Have you ever wondered where the considerable popularity of NFT came from? What does it mean, and how is its price determined on the market globally?
Non-fungible tokens, better known as NFTs, are property types that exist exclusively in digital form. They are related to cryptocurrencies whose records are kept based on Blockchain technology.
Unlike cryptocurrencies in which each unit or coin can be exchanged for a different, the same value, which is also true for real-world currencies – NFTs are unique.
NFTs as a way of collecting digital art
NFTs have emerged as a way to collect digital art and as a means of investing. American artist Mike Winkelmann, known by the nickname Beeple, sold his digital painting “First 5000 Days” in March 2021 for $ 69 million. This sale achieved a record price for one digital work and was one of the most significant sales in the history of Christie’s auction house. Why?
Since the sale of Apple’s digital image, NFTs have begun to permeate popular culture in various ways. Hundreds of millions of dollars in irreplaceable tokens are sold weekly on NFT trading platforms such as Nifty Gateway, where Beeple sold its digital image.
Sometime around the same time, in March 2021, on another similar platform, Valuables, Jack Dorsey, a billionaire, co-founder and CEO of Twitter, sold his first tweet as an irreplaceable token (NFT) for $ 2.9 million. It read, “I’m just setting up my Twitter,” and was released on March 21, 2006.
How can an NFT be worth so much money?
Many individuals have begun wondering how a token on the Internet can be worth so much money, especially if the token is just an “ownership” of an image on the Internet or an animation whose copy can be downloaded from the Internet for free. Also, what is so crucial for setting the
NFT Art coin price, for example?
It’s not so hard to see why NFTs inspire so much excitement and skepticism simultaneously. NFTs are a whole new asset class, and it’s not uncommon for a new asset class to emerge, writes the Harvard Business Review in How NFTs Create Value.
What drives the value of an asset that is just a digital token that people can transmit? To properly value NFT assets, one must first think about what they are and what types of economic and market opportunities they provide
At the highest level, NFTs are linked to the Blockchain cryptocurrency ethereum. The blockchain ethereum system supports irreplaceable tokens by storing additional information that makes them different from the cryptocurrency itself. The same technology is used by other cryptocurrencies, such as the most famous one – bitcoin.
Irreplaceable tokens are attractive to collectors.
“Irreplaceable” means that the file is unique and cannot be replaced by something else, which is not the case with, e.g. bitcoin as a cryptocurrency.
Because NFT is unique, its value is not in the form of exchange but makes it interesting for collectors. If something is unique and unrepeatable, it makes it the object of a collector’s wish, explains How to Geek magazine.
NFT is designed to give something that cannot be copied: the ownership of the work (although the artist can still retain copyright and reproduction rights, as in the case of works of art in the physical world).
Conclusion – rarity determines the price
In conclusion, we can say that the rarer and more popular NFT is, the higher its price, and thus the demand. If you are a passionate collector, choose only the most interesting, rarest NFTs that are, of course, the most profitable!