And of course, many NFT mediums will require the connection to a web wallet like MetaMask or Trust Wallet.
The next step involves the purchase of the preferred crypto or NFT to be used for the staking, lending, or drawing down on royalties, based of course on your chosen project, as we keep repeating because this is a general guide. To do so, one needs a crypto wallet, the equivalent of a bank account in the blockchain world. Once secured, one only needs to use the account opened earlier to make a purchase.
The choice of payment also features here, and that's where the fiat-on-ramp feature plays its part. Most exchanges allow one to link the credit and debit cards for a smoother transaction. Still, a fiat-on-rump enables one to purchase without having to convert their local currency into something else.
With all the above sorted, the crypto or NFT purchase can be made easily at the investor's comfort. One isn't obliged to buy a whole coin in the case of a cryptocurrency since it may be worth a lot, especially for the big two cryptos. At current prices, a single Bitcoin would set back an investor $23,132.25, a pretty hefty sum. The good thing is that before any purchase, crypto retailers update an investor on the prevailing prices of the crypto of choice.
Putting the Crypto or NFT to Work
Now that the investment choice is made and the crypto or NFT purchase is made, it's time to put it to work. The important thing to remember is that any stake or choice made here is hedged as a bet in anticipation of the potential rise or fall of the target project.
The most popular Bored Ape sold for as high as $3,408,000 and yet the current median price is $100k. It is, therefore, crucial that step one is carefully followed and the project thoroughly analyzed. A wrong choice translates to tears in bed rather than a beautiful Miami summer vacation.
At first glance, it may appear like a big gamble on one's assets. But over time, as top whale investors have realized, it may make a difference between staying as is or making that extra 1 million dollars. Mustering the basics of investments in royalties goes a long way here.
Tracking the Investments
Investing is one thing; monitoring its performance is a whole other requirement. One has to have co-indicators of targeted revenues against set time frames. Failure to achieve the same should be a red flag, and one should have a pull-out or stop-loss strategy.
On this front, using the specialty project review tools goes a long way. Sites like Twitter and discord help maintain updates for the project developers' long-term strategy. Any continued deviation is a sure red flag.
Disregarding the cryptocurrency market cap, the blockchain has proven to be a worthwhile investment; it may revolutionize sectors like supply chain management, healthcare, insurance, banking, and government services.
On that rationale, a recent report from PwC found that blockchain technology could generate $1 trillion in revenue over the next decade. This includes royalties paid to creators and owners of crypto technologies, art, and associated projects or technologies.
Moreover, the report estimates that by 2027, this will grow to $2.7 trillion annually, representing almost half of all global IT spending. Don't get left behind. DYOR now on what are the best crypto tech royalties to invest in.
Frequently Asked Questions:
What Are Crypto Tech Royalties in a Nutshell?
As above, crypto tech royalties are a type of earning mechanism built for the cryptocurrency and related NFT industry, where you get paid to lend, stake, farm or rent your digital assets. With, tech royalties you get a cut due to the underlying crypto technology or the perceived value. The amount of royalties paid is dependent on the growth of the crypto and NFT and its usage. Crypto tech royalties are a way to earn returns from a new crypto or NFT technology’s revenue or its market value.
Are Crypto Tech Royalties Legit?
Crypto Tech Royalties are similar to traditional royalties and you get periodic payouts after investing in these DeFi, crypto, and NFT projects. These tech royalties are still cryptocurrencies and NFTs at their core and as such, adoption by the masses will earn you chances of making profits as the asset grows over time. You can earn monthly, quarterly, or annual income with crypto tech royalties and in some cases, payouts occur at dollar value milestones.
How Much is a Crypto Tech Royalty?
A crypto tech royalty is a percentage cut off the revenue of a new crypto or NFT technology or project. You might mint a new NFT and code into the contract that each new sale provided you with a 10% cut of each sale going into infinity. There is no standard here. These values are all based on the project, marketplaces, and associated cryptocurrency or blockchain.
Are Crypto Tech Royalties Secure?
The answer depends on the type of royalty. Staking is designed to be a very secure network, it would take a 51% attack or something similar to kill the network providing the ability to stake tokens which is almost impossible or at least very expensive if considering something like the Cardano network.
Ethereum smart contracts when considering NFT royalties need to be coded professionally and ideally audited, if there are any gaps in the contract, your digital assets are open for the taking and it has happened before.
When thinking about crypto lending, this depends again on the lending platform. Generally speaking from purely a security point of view, if they have the usual email, phone, password, and 2FA protocols you'd assume it's a secure platform, but that is only one aspect of your investments being secured. How do you know the company offering the lending and payouts is stable? This is the million-dollar question and as we've seen with multiple crypto company failures in 2022 and prior to this, you need to do your research, remain vigilant and if at all you feel your investment is threatened, you need to pull it.
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