NFTs have seen an exceptional jump in popularity, all thanks to the support they have recently received from the entertainment industry. Here’s what the fuss is all about.
The way our economy has always worked is that we earn money and then we use that money to buy goods but the more time we’re spending in the digital world the more our purchases are shifting away from physical goods and more towards digital goods.
What are NFTs?
NFTs represent any unique asset based on Ethereum, Ethereum is an open-source as well as a decentralised cryptocurrency based on blockchain technology and is second only to Bitcoin in terms of market cap. The word NFT itself stands for Non-Fungible Token, non-fungible means that it cannot be interchanged with physical goods or hard currency.
Is it worth the Hype?
NFTs are using blockchain technology to be able to indisputably verify who has the original of a digital product. They are a one-of-a-kind token of ownership that has a value and so buying and selling NFTs means that we’re buying and selling their virtual ownership over something. NFTs are a blessing for individual creators as it provides a medium through which they can earn hassle-free while also being able to share their art with their fans.
In exchange, NFTs put an end to long-written contracts, replacing them with smart contracts which defines the rules by which the NFT operates. Smart Contracts allow creators to set a rule such that every time their item is bought or sold they get a 20% cut. NFTs are a dream for a lot of collectors. Through NFTs, an individual can be the sole owner of the token for a digital piece authenticated via a system that’s completely fraudproof.
Another important point is that the NFT market is a fairly accessible place to invest, unlike the stock market which can be intimidating for a lot of people and it’s not like the housing market where one might need hundreds of thousands of dollars to just get started.
Difficulties that NFTs pose
NFTs also have their fair share of problems and controversies. The most discussed issue is that they’re being used by large corporations just for profit-making and are not the result of a genuine work by a passionate creator. Unique pieces of art can be digitally created just with the help of a suitable code. Digital property is also hard to monetize.
Another disturbing fact is that if one owns the NFT of a piece of work they’re still not the actual owner of the design itself, meaning one can’t start printing t-shirts with the NFT design on them. Despite these facts, the trend which NFTs have been able to pick up is unparalleled in the field of technology and cryptocurrency.
Calculating The Worth
A unique fact about NFTs is that their value may increase or decrease depending on how people perceive it’s worth or with the value of Ethereum.
NFTs are present in the discussion forums for 5 years due to the countless possibilities they possess in the digital and hybrid world.
The value of an NFT on the blockchain can be understood as a function dependent on variables like Ownership Value, Usability, Future Scope and Tangibility.
Usability — It expresses how freely and diversely owners are able to use an NFT. Game assets and tickets are some categories that have very high utility because they can be used as a pass to Unlock a particular feature of some game or could be used to attend an online event. The utility of an NFT can be increased by making it available on platforms operated by other companies by collaborating with them, this provides the owner more options where they can use their NFT.
Ownership Value — The value of an NFT depends highly on the fact that who was the previous owner. NFTs with enormous ownership values may be released by famous artists or companies. If a particular NFT is endorsed or owned by a celebrity, the fact itself increases its uniqueness, thus making it more valuable for passionate collectors.
The easiest way to increase ownership value is to either co-ordinate with companies that have a high brand value in the market or with individuals having a strong base following. There are many examples available like the first authorized NFT was sold for about $113,124 because it represented an F1 car.
Future Scope — NFTs are based on Ethereum prices and their value is a reflection of how rare people think it be. Heavy investments may suddenly cause the value of NFTs to swell up.
Tangibility – Not all NFTs are relevant only in the digital world, some could be used to some extent in the Real World too. Like in cases where ownership of an NFT comes with the right of ownership to the design or a physical object. This does not increase the uniqueness of the digital asset but the subtle message is that it does come with a sense of enhanced practicality.
5 MOST Expensive NFTs
Keeping these things in mind, here are the 5 MOST valuable/expensive NFTs till now –
1. CryptoPunk#9998 – 532.4 million US dollars.
2. Everydays: The First 5000 Days – 69.3 million US dollars.
3. HUMAN ONE – 30 million US dollars.
4. CryptoPunk#7804 – 7.57 million US dollars.
5. CROSSROADS – 6.60 million US dollars.
