Why are some NFTs worth millions?
Digitalization has modernized the art market, giving investors a virtual format of works. Non-fungible tokens helped transform the industry, among other things. In this article, we explain what NFT art is and whether investors should pay attention to it.
NFT is short for non-fungible tokens. Such tokens can be an image, a music track or another digital file. At the same time, each NFT is unique, which means it is of interest to collectors. Information about the ownership of the token is entered into the blockchain.
There are many points of view and answers to the question of why NFTs are expensive on the net. At the same time, there is only one universal explanation for the high prices for non-fungible tokens – the format is on the wave of hype. For example, the digital painting Everydays – The First 5000 Days by the artist, who works under the pseudonym Beeple, was sold for $69 million.
NFT helps to confirm the ownership of art, such as a painting. In this case, the image does not have to have a physical form in addition to the virtual one – it can be exclusively in digital format.
To make an NFT picture, it is enough to prepare the “stuffing” of the token. In this case, we are talking about an image. You can “wrap” an image into a non-fungible token format for free, for example, on the OpenSea marketplace.
Many celebrities have noticed NFT. Among them are rappers Snoop Dogg and Eminem, model Emily Ratajkowski and actress Paris Hilton.
The growing popularity of non-fungible tokens, among other things, is facilitated by social networks. For example, in January 2022, Twitter introduced functionality for installing NFTs on avatars. Many celebrities have used the new tool, including tennis player Serena Williams.
Among other factors that contribute to the growth of prices in the market of non-fungible tokens, the following can be distinguished:
- Convenient format. A digital work of art is easier to buy. At the very least, you don’t have to go anywhere.
- Uniqueness guaranteed. The non-fungible token format allows you to verify that you are the sole owner of an asset.
- Market growth potential. The non-fungible token industry is projected to grow to $80 billion by 2025. The demand for NFTs, among other things, can support the development trend of the metaverses. Developers use non-fungible tokens to populate virtual worlds.
Many NFT collections such as Bored Ape Yacht Club and CryptoPunks have become iconic. Their developers proved to the market that the art of NFT is valuable and that you can earn money on investments in tokens.
But some members of the crypto community believe that the hype around non-fungible tokens is artificial. In their opinion, the creators of digital assets are manipulating the market.
According to users who are negative about non-fungible tokens, NFT creators manage to promote assets at high prices thanks to hype. The scheme, according to members of the crypto community, will fall apart at the moment when the market runs out of enthusiasts.
You can make money from digital art. To do this, for example, it is possible to profitably purchase non-fungible tokens at the start of sales in order to subsequently resell the asset at a higher price on a wave of hype.