In a research conducted by the block, the trading volume of NFTs crossed over $13 billion in 2021. OpenSea, the leading NFT marketplace, was instrumental to this monumental feat. These digital arts have changed the landscape of ownership as we know it, having gotten a lot of high-profile celebrities on the buzz.
With the drop in NFT sales by 99% on OpenSea, some skeptics believe the industry is a bubble waiting to burst.
In this article, we will find out how NFTs are worth money and the future of NFTs.
How do these NFTs work?
NFTs, also known as non-fungible tokens, are digital art that cannot be replaced or easily duplicated. These digital assets differ from other assets in that they are stored on the blockchain and tokenized to represent full ownership through a signed certificate once bought or sold.
Similar to cryptocurrency, a record of who owns what is kept on the blockchain.
Because the ledger is kept up to date by thousands of computers throughout the world, the records cannot be falsified.
Additionally, NFTs may include smart contracts that, for instance, grant the artist a portion of any future token sales.
How much are NFTs worth and what makes them so valuable?
The cost of NFTs can range from being free—as in the case of a free mint—to being worth millions of dollars.
NFTs that are worth over a thousand dollars to millions of dollars are worth this due to a number of factors which include:
- Perceived Value
A mix of these ingredients make NFTs viable as long-term collectibles, and investments and can be seen as social signals to collectors.
You might wonder why some NFTs are worth so much money and some NFTs are worth next to nothing. This is simply because of what is known as the “Perceived Value.” This is the value people place on commodities, even if they are actually not worth that value.
A perfect example of a commodity that has perceived value is Gold. We only believe that it has so much value because we are told so and people buy into the idea. The perceived value of NFTs are even on a much higher scale. One of the most valuable NFTs ever sold is the “merge” which was sold for a whopping $91.8 million in December 2021.
Yuga Labs, a venture-backed web3 marketing firm, has been wickedly clever with their marketing strategy, creating a sense of exclusivity with their brainchild–the Bored Ape Yacht.
There was no outright marketing strategy for the Yuga Labs team; instead they created a sense of community and were able to leverage it. Amid the crypto and NFT frenzy, Yuga Labs has transformed the BAYC brand into a badge of pride and a blatant indicator of social status. The BAYC NFT, which opens the door to a select community, is the only pass available to those bold enough to participate early and maintain possession of it.
This “exclusivity” could also be seen in the recently held Ape Fest that happened this year. Only people that owned Mutant Apes and Bored Apes were allowed exclusive entry into the event. It is even speculated that the Ape Fest will one day surpass the popular NFT.NYC which is a gathering of NFT enthusiasts in the industry.
Everyone wants to leave their footprints in the sands of time. While the prices of some NFTs will pump for sometime only to dip, some will actually stand the test of time because they are historical milestones.
Some NFT collectors believe CryptoPunks (from 2017) will linger for a while because they were the first collectible avatar project and represent a watershed moment in blockchain history.
Other collectors believe that projects like Autoglyphs, Fidenza, and Ringers will remain relevant because they were among the first blockchain-based generative art projects.
It is easy to see that timeliness is very key to why NFTs are worth a lot of money.
The price of NFTs follow the economics principle of demand and supply, which states that “the price of a good, which has low supply and high demand, rises to meet the expected demand.”
For the Bored Ape Yacht, these NFTs are only about 10, 000 characters designed by Yuga Labs, and it is highly unlikely that they will make more; because of their rarity and other perks; there is a high price tag attached to them.
Closing Thoughts–Will NFTs be worth money in the future?
Due to the rising interest rates worldwide, the crypto market has been on a bearish trend, which has negatively affected the NFT industry. Also, the crypto community is clamoring for the industry to churn something more than just pictures rather, they need NFTs that drive utility and better use cases.
NFTs have been down 99% in trading volume, as depicted by statistics on OpenSea. This is even evident in the $623,000 Bumblebee Logan Paul purchased in 2021. As of the time of writing this, his NFT is worth about $10.
We believe NFTs will still be worth a lot of money in the years to come. Many industry players are coming up with better use cases for these NFTs that are worth more than pictures and we know NFTs will blossom!
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