How NFTs Become so Expensive
In 2012, the Non-Fungible Token (NFT) was introduced under the category of Crypto Art. Since its conception, the concept has grown in popularity and is widely used to show ownership of digital works. Each NFT is unique for the digital work it represents but can easily be tracked. NFTs are popular in the art world as well as other areas of interest for collectors.
As NFTs have grown in popularity, so has their price tag. NFTs have become so expensive because of the unique nature of each token. While the NFT is unique to the owner, some things may be a bit confusing about the expense of owning one.
This article will learn about NFTs, how they work, and why they are so expensive.
So, I Can Buy an NFT; what Does That Mean?
You are a bit perplexed with the idea of buying an NFT. You are not alone. The world of NFT buying and selling can be quite overwhelming. It is important to know that NFTs can be created and sold by anyone. However, there are only certain locations where you will find them. The most common sites to look at and purchase NFTs are:
While there are many other sites that offer sales of NFTs, these are among the most popular and user-friendly. When you buy an NFT, you are gaining ownership of a digital file. Although you have ownership of the file, you do not own the copyrights to the file. This means that you will not be able to make financial gains with the NFT. The only way to secure full copyrights to the item is to have the artist legally sign rights over to you. (Source: The Conversation)
How Does an NFT Work?
You may be curious to know just how an NFT works. After all, you have “ownership” of the document, but you do not have absolute rights to it. If you purchase a trading card, you have total ownership of that card, and you can display, sell, or trade the card as you see fit. There is no need to report back to the player or the individual you purchased the card from.
NFTs work a bit differently. First, there is no physical part of the purchase. All NFT purchases and products are completed and stored digitally. The NFT is part of an Ethereum blockchain, which is part of the cryptocurrency world. Because it is a part of this blockchain, every action taken can be tracked. So, while you are the original owner, other people can easily make copies of it.
You will have the option of selling the NFT, but the creator will also reap the benefits of the sale since it is digitally tracked on the Ethereum blockchain. Because the creator can track sales, they can also track the use of the digital file to ensure copyright infringement is not taking place.
(Source: The Verge)
Why Some NFT Art is Cheap and Some Expensive
If you have taken time to look at any of the NFT sites, you will notice a wide range of prices when it comes to art. It is important to remember that NFTs attached to art is just a digital version of works of art you may step into a gallery to view or purchase. When it comes to pricing the NFT, the process is very similar.
Popularity: When pricing NFT art, the popularity of the artist is going to be a factor. If the artist is not well known or is just beginning, the price will be lower than an experienced artist that has a large following.
Time: The amount of time that went into creating the art piece is going to play a part in the price. If a work of art took several years or months to create, the price tag would reflect that. After all, an artist wants to get paid fairly for their effort.
Other work: The price of an NFT can also be dependent on other pieces of work created by the same artist. If an artist has several pieces that are selling for thousands of dollars, the price of their following pieces will also be in the same price range.
Amount of work: Many artists have very limited pieces of artwork. Whether it be because of the time required to complete a work of art or the inability to create multiple pieces, the number of pieces available will factor into the price placed on each piece.
Because of these factors, NFTs can be both cheap and expensive. When looking at an NFT, it would be wise to do a bit of research prior to purchasing. This will help ensure you are paying a fair price for the NFT. It may also help you to determine if a resale could be in the future. Remember, all artists need to start somewhere, and a cheap piece of art today could be worth millions in the future.
(Source: The Crypto Curator)
How Does an NFT Become so Expensive?
The cost of NFTs is all over the place, but some become extremely expensive, which may be confusing. Many people balk at the idea of spending an excessive amount of money on something you will never physically have in your hands, while others view this as the future of collections.
Just like works of art or pieces of sports memorabilia, there is usually only one original. For example, there is only one original basketball jersey that Michael Jordan wore during his college championship season. Because there is only one, the price is going to be high. The same is true for NFTs. The more popular and sought-after an artist or creator is, the more expensive the NFT will become.
What Makes Some NFTs Popular and Some Not?
When it comes to looking at the popularity of NFT’s, you will notice some are popular while others barely get looked at or mentioned. Just like works of art or trading cards, some NFTs will draw more attention than others. If a well-known artist starts dropping NFTs, it is likely that the price will be quite high. The same is true if a popular artist only has a couple of pieces of art available.
On the other side, if you have an unknown artist who has put many NFTs on the marketplace, the pieces will not be noticed as quickly because the name will not be as recognizable, and there are many options to choose from.
The more traffic that is driven to NFTs and the more purchases that are made, the more popular an NFT will become. As the popularity of an artist of piece increases, so makes the price tag and the demand.
Where Can I go to Find NFTs to Buy?
A quick search will lead you to dozens of sites that you can use to find NFTs that are for sale. Just like any search, it is important that you know what you are looking for and only go to reputable sites to purchase NFTs. There are scammers everywhere, and the last thing you want is to be taken advantage of when you make your first purchase. Here are some of the best sites to find NFTs
Open Sea: At this site, you will be able to both explore and create NFTs. There are many features on the site that make it user-friendly and a way to track both your collecting and viewing history. This is one of the most popular and easiest to use sites available.
Binance NFT: This site is a unique marketplace where you can view digital creations from all levels of artists. One unique feature of this site is the option of mystery boxes. While it is typically preferred to view the file before purchasing, you may wish to purchase blindly.
The mystery box option is listed with a price tag, but the only visual you see is a blue orb. If you look at the price tags, you will see a range of prices from inexpensive to quite expensive. Again, blind purchases are not for everyone, but you could end up purchasing a valuable NFT.
Rarible: This site provides users the opportunity to buy, create and trade NFTs. You will be able to find digital art files as well as sports memorabilia as well. This is a popular site because it is both user-friendly and provides options beyond purchasing.
Foundation: This site is quite simplified with easy-to-access videos and images. When you enter the site, you will see trending auctions, and then you will have an option to search for other works of art.
How do You Buy NFTs?
Buying NFTs is not as simple as putting a credit card number into the computer. Remember NFTs are Crypto Art and need to be purchased with cryptocurrency or Ethereum. To get access to cryptocurrency, you will need to follow a few simple steps.
- Go online and purchase Ethereum from a specific cryptocurrency exchange. There are a few places you can purchase Ethereum, but the most common is Coinbase.
- Transfer the Ethereum to your crypto wallet.
- Use your crypto wallet to purchase NFTs.
Once you have purchased the NFTs, the amount will be deducted from your crypto wallet. When you want to purchase more NFTs, you will have to add more Ethereum’s to the wallet.
(Source: Motley Fool
What do You do With NFTs?
Once you have purchased an NFT, you may wonder what you do with it. When you purchase a physical item, you can display it or store it, but what do you do with a digital purchase? While you may not be able to hold the item you purchased physically, you may be able to display it as a profile photo or on your webpage while giving credit to the creator.
Many people choose to purchase NFTs, only to sell or trade them in the future. If you are choosing to do this, you will want to keep track of the market for your NFT to determine the best time to sell or trade.
Final Thoughts
NFTs are becoming increasingly popular in the digital age in which we live. While most collectors still prefer to have a physical item in hand after they purchase a collectible, there are many that are turning to the digital platform for their collections. Before purchasing NFTs, you need to understand how the cost is calculated as well as the best way to purchase them for your collection.
