What gives an NFT value?
As someone without prior NFT experience, you might ask this question. After all, Famed NFT artist Beeple sold their EVERYDAYS: THE FIRST 5000 DAYS for almost $70 million in 2021.
Without the following factors, NFTs will never gain value. Read on as we discuss them below:
NFT value depends on how people can use the token. Game assets and tickets are prime examples of NFTs valued based on their usage. For example, an NFT ticket carries the price of an event pass.
Another aspect of NFT utility is its usage in various applications. However, realizing interoperability is challenging. After all, almost all NFT game players only have one game.
Developers must first build a massive game ecosystem to give more use cases. Nowadays, platforms are working in this direction. It will require serious time and effort, but it fuels the industry’s excitement.
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Aside from usage, how does an NFT gain value? The issuer and previous owners could play a part. NFTs with more value often have famous artists or companies as issuers.
Strong brands issuing NFTs will bring more traffic and users to the ecosystem. However, NFTs with previous famous owners can also be expensive. This method is more challenging since tracking ownership is tedious.
Marketplaces and reputable sellers can have a tracking interface to increase NFT values. For example, a platform can highlight the investors with the most money from trading tokens. They could even list their other owned NFTs.
Do NFTs have value in the future? Valuation changes and future cash flow determine the answer. The former is speculation, but it can become the primary driver behind price increases.
Some experts argue that price movement due to valuation is detrimental to NFTs. However, human nature drives speculation, making it a part of the current NFT financial system.
Future cash flow comes from NFT owners’ earned interest or royalties. Some platforms allow NFT artwork creators to get a small percentage of the value as royalty. It happens whenever another person buys their artwork on a secondary market.
What is the value of an NFT after liquidation? When the NFT has high liquidity levels, its value increases. It’s the primary reason on-chain tokens are more valuable than off-chain ones.
ERC-721 standard NFTs are easy to trade on secondary markets. As long as they have ETH, there will be no issues. It applies even when NFTs lose their utility value.
As long as people are willing to buy and sell, NFTs will have value due to their liquidity.
Learn More About NFT Value Now
We hope our guide answered your question, “what gives an NFT value?” Use what you learned to determine whether NFTs fit your portfolio.
Consider getting an NFT value estimator to discover the best NFTs to begin your investment journey.
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