Everything that you need to know about NFTs
History of NFT
The history of NFTs can be traced back to the early days of blockchain and cryptocurrency. One of the first uses of blockchain technology for digital assets was the creation of the cryptocurrency Bitcoin in 2009. However, it wasn't until the advent of Ethereum in 2015 that the concept of NFTs began to take shape.
In 2017, the first NFTs were created on the Ethereum blockchain. These early NFTs were primarily used for collectibles and gaming items, such as CryptoKitties. However, it wasn't until the explosion of the NFT market in 2020 that they began to gain mainstream attention.According to a study ( Credits nature.com), 6.1 million trades of 4.7 million NFTs had been made between June 23, 2017 and April 27, 2021.
NFT'S in Recent Years
In last couple of years, NFTs have gained more recognition and attention from the art world, and auction houses like Christie's and Sotheby's started to accept and sell NFT art (Credits : Bloomberg.com )
One of the main studies about NFTs is "The Economics of NFTs" by Christian Catalini and Joshua Gans. They analyzed the NFT market and discussed how NFTs can create new opportunities for creators and collectors, but also how it can lead to market inefficiency, fraud, and environmental concerns.
Another interesting read is the "NFTs and the Future of Art" by The New York Times which discusses how NFTs are transforming the art world, and the potential implications of this technology for the future of art and culture.
Please note that NFTs and blockchain technology are still new and evolving fields. There are also some concerns and challenges with NFTs such as their environmental impact and scalability, but there are also potential benefits such as creating new opportunities for creators and collectors.
Why NFT's are so valuable
Have you ever wondered why S.Lincoln penny has a value over $100k?
You're right, rarity!
Same phenomenon applies on NFT's. As discussed earlier, NFT is a digital art whose ownership is sold and no one else can use it. That sense of accomplishment you get when you have something that no one else has. This feeling of having the rights of something that's second to none. It's the main reason that makes NFT's so valuable.
You might have seen Bored Ape NFT's, people buy them just to be part of the bored ape yacht cluband even the cheapest one of them if going over 200,000 dollars.
On what factors, NFT's worth depends
As discussed earlier, NFT's could be worth up to millions of dollars but there most of them doesn't even worth a penny. The value of a non-fungible token (NFT) is determined by a variety of factors. Now we're going to discuss 5 essential factors that determine the worth of any NFT:
Just like other forms of art, the worth of any NFT also depends heavily on its rarity. These are assets that belong to a single person and can not be used by any other person. It makes them valuable and increases their worth.
Limited edition or one-of-a-kind NFTs are typically more valuable than those that have a large supply.
The authenticity of an NFT can also play a role in determining its value. An NFT that can be verified as authentic, either through provenance information or through the use of technology such as blockchain, is more valuable than one that cannot be verified. Additionally, NFTs that are created by well-known or respected artists or creators tend to be more valuable than those that are not.
It works the same, if we could prove that this painting is the creation of Leonardo Da Vinci, then its value will rise up to hundreds of times. Same principle applies to NFT's too.
There are some NFT's that are based on some specific principle or they make you part of some special communities that a common man couldn't access, just like we discussed about the Bored Ape yacht clubearlier. These NFTs have a specific use-case, such as granting access to a virtual world or allowing the owner to vote in a decentralized organization, which can make them more valuable.
The popularity of an NFT, as well as its creator, can also play a role in determining its value. We've seen a $30 being sold for over $11 million just because of the fact that it became popular. In recent times, NFT creators use social media sites, most probably Twitter and Reddit, to create more hype. It increases people's interest and their product's worth goes into the skies.
They buy big accounts and increase their Reddit presence using upvotes and awards.
This potential is one of the factors that can determine the value of an NFT. Potential appreciation refers to the likelihood that the value of an NFT will increase over time.
However, it's important to note that the value of NFTs is highly speculative, and it's difficult to predict how much an NFT will appreciate in value. Some NFTs may rise in value quickly, while others may never gain significant value. Like any investment, it's important to do your research and consider the risks before buying an NFT.
World's most expensive NFT
Whenever you think about NFT's, value comes into your mind and the first question you mind ask is what's the biggest amount an NFT is sold for?
Prices of NFT's have grown insanely in the past couple of years. We saw dozens of NFT's being sold above a million dollar mark. The most expensive NFT ever sold is THE MERGE by Pak. It was bought collectively by nearly 29 thousand people for $91.8 million in December 2021.
It ranges between a couple of dollars to millions of dollars depending upon its worth. We've seen unexpected turns out in their value too, like a cryptopunk was originally sold for $30 but in 2022 it was sold for over $11 million. So you can never predict their value.
In this digital world, NFT's have emerged as a solid way of owning and investing in digital goods along with some perks. It has made investing and trading easier as you don't need to go through countless contracts and the possibilities of fraud or duplication are negligible. But before investing in NFT's, keep in mind their worth doesn't depend upon reasonable factors, so its value could change anytime. If you want to invest in it, you should study it thoroughly. Right now it's a reasonable investment as celebrities like Logan Paul have invested in it, so in near future it's going nowhere.
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