The attention being given to the NFT market is increasing every day. Hardly a day passes without news of someone making a million dollars on NFTs being circulated.
For instance, the NFT; Cryptopunk, which was given away for free in 2017, now has a floor price of 63.5 ETH today, which is worth more than $98,000.
With the global NFT market size growing to around USD 3.0 billion, it is safe to say that NFTs have come to stay.
Why and how is this NFT valued, you might ask? I am here to tell you that the value of NFT can be explained.
If you want to buy an NFT, there are plenty of factors to consider. Not all NFTs are created equal.
In this article, I will show you the reasons why some NFTs are worth more than others.
So, let’s get started.
4 Reasons Why Some NFTs Are Worth More Than Others
When evaluating the value of an NFT, it’s important to look at factors such as utility, ownership history, tangibility, and rarity. Let’s explore this.
1) Rarity
Raririy, in its simplest term, means how difficult it is to acquire something.
Relating this to the present discourse, some NFTs are rarer than others, and it is this rarity that drives the massive increase in value of an NFT.
For instance, in a collection of 1000 cryptopunks, each punk will have unique traits, features, or other characteristics that will make them different.
Popular NFT collections with rare and high value are Cryptokitty, Beeple’s Everydays, and First 5000 Days.
2) Utility
The reason why some NFTs are worth more than others also lies in their utility. Do they NFTs have other applications that will extend their value into the future?
Currently, NFTs are used in many applications. For instance, an NFT might be a key that grants access to a particular service or piece of content. This application is found mostly in gaming.
NFTs that have many use cases are worth more than others. For example, an NFT might have use cases in games like characters, spells, or virtual lands. Such NFTs will have good value as people will believe that as the game community grows, more people will be willing to pay a high price for the NFT.
3) Ownership History.
The values of NFTs can also be determined by the ownership history of such NFTs. Not only that, the popularity of the creator also plays a part here.
NFTs created by famous artists tend to be valued very well. For example, Beeple, a popular digital artist, has three of his NFTs in the top 10 NFT sales of all time.
When creators who have achieved this kind of fame mint new NFTs, they will be valued so much.
Also, if a popular celebrity or any other popular person has owned an NFT at some point in the past, the value of such an NFT tends to be worth a lot. For instance, the NFT of a collectible card used by a player to win a competition will have more value than a card without such a history.
4) Circulation.
How much people value an NFT is also determined by its liquidity. When an NFT is being sold and transferred to a new wallet, the blockchain records this transfer of ownership, and investors can use this history to inform their decision. NFTs with higher liquidity are valued higher.
An NFT minted on the ETH blockchain tends to be immediately resold. This is because investors feel more secure banking with the ETH network, which is the most popular blockchain among other NFT blockchains.
Investors value NFTs with high liquidity because they believe it will be easier to sell.
Conclusion
There are millions of NFT out there. Selecting one with a good ownership history, utility, high circulation, and, above all, rarity is a good road-map to buying a valued NFT.
During our research, all our findings on why some NFTs are worth more than others centered on these 4 factors. So, if you were able to understand how these factors affect the value of NFTs, you have known the reason some NFTs are worth more than others.
Disclaimer:
The information on this page is based on our experience and the research we have done and should not influence your financial decision. Please conduct thorough research before making any major financial decisions.
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