The value of an NFT fluctuates depending on a few different factors, such as its content, it’s utilityand the scarcity factor. The value of an NFT can definenately be intrinsic, meaning that the more the person enjoys owning it, the more value it has.
The intrinsic value of an NFT depends mainly on the type of NFT it is. Certain types of NFTs will have more intrinsic value for people than other types of NFTs, so their intrinsic value is highly subjective.
The following article is a more thorough explanation of how and why NFTs have value. It also includes a brief guide on the different types of NFTs and how value may be applied.
Why Do Some NFTs Have Value and Some Don’t?
The value of an NFT depends on how much people want to own it and the type of NFT it is. These value definitions can be highly subjective, and an NFT’s value can fluctuate depending on how scarce it is and how much enjoyment consumers will receive from owning it.
Plus NFTs can be attached to physical assets like real estate where the token represents ownership and ownership could be quickly and efficiently traded and transfered. This will create a form or value based on the asset and possibly cash flow. Also, owners of real estate backed NFTs could use said NFTs as security for loans. This is a component of the DeFi and Web3 movement.
To learn more about DeFi and NFTs, check this article out: NFT Vs DeFi: The Differences Explained.
While cryptocurrency is used to purchase an NFT, its value is encrypted and equal to how much the person paid for it at the time of purchase and is referred to as cryptocurrency. After purchase the value of the NFT can rise or decrease.
Physical money cannot be used to purchase NFTs, first you would have to exchange your fiat money for a cryptocurrency like Ethereum.
But the primary reason that some NFTs have value and some don’t is due to intrinsic value.
The more enjoyment they think they will get out of it, the more they are willing to pay for the NFT, thus increasing or decreasing its value. If an NFT includes certain things that the consumer likes or dislikes, then they will be more or less likely to purchase it.
The Type of NFT Affects Value
There are six main types of NFTs (but the list is increasing quickly), including:
Each of these types will have varying amounts of intrinsic value, but they can also have scarcity value or utility value.
Art NFTs are one of the most popular NFT types on the market right now. They typically include digital images and graphic interchanging formats or GIFs. Creators are even minting Memes and Poems into NFTs.
The intrinsic value of these NFTs can also be affected by scarcity value, which is when something that’s rare is worth more than something that’s common.
Scarcity value can help increase the amount of intrinsic value that an NFT has. The rarer an NFT is, the higher its scarcity value is since there’s a limited supply.
Consumers may get more intrinsic value from knowing that they own a scarce NFT. These value definitions are highly subjective, and an NFTs value can fluctuate depending on how scarce it is and how much enjoyment consumers will receive from owning it.
If having a rare NFT artwork will be valuable for someone, then the NFT has intrinsic and scarcity value. If you want to see some insanely valuable NFT artwork then look no further than the artist known as Beeple. He has sold millions of crypto worth of NFT digital art.
Gaming NFTs are typically gaming items that can be difficult to find in certain games, such as characters or weapons. Consumers purchase them as collectibles and can then use them in-game.
These NFTs can have intrinsic value and scarcity value, but another type of value they have is utility value.
Utility value depends on how the NFT can be used, and gaming NFTs are considered highly valuable in this regard because they can be used to complete tasks in video games.
Utility NFTs are also very valuable when it comes to utility, as the name would suggest. This type of NFT refers to those that have specific functions. For example, an NFT of a ticket can be used to gain access to a show; therefore, it’s a utility NFT.
Collectible NFTs can be purchased by collectors who want to own something rare. These NFTs typically have very high intrinsic and scarcity value since the need for someone to own it is very high because the collectible is likely scarce.
Sports collectables like video highlights are a big part of the NFT market. Almost all the major sports of the world are taking part, we are talking about basketball, UFC, soccer and baseball.
Metaverse NFTs are virtual worlds that consumers can use to create a virtual reality. They are very high in utility value since the NFT can be used in a different function. Still, they can also have intrinsic value if the consumer will get a significant amount of joy from owning things in a certain world.
One of the most popular places or platforms to participate in a mestaverse is Decentraland. You can buy land, houses and all sorts of add ons. You can even build out a gallery to show off your art NFT collection.
If you need more places to show off you digital NFT art, then check out this list of the top 8.
Finally, other NFTs refers to all other categories available on the market. These can range from real estate NFTs to music NFTs. As the market continues to grow, the different types of NFTs available will grow along with it.
Intresting Concepts of NFT Value Loss
Some NFTs don’t have any value because there isn’t any perceived value by the market. If an NFT doesn’t include anything that could put a spotlight on it, such as a celebrity, famous artist (artist with large social media following) or pop culture trend, then it’s perceived as not valuable and likely won’t sell for very much.
Here is one interesting example of how an NFT could lose value. NFTs can be created when someone notices that an idea, usually an image or person, is trending and getting attention from a broad audience of consumers. The NFT is then uploaded to a marketplace site, and consumers gravitate towards it since whatever it’s portraying is popular at the time. But in a few weeks, after the trend the NFT is riding on has died down, it may have little to no value.
This is called hype when a particular thing or idea is given significant attention, and people build rapport with it. In the case of NFTs, it usually takes place in the form of pump and dump campaigns.
They typically take place in online chat rooms and forums where people discuss what they are going to buy and increase the excitement surrounding it. When they think they have made enough money, they sell the NFT to the highest bidder and then move on to the next trending topics.
If this were done on the stock market, it would be illegal, and participants would have charges pressed on them. But the NFT market is very young and is thus very immature, so some NFTs aren’t given any value while some are given too much value.
Some people even believe that cryptocurrencies and NFTs have the potential of turning into pyramid schemes and of course oversaturation can be a big problem.
How To Know If An NFT Is Worth Buying
The best way to know if an NFT is worth buying is if it has intrinsic value to you, or you know it will have intrinsic value to someone else. If an NFT includes something you enjoy or you think will be a worthwhile investment, then it’s safe to say that it’s worth buying.
The value of an NFT heavily depends on how much a purchaser will enjoy having it, and this can depend on a few factors. For example, if an NFT was created by an artist whose style you enjoy, then it will have more value to you than to someone who doesn’t enjoy the artist’s style.
NFTs have turned into an amazing way for fans and collectors to support there favorite artists especially in digital art space which up until NFTs had been a very difficult area to make a living in fine art.
On the other hand, some people purchase NFTs as an investment and intend to sell them to someone else who will have a greater amount of intrinsic value for the NFT. If an investor thinks they can sell the NFT for more than what they purchased it for, then the NFT is considered worth buying.
As always do your due diligence when considering a purchase and try not to get scammed. Always very you are buying what you want and check the ownership and history of the NFT. This article shows you how: How to Check the Ownership of an NFT (7 Methods).
As you can see intrinsic value can be applied to NFTs yet there are other ways to value NFTs. The value of NFTs from a monetary point of view can go up and down.
It is my strong opinion that NFTs are not going anywhere and are here to stay and definitely will not die out. In the near future they will be an even bigger part of society. Want to learn why? Read this: 10 Reasons Why NFTs Will Change the World.
Also, if you want to start making your own NFTs and sell them these 2 articles will help you save money and show you how:
- How Much Does It Cost to Create an NFT? A Simple Answer
- The 3 Cheapest Ways to Mint an NFT: Full Breakdown