Will NFTs go up in value? Why are NFTs so valuable? Find out why some are worth millions
The recent popularity and increased demand for NFT, or more precisely interchangeable tokens, means that the cryptocurrency world is moving to a new unprecedented high.
- Are NFTs worth anything?
- How does the value of NFTs increase?
- Why would anyone buy NFTs?
- Are NFTs a good long-term investment?
- What are the risks of investing in NFTs?
Cryptocurrency enthusiasts are excited about the multi-million dollar turnover (in dollars) in this new market for digital products and assets, which has fueled the rapid career development of some digital artists like Beeple. Meanwhile, some critics and analysts have warned of a bubble around NFT and the market for selling crypto-art, which has led to a surge in prices.
The surge in demand for NFT has been driven by recent million-dollar sales, such as the first tweet that Twitter CEO and co-founder Jack Dorsey sold for $2.9 million and the $69.3 million sale of crypto-art digital artist Beeple.
Everydays: The First 5,000 Days – Beeple / Christie’s
On the other hand, brands and companies such as Taco Bell (a Chinese fast food restaurant), NIKE (a company that makes shoes, clothing and accessories), TIME magazine (news magazines) and The New York Times (a daily news paper) have also launched and sold new products and services in the crypto space, especially in the NFT space.
Since most NFTs are released on the Ethereum blockchain, many people have wondered if they will appreciate and increase the value of the Ethereum cryptocurrency (ETH) over time. NFTs, or more precisely, non-exchangeable tokens, are a type of digital asset, or crypto-asset, designed to create a digital deficit of a particular object and secure ownership of a unique virtual object, such as digital art, an image, photo, music, GIF, video, tweet, PDF documents and even plain text documents.
Are NFTs worth anything?
In finance and economics, there is an interesting distinction between functional value and intrinsic value of an asset, commodity, product or service. You can do the following analysis and compare the two: “How can I use this? How do I benefit from it? Is it important to me?” and “How much do I like this thing, product or service in and of itself?” It’s the functional value of NFTs where most of the discussion is about whether or not NFTs are worth something and why people buy NFTs. The functional value of an NFT asset can be simply because you want to show people your cryptocurrency portfolio and your taste in art, or other things, like an interest in the amount of money you can make with a particular NFT in this speculative market.
The second way to look at the value of an NFT asset is through its intrinsic value. For most people, it doesn’t make sense to spend money on digital things that can easily be downloaded and shared online. On the other hand, there’s another way to think about the value of NFT when it comes to supply and demand.
NFT is designed to create digital scarcity and provide a limited amount of digital goods. NFT does not guarantee demand for an asset. Demand usually depends on various factors such as the stock market and stock exchanges.
How does the value of NFT increase?
The value of any asset class increases according to the old law of supply and demand. With NFTs, it’s exactly the same. If more companies, brands and celebrities launch digital versions of their products and services in the form of NFTs, the demand for these crypto-assets will likely increase their prices in the short or long term.
As NFTs create a digital scarcity of digital files and turn them into digital assets while guaranteeing proof of authenticity, their value increases over time as their usefulness cannot be challenged like any digital file available on the Internet. This is different from traditional assets, such as the stock market or the financial market, which are often subject to devaluation due to the external and internal environment of the listed company and inflationary pressures. This devaluation does not occur with NFT assets.
The price of an NFT usually depends on demand, speculation and other factors such as the utility, transaction history of the asset, liquidity premium, the way a celebrity is associated or even the receipt of rewards, prizes and discounts on brand products and services. In addition, NFTs could completely change the art world because this new technology allows direct payments without intermediaries for artwork and provides royalties to digital artists for each future sale of their NFT work, meaning that for the first time, content creators and artists can directly benefit from recognition of their digital works and products after some time.
Why would anyone want to buy NFTs?
Truth be told, it depends. NFT stands for non-interchangeable token, which means you own a unique and exclusive collectible token. It’s like having a crypto-asset or digital asset in your wallet that has legal properties or even sentimental value. If you look at NFT from that perspective, you can collect or own anything and assign value to it as you see fit. Thus, when it comes to investing in NFTs, it’s best not to view them as short-term or long-term investments, but to buy NFT tokens that relate to your personal interests or hobbies.
If you’re a big fan of the rock band Kings of Leon, for example, buy one of the band’s NFTs released that offers a set of rewards, such as front row seats on every tour or discounts on the band’s merch for the rest of your life. Or WePlay Collectibles, designed for people who want to be a part of cybersports events and show that they like players and talent and merch differently. WePlay Collectibles is part of a platform where you can buy items with NFT technology, both digital and physical. These are awards and items associated with a specific tournament.
