Non-fungible tokens (NFTs), you can no longer ignore them. They have become incredibly popular in the past year and everyone who is involved with crypto or blockchain has already heard of them. This has also made more and more people want to invest in NFTs. However, there is also another camp. Namely the camp of people who absolutely cannot understand that such large sums are being paid for digital files. That is of course not surprising because especially if you have no experience with it yet, it sounds very unreal that tens of millions are paid for a digital image.
Still, it might not be as crazy as you might think. At least, in some cases. The popularity and high prices can certainly be explained in some cases. But how? How is it possible that NFTs have become so popular in such a short time? And how is it possible that tens of millions are deposited for digital files? That’s what we’re going to look at today!
Why Are NFTs Worth So Much?
Table of Contents
The answer to the question: ‘Why are NFTs worth so much?’, can be divided into 4 parts, namely: hype, art, utility, and community. But what exactly do we mean by these 3 parts? Now let’s take a look at that.
There is simply a lot of hype surrounding NFTs and this is certainly driving prices up. This is similar to the hype that appeared after Edward O. Thorp published his famous book “Beat the Dealer” when blackjack was resurrected after it was almost extinct and everyone was playing blackjack with the aim of challenging the casino and getting the largest possible profits using the card counting loophole. If you want to try this strategy yourself, we advise you, you must first know how to play blackjack or كيف تلعب بلاك جاك. After that, you can try the card counting strategy on your own.
As for the hype of NFTs, now everyone is looking for the new CryptoPunks or the new Bored Ape Yacht Club, and as a result, some projects are in more demand than there would be if there were less hype. There is also a lot of suggestion at this point that we are currently in an NFT bubble.
Most NFTs, until now, are works of art made into NFTs. While this is by no means the only purpose for which non-fungible tokens can be used, it is the most widely used and most popular form of NFTs to date.
The physical art market is also very large. It is currently worth about $50 billion. If you believe that the world will gradually become more and more digital, for example because the metaverse is becoming increasingly popular, it is not unlikely that a comparable art market will develop in this digital world. There is therefore a chance that the current NFT market will develop into the physical art market of the digital world.
Another way in which art can make the NFTs worth a lot is because people simply think the art is beautiful. With NFT art there are many different possibilities and there are certainly people who buy NFTs because they like them.
Another reason is the utility some NFTs have. Utility freely translated means ‘usability’ and when you talk about the utility of an NFT you are talking about what you can actually do with the NFT.
An example of utility in NFTs is the NFTs used in blockchain gaming. Blockchain gaming is a new branch of gaming, in which games are developed that use blockchain technology, and therefore also tokens and NFTs. These games are also called play-to-earn games and users can actually earn money playing the games. You often need NFTs to get started with these games because the characters used in the games are NFTs. In this way, NFTs can actually apply and become more valuable as a result.
The possibilities with utility in NFTs are theoretically endless. In principle, an NFT is, of course, just a property right.
Another reason NFTs are worth so much is the community. In this case, by the community of an NFT, we mean the group of people who own the NFT. You have the CryptoPunks community, but also the Bored Ape Yacht Club community. For this example, let’s take a look at the Bored Ape Yacht Club community.
This is a very valuable community. Many celebrities, such as Jimmy Fallon, Post Malone and Stephen Curry. When you own a Bored Ape, you gain access to an exclusive Discord community, which includes all Bored Ape holders. By buying a Bored Ape Yacht Club NFT, you actually get access to all holders, in this case for example Post Malone or Jimmy Fallon. With this, you buy an extensive network, as it were, which can be very valuable.
Besides the exclusive Discord server, Bored Ape Parties are also organized. Only holders of NFTs are welcome on this. By buying a Bored Ape you can suddenly be at a party with all kinds of celebrities and other interesting people. The network that you actually buy in the case of the Bored Ape Yacht Club is worth a lot of money to many people, for example, because it can also offer them other opportunities in the future.
However, such a valuable community as the Bored Ape Yacht Club, unfortunately, have few NFT projects, but they certainly exist. A lot of NFT projects these days have their own exclusive Discord server and this can lead to interesting connections.
Does This Actually Justify the Prices of NFTs?
Of course, that all sounds very nice, but does it actually justify the prices of NFTs? Besides the fact that the answer to this question is subjective, it is also very early to make a statement about this.
NFTs are, of course, still a fairly young industry. This means that we have little historical data, so we can’t really say anything about what will happen in the long term.
In addition, the answer to this question is subjective. The answer is different for everyone. For one person, a certain NFT, with the utility, art, or community in mind, is simply worth the amount, while another thinks this is too much. Of course, this applies to all industries. One finds a trip abroad too expensive, and chooses to stay in their own country, while the other thinks the memories and experiences gained abroad are worth the amount, and chooses to go on a trip outside their own country.