Several people have invested in digital assets; one of them is most talked about NSTs. In fact, NFTs have generated billions in the past year, and one has sold for a whopping $69 million!
The big question is, why would people pay so much for digital arts? Let's walk you through all the reasons why non-Fungible tokens are worth so much.
People buy non-fungible tokens because they believe it is an investment opportunity.
Purchasing it at a lower price, the value of the art might appreciate over time and will be worth more than its original price.
Its new owner then takes advantage of this and sells it to make profits. Another reason is to have exclusive rights over the art in question.
Our guide gives more details on these reasons and covers the following:
- 6 Reasons People Buy NFTs
- What Sets NFTs apart from other digital assets?
- How many people buy NFTs?
Knowing why people buy NFTs will help shape your impression of this blockchain use case, especially if you’re just
If you're ready to discover why people purchase NFTs, let's dive in.
6 Key Reasons Why People Want NFTs
There are several reasons why people would spend millions on a piece of digital art. We have highlighted and explained why people want NFTs below.
People want NFTs to Make a Profit
One main reason why people want NFTs is so they can make profits from the resale in the secondary market. There are individuals whose mind is geared toward seeing an opportunity in everything. When NFTs first hit, people like these saw them as a business venture thanks to their unique characteristics.
First, there can't be two of the same NFT because each is unique. They're also indivisible, making them worth more than some cryptocurrencies.
An NFT believed to be of value holds the interest of many. People who are quick to purchase these valued arts can resell them for a much higher cost after some time.
Richard Chen, the partner at a crypto investment firm and creator of Crypto Art, mentioned that
A good example is "Reflection," a piece made by XCOPY. It initially sold for $98,500 but was later resold for $872,500, a long way from the primary sale.
People Want NFTs to own Intellectual Property Rights
When you buy an NFT, you might be opportune to own the Intellectual Property related to that token. These rights allow you to use the NFT in certain ways that the creator approves.
IP rights originally belonged to the token' creator and could include the following:
- Public display of the work
- Distribution of copies
- Selling items branded with the artwork (if it is an artwork)
Therefore, the creator must grant these rights before another person can do those mentioned above. However, the term of use usually depends on your agreement with the creator.
IP rights are one of the perks of buying NFTs, as they allow you to use these works as permitted. You can also earn from allowing others to recreate the art in their work.
Buying Original Copies from the Creator
It's no news that beautiful pieces have several copies that are sometimes sold as the original. But, purchasing NFTs allows a direct transaction between the artist and the collector. With this, you're certainly purchasing an original piece of the work.
NFTs also offer proof of ownership which records that a transaction has taken place. This reduces misunderstandings about who owns the token.
Utility
NFTs also offer some form of utility to holders. These utilities can range from exclusive access to content, shows, or meetups. Some NFT collections also offer access to online educational materials or partnerships with other NFTs. The list is endless.
Ownership of Physical Goods
Buying an NFT doesn't mean that your asset is only digital. After acquiring the digital asset, some tokens might come with a physical good. This adds additional value to the token you acquired.
NFTs and their Physical products are not limited to artworks. Since anything can be made into a non-fungible token, you might as well purchase a piece of land as an NFT and have a physical location to show for it.
Easy to Secure Digital Ownership and Rights
NFTs are one of the most reliable ways of verifying and securing digital ownership. The decentralized blockchain on which it operates makes it easy to track and verify. This technology also preserves it from forgery or theft.
What Sets NFTs Apart from Other Digital assets
The blockchain allows NFTs to be publicly verified without needing a centralized authority. It also acts as a digital signature to confirm ownership and authenticity.
However, the potential to sell NFTs for profits has contributed significantly to their hype. Pablo Rodriguez Fraile, an art collector, paid $67,000 for a 10-second video clip from an artist before selling it for $6.6 million.
NFTs are also quite useful in other scenarios; they can be used to store recollections and as digital treasures. A good instance is when Jack Dorsey, the creator of Twitter, sold his very first tweet, which is over 15 years old, as an NFT.
NFTs are not just images; they can't be copied and reproduced like JPEGs. Therefore, they're perfect for displaying digital art, in-game objects, and valuable collectibles.
While NFT rights management is still in its infancy, the technology may pave the way for a new era of digital ownership.
How Many People Buy NFTs
In the final quarter of 2021, global NFT trading reached $10.7 billion. The NFT market's target audience is growing and is no longer only a small number of speculators. Here are some data that shows how many people are buying non-fungible tokens.
- According to CivicScience's research, those making under $25,000 annually invest in NFTs at a pace comparable to those making over $150,000.
- From a Finder survey, the top five nations with the highest share of NFT adoption are all in Asia.
- According to a Morning Consultant survey, one-third of Americans collect NFTs as an investment or pastime. 23% of Millennials in the US also collect NFTs.
Final Thoughts on NFTs and Their Worth
While some might think investing in NFT is unreasonable, it depends on why they buy them. Some buy these tokens because they think they will retain value over time and be a profitable investment alternative.
Since NFTs are hard to forge or steal, some invest in them to safeguard digital ownership of tangible things and collectibles. Others buy NFTs to access premium benefits like Intellectual property rights to use the artwork as they please.
Over the past two years, there's been a constant influx of new customers into the NFT sector. As a result, this market keeps expanding and changing. According to analysts, NFTs will eventually become more valuable assets and open up new ownership opportunities.
Frequently Asked Questions
How Do You Buy NFTs
Before buying NFTs, you must have an exchange account and a crypto wallet with some cryptocurrencies. Afterward, you find a suitable marketplace where you can get tokens of your choice. Connect your wallet to the NFT marketplace. Search for your preferred token and initiate a transaction.
What NFTS Should I Buy
The NFT you should buy depends on your preference and your purpose. If you're looking to resell, you should buy tokens with a good chance of making headway in the market. On the other hand, if you're purchasing for fun, you only need to find an NFT that catches your fancy.
Where Can I Buy NFTs
You can purchase NFTs on marketplaces like Opensea, NBA, and Nifty Gateway. There are two types of marketplaces - Open, closed, and proprietary. Open marketplaces allow anyone to trade on their platform, while closed places are invitation-only.
Why Are NFTs Expensive
NFT values depend on how much a person is willing to pay for it. For instance, Sina Estavi thought the first tweet to be like Monalisa, the famous painting of Leonardo da Vinci. Another reason might be because of a bubble. This is when investors purchase an item to sell it shortly at a higher price.
Should I buy NFT
Buying non-fungible tokens depends on you. Many analysts believe that some NFTs would seriously impact the Metaverse. Therefore, it is a worthy investment, especially if it's an item that can be used in the Metaverse.