WePlay Collectibles is powered by Ethereum, a software platform that uses blockchain technology. Blockchain is like a distributed ledger, a system that allows parties to exchange products, services or financial assets while securely managing transaction records. They are encrypted, organized into a series of blocks accessible to all participants in the platform (or rather their computers), but they cannot be changed. In this way, you can be sure that transactions of non-interchangeable tokens are protected from fraud. The blockchain network is controlled and regulated by smart contracts.
Buying unique digital artwork from WePlay Collectibles is easy. You can do it through the OpenSea Marketplace.
To buy NFT, you’ll need ETH, BNB or BUSD in your Binance account. Once you fund your wallet with any of these cryptocurrencies, you can bid on any interchangeable tokens available on the Binance NFT marketplace.
Find the NFT you’re interested in, bid, win the auction, and the token will be sent straight to your wallet! With any of these cryptocurrencies, you can bid on any NFT available on the Binance trading platform.
Find more information about the platform and NFTs here: https://weplaycollectibles.com/ru/
If you love digital art and online gaming, buy these crypto-assets to participate in the new digital economy and start collecting new and more interesting digital artwork.
Consider buying NFTs purely for fun or as a way to support artists or other content creators whose content you like and want their work to continue to be published.
Are NFTs a good long-term investment?
Does it make sense to buy Pokémon cards or any other cards for your retirement fund? Perhaps one of them will be worth thousands and thousands of dollars in the future, but you probably shouldn’t particularly count on it.
As we explained above, buying an NFT only makes sense if you’re doing it as a hobby, supporting an artist or receiving rewards in the form of brand products/services, or if that token is used on a particular platform, like an NFT representing an active cryptocurrency in an online game you like to play.
For example, you can play the game, earn points, exchange points with other players, or trade them in the form of NFTs on NFT trading platforms like OpenSea. This is a viable option to use a non-exchangeable token (NFT).
Right now, it’s impossible to predict whether the value will increase in the medium to long term or sometime in the future; it’s also hard to predict whether an NFT from a famous artist or Internet celebrity will eventually become really valuable.
And you should only buy NFT or crypto art because of the artistic value or because you love art, not because of future profits or return on investment. This doesn’t mean that you can’t make a profit by investing in crypto art, it just means that your primary motivation shouldn’t be to make a lot of money in the short term with NFT art.
What are the risks of investing in NFT?
NFT is a new asset class that, like any established asset, has numerous risks. The main risks of investing in NFT, or non-swappable tokens, are the inherent risks of investing in any file that could become worthless the next day, which means you could lose your money.
The other major risk is that Ethereum could fail as a blockchain and cryptocurrency, and NFT would become part of another blockchain or centralized database.
In addition, when investing in crypto-assets such as NFT, you will need to “store” your NFT tokens in a secure digital wallet such as Metamask, Trust Wallet or Coinbase Wallet. Consequently, you need to keep your private key in a safe place because you will need to enter your private key or passphrase and public address every time you want to trade using NFT.
Obviously, if you lose your access data, your NFT will also be lost forever.
On the other hand, these assets are part of a decentralized marketplace, which means that there is no central authority controlling the asset, and there are currently no rules and regulations on non-interchangeable tokens (NFT), which suggests that you will have to make your own decisions about the good value or fair price of NFT and be willing to take on these and other significant risks of this speculative market.
This is because many NFTs are tied to the reputations of their creators. For example, when the NBA partnered with Dapper Labs, the developers of the Flow blockchain, to create and launch the NFT NBA Top Shot platform, normal people and NBA fans were going crazy for American Major League Basketball “moments” or “highlights” they could buy, because it was something new and interesting.
Regardless, the owners and investors of the “moment” or “highlight” obviously don’t get any copyright or commercial distribution rights to the file associated with the NFT token. Instead, they just get a copy of the exclusive video clip.
If you’re still interested in investing in NFT or trading crypto-assets, do your research, understand the risks and the market before you start developing an investment strategy.
If you as an investor or buyer are interested in artwork, you can buy NFT with the goal of creating your own virtual gallery.
If you want to make money in the NFT art market, you need to understand the crypto art market, identify and analyze the supply and demand for a particular collectible crypto asset and look for signals that play to the upside in the secondary market. Consequently, avoid entering the scene during the speculative mania of the moment.