What Makes NFT Digital Art Valuable?
The rise of non-fungible tokens through 2021 made NFTs crypto’s newest buzzword. Mega sales, to the tune of millions of dollars, have drawn interests from people looking to cash in on the NFT space, which proponents say will be the next big thing for creating and distributing content. However, critics have raised concerns regarding the value of NFTs and express doubt that the NFT craze could be a bubble in the offing. Here to set the record straight, this article simply breaks down what makes NFT digital art valuable.
Why Do Digital Art NFTs Have Value?
Plainly, digital art NFTs are valuable because they are scarce and highly demanded in the market. From its naming, an NFT is a unique token that is not easily exchangeable or equivalent to another token, meaning it is non-fungible.
NFTs are created in a process known as minting, powered by the underlying blockchain technology. Each blockchain that supports NFT creation has dedicated token standards that make it easy for users on how to make NFT digital art, without any coding experience or skills in blockchain. Ethereum, blockchain’s highly programmable and popular NFT digital art platform, deploys ERC721 and ERC1155 token standards for minting NFTs.
Since NFTs are minted on a decentralized environment, there are no intermediaries or gatekeepers to regulate access and distribution of art. Collectors, traders and investors have unrestricted access to NFTs via marketplaces where they may purchase their preferred collectible at a value set by the seller or through an auction. Such decentralized markets ensure creators can reach art fans across the world. As a result, more artists have joined the space to create digital art for NFT, and in the process increased their earnings.
Features Driving Up Value of NFTs
NFTs are Indestructible: The NFT token standards embed digital signatures on each token, securing it against duplication or destruction on the blockchain. Often times, creators will issue NFTs that are visually or audially similar and even then, each token on the blockchain can be distinguished from the other with its unique signature. This feature of NFTs ensures that every token remains unique and rare, keeping the supply low while demand rises.
NFTs are Easily Verifiable: NFT token standards simplify the process of tracking the ownership of NFTs as they are created and transferred within the blockchain. So, buyers are incentivized to buy unique and original art from creators they love, without fear of getting scammed or contributing to piracy. This simple way of verifying authenticity of NFT digital artwork also drives value for NFTs.
NFTs are Indivisible: Each NFT maintains its uniqueness by remaining in its original form, without having smaller denominations like fungible tokens. So, a digital art NFT will remain unique and valuable as it is not divisible into smaller units. Just like paintings maintain their value in their complete state, these NFTs’ indivisibility adds to their scarcity and value.
The rise in activities on the NFT space has driven more demand for these tokens and consequently raising their value. With huge potential in disrupting creation and distribution of art, music, and content, the popularity of NFTs will grow even more.
What makes for a valuable NFT?
A valuable NFT is one that is scarce in supply and has the crypto community talking about it. To create such conversations, the NFT must offer the potential of value appreciation to buyers. This can be demonstrated by how well the NFT project is organized.
Is NFT art a good investment?
Yes. NFT art is gaining popularity fast among creators and fans. This makes for a good investment as the value of NFTs is generally on an upward trend, with significant returns for traders.
Why are NFTs worth millions?
Scarcity and speculation. Each NFT minted possesses rarity that when coupled with a high demand, raises the value of the token. Also, investors may speculate that the prices of certain NFTs will increase and potentially purchase the collectible for millions of dollars. The record-breaking NFT sale is Beeple’s Everyday: The First 5000 Days, which sold for $69 million.
Can you make money with NFT art?
Yes. You can mint your own NFT and sell. Also, you can buy NFTs at a low price, then sell for a higher price on secondary markets.