Chapter 7: What is NFT and what makes it valuable?
We live in a digital era where almost everything is being digitized. A recent addition is the NFT development.
NFT is a recent Cryptocurrency phenomenon that fully entered into the mainstream in, 2020. Ever since the NFT development has taken the online world by storm with its tremendous growth. Recently, we have seen a lot of people including high-profile celebrities like Lionel Messi, Justin Bieber, and others buying Nfts for a humongous sum of dollars and repping the avatars on their social media profiles. Big brands like Adidas, Nike, and Walmart are also chomping in on the NFT space to bring more attention to their businesses.
But what exactly is NFT and why are they so expensive? Don’t worry by the end of this article, you will have the answers to that.
What is NFT?
NFT is a short form for non-fungible tokens. It is a certificate for proof of ownership of a digital or real asset that has unique characteristics. Its non-fungibility nature makes it indivisible and unchangeable unlike money or other cryptocurrencies that can be interchanged for another. For instance, you can break dollars into cents and bitcoin into particles known as satoshis. But you can’t break or sell part of Nfts without spoiling the whole. It is like selling part of a sculpture or painting.
Nft can be anything from a digital asset to a real asset, but it is mostly digital. Examples of Nfts are;
- Virtual cards
- Video clips
- Video games etc.
These collectibles are minted as NFTs through a Cryptography technology known as a Blockchain network. This is where vital information about the Nft is stored indefinitely and can be viewed by the public to ensure ownership transparency.
What makes NFT valuable?
If you have been following the NFT space for a while you would have noticed the huge sum of money that is being used to purchase these NFTs and some of these NFTs happen to be some ordinary-looking painting/drawings. Recently, Eminem bought a bored ape NFT for $460K.
Absurd right? I mean how can someone pay that huge of an amount for an ordinary-looking piece. When you can easily download it from the internet
Yeah, sure you can. Many people have indeed downloaded the bored ape yacht club collections from the internet, but the thing is that only one person has the right of ownership to the original copy which is worth a lot of money.
Aside from the bragging rights. Other things make NFTs valuable, such as;
- Secured ownership
- Fan support
1. Secured ownership
The NFT development has changed the game for digital artists and content creators. NFT offers a platform for them to safeguard the ownership of their works and monetize them. In addition, creators also get royalties on their works each time the NFT is transferred to a different owner, so as a creator of an NFT you can still earn from your creation even after you have sold it.
2. Fan support
With NFTs, fans get to support their favorite artist by paying for their works. This is because the fans value their favorite artist and want to see them making more artworks.
NFT projects create a strong community for their holders where they get to feel a sense of belonging. This community includes high-profile celebrities which increase the value of the NFT projects. These NFTs also appreciate their community members by giving them exclusive things like; a membership ticket to an exclusive event, merchandise, special discounts, or airdrops. A strong community is valuable to an NFT project and its members because without one an NFT project will flop. The bored ape yacht club is a good example of an NFT with robust communities that work together to improve the utility of the NFT. Asides from that, the community members are given an exclusive invite to a private hang-out hosted by the creator and given access to a virtual bathroom to paint graffiti.
Most NFT projects are known for the value they add. You get to be a part of a cause you love like donating to charities, research, or any other cause, so if you want to buy an NFT check its utility to see how valuable it is to you.
NFTs are a great investment for their holders. NFTs can turn holders into overnight millionaires. Since they can sell it for more than triple the buying price if the value of the NFT goes up. Bored ape NFT started selling from 0.8 Eth and now it sells for around 64 Eth and is still projected to go higher before the year runs out. Now imagine how many people who bought it earlier will make it when they sell it. Yes, a lot.
The key ingredient to NFT’s success is that everyone in the space (Creators and collectors) have agreed for NFT to be proof that a person owns a collectible which is made possible through the blockchain. This trust between the parties makes NFT valuable.
Now you know why NFTs are considered valuable to the artists and NFT enthusiasts, so if you need a legit platform to buy from, consider the following legit NFT marketplace;
- Crypto space
Now you see why NFT is worth a lot of money. Most NFT projects have come this far because of the value their community places on them and they reciprocate such value in turn by helping artists safeguard their works, contributing to good courses, making their holder a part of something exclusive, and turning holders into an overnight success. But before then you need to be careful before buying any NFT. The space is still maturing which makes it volatile. There are many scammers, hackers, and wanna-be NFT artists in the space ready to dupe you if you slack, so if you need help verifying the authenticity of any NFT you can engage our services @ autentica.io