NFTs became the talk of the town in the last few months, and you’d have to have worked pretty hard to avoid the topic. Investing has taken a new direction and is slowly making the switch to NFTs. Traders around the world are gearing up to get a piece of the NFT action and for good reason. If you’re new to the game, you might be wondering what NFTs are, and why are they so expensive?
There are plenty of reasons to want to learn more about NFTs, as they are a new and lucrative investment option for the future. If you’re looking to learn a thing or two about NFTs, or simply understand them better, you’ve come to the right place. Here’s everything you need to know about NFTs, from how they work to why they’re so expensive. Read on and stay in the know to keep up with the fast and exciting world of NFTs!
What are NFTs?
If you’re new to the topic of NFTs, or you need to jog your memory, here’s a quick reminder. An NFT is a non-fungible token that you can trade for a variety of different items. Anything can be considered an NFT, from digital files to music, to video game accessories to collectibles. These digital items are referred to as tokens or assets and are unique, irreplaceable, and linked to the blockchain. For the time being, the most prominent and popular NFTS on the market are various forms of digital art. These NFTs are non-interchangeable and can cost a fortune.
How do you get NFTs
Just like with cryptocurrency, you can get NFTs through online trading halls and marketplaces. Since NFT trading is still in the early days, those at jungle recommend finding marketplaces that are inclusive and easy to use. Now that you’re caught up on what non-fungible tokens are and how to use them, it’s time to understand why they’re worth so much. To understand why NFTs are so expensive, you need to understand how they’re valued first. To help catch you up to speed, here are some of the main reasons why NFTs cost so much.
Expensive by design
Before getting into the nitty-gritty details, it’s important to understand that NFTs are expensive by design. The ownership of non-fungible items lies solely with the person who owns them. The creator or buyer verifies the authenticity of the non-fungible asset, making it unique and one-of-a-kind. NFTs cost so much in the first place precisely because of this. Originals are always going to be more expensive than copies because they are unique and irreplaceable.
Works of art
Another main reason why NFTs are so expensive is that they are considered unique works of art. Buying a digital NFT is like owning the rights and ownership of a unique digital painting. Although this artwork may be beautiful, it costs a lot of money to own it.
These digital pieces are much like their physical counterparts in many ways. If you want to buy a one-of-a-kind painting from a well-known artist in the real world, you’re going to have to spend a pretty penny. Artists and the art market decide on the worth of their artwork, so it makes perfect sense why NFTs cost so much.
Another reason why NFTs cost so much is less about the quality or the type of artwork, and more about its uniqueness. Just like with very rare items in the real world, NFTs are expensive because there are so few of them on the market.
Artists and creators will produce a limited amount of NFTs, which keeps the price and scarcity of their artwork high. You can get your hands on a copy of the Mona Lisa for dirt cheap, but the one and only original is priceless. An authentic singular piece of artwork will always drive a hard bargain, simply because of its rarity. Whether they’re works of art or unique collectibles, it’s easy to understand why one-of-a-kind NFTs are so expensive.
Market and buyer perception
Because NFTs are digital artwork pieces, they are only worth as much as their creators, buyers, and the market says they are. Artwork is subjective, and if creators are allowed to value their work at whatever price they want, why not reach for the stars? If an NFT creator can price their work at a million dollars, and if someone is willing to buy it, the market will reflect this. If the market chooses to value a piece of artwork at a certain million-dollar price tag, buyers have no choice but to comply.
Hot new investment
Last but not least, one of the reasons why NFTs will continue to be so expensive is because they’ve started off that way. It’s difficult to predict what direction the NFT investment market will go in, but the future seems to be looking bright. Since so many people have already invested huge sums of money into NFTs, it only makes sense that they will want to continue doing so. The goal to make more money as an NFT creator, owner, and investor, is enough to drive up the prices and keep them high.
So there you have it. Although the concept of NFTs may still be new to some, it’s pretty easy to understand once you get into it. Once you’ve learned the ins and outs, you can start asking the big questions, like why NFTs are so expensive. To answer that question, you really have to look at the nature of NFTs and how they came about in the first place. NFTs are so expensive because they are works of art. Art will always be expensive, and so will NFTs.
Any item that is unique and one-of-a-kind will always be valued at a higher price, and the same goes for NFTs. Market and buyer perception will always influence the price of any item on sale. When it comes to expensive NFTs, what the creator, buyer, and market say, goes. Last but not least, NFTs have such a steep price because they’re a new and fresh concept that is already a million-dollar industry. Now that you’re more familiar with them, it makes perfect sense why NFTs are and will continue to be so expensive.