Non Fungible Token in short NFT, why is it so popular? Why are NFTs so much expensive? Does it really worth millions for one NFT? These were some of the questions bouncing around my head whenever I heard an NFT sold for Millions of dollars.
To understand its value, I had to know about NFT itself. Nfts are crypto tokens that have their own unique identity. Sounds confusing, but in simple terms, NFTs are digital or real-world assets with a unique identity and can prove their ownership with the help of blockchain.
About the fungible part, it’s actually simple to understand with the examples. Currency is the best example of fungible. For instance, let’s say you have a $100 bill. You can change it to two $50 bills and still have the same value as before. The same goes for cryptocurrencies. You can even exchange bitcoins for assets, products, or services.
But NFTs are diffrent. A single NFT cannot be exchanged with other NFTs. The non-fungibility of NFTs distinguishes them from Bitcoin. NFTs are one-of-a-kind and non-fungible.
Those were the basics about NFTs I learned through research. Now onto the main dish, and for that, let’s take an example of Picasso’s artwork. Picasso’s artwork is one-of-a-kind and irreplaceable, and its worth is determined by various circumstances. Non-fungible asset values are often determined by usefulness, ownership history, future value, and liquidity premium.
A painting or artwork is just the arrangement of colors in a specific way. However, the emotions it produces and its influence have been critical in determining the value of that work of art. A digital-only artwork by Beeple was recently auctioned for $69 million. What does the buyer get? Nothing tangible-only a virtual image. These pixels, however, had a financial impact of up to $69 million.
Why are NFTs so damn expensive?
When it comes to establishing what makes an NFT expensive, we gotta know its value. There are a few different crucial things to consider. So, how can you tell if a non-fungible token is valuable?
Here are some things to consider when assessing the value of a non-fungible token (NFT):
- The value of the Creator
- Buyer perception (are NFTs shit or gold for you)
- Utility that comes with NFTs
- The Value of Creator
It’s self-explanatory. If the Creator’s values are high, or let’s say they are well known among the community, then the NFTs they make will automatically have a high value. For instance, the famous brand Gucci published its SuperGucci NFTs collaborated with Superplastic.
As you may all know, Gucci is already an established brand and well known to all. So when they published the Supergucci NFTs for 1.5ETH, guess what happened. Within hours people who bought the NFTs put it on Opensea for sale at the price of 7/8ETH.
So why did it happen? The price was able to be high thanks to the value of creators.
You can guess where I am going with this one. If everyone is doing it, then it’s a trend. In the world of NFT, you may already know some names like Cryptopunk and Bored Ape Yacht Club. The price of these NFTs blasted through the moon when Hot names like Mr.beast, logan paul, Justin Beiber, etc., flock to buy it. So yeah, there’s that, and it’s happening.
Buyer perception (are NFTs shit or gold for you)
So if you were buyers, what does NFT worth to you? It’s pretty straightforward. If you think NFTs are gold, then yeah, you will buy it. If you don’t, then you will chill on other topics.
Utility that comes with NFTs
The exciting fact about NFT is that it comes with utility benefits, whether in the virtual world or the real world. For example, Owners of Bored Apes have access to elite BAYC clubs and places. This provides exclusive access to new NFTs, NFT upgrades, and other benefits. The Mutant Ape Yacht Club (MAYC) and the Bored Ape Kennel Club permitted BAYC members to participate for free.
Let’s put aside all the facts and reports I found cause it says NFT prices are legit. I think the main reason to spike NFT’s price is hype and popularity. If something is popular, then everyone wants it mainly to flex it, and suddenly, it has more value. I mean, what makes a Gucci hoodie have value? It’s just made of fabrics like other brands. The popularity that surrounds Gucci made the hoodie more valuable.
Is NFT worth your time and money?
With the quick rise of NFTs, many fish are nibbling at the bait, clogging the space with garbage and treasure. So, are non-fungible tokens worth your time and money?
NFTs are worthwhile investments if the token you buy has underlying value. The underlying value represents the company’s worth or the individual responsible for the NFT’s creation. The underlying value of the NFT is also affected by both tangible and intangible assets.
In contrast, Twitter co-founder Jack Dorsey has auctioned off the first tweet. Online bidding has hit $2 million. Other artists’ work has sold for as much as $50 million and more. This demonstrates that there is a lot of money in the NFT space. However, the value of an NFT is ultimately determined by the market demand for that piece. NFTs will be priced and sold in the same way that artwork has been valued and sold in the real world for centuries, depending on value assigned by the market.
So all these gibberish words mean it is if you want to buy NFT, do your own proper research. Many of the NFT projects are scams rather than actual NFT.