Why NFT Art Is So Expensive?
With news of NFTs going for millions, the world is buzzing with equal parts excitement and confusion. Those investing in NFTs, and everyone else in the crypto space, are thrilled by the potential of these digital assets; while those still wrapping their heads around the concept of blockchain are filled with questions—what are NFTs, and why are they so expensive? But not all NFTs cost an arm and a leg; you can find some decent ones, like those made using an NFT creator, such as what we offer here at NightCafe, at affordable prices on any NFT art marketplace. But the ones with immense value are expensive due to their rarity and value (be that underlying value, potential value, and market value).
What Are NFTs?
NFT art is inherently expensive because it’s an NFT or a “non-fungible token.” That means it’s a unique and irreplaceable asset that’s stored on the blockchain. It can be any piece of digital content: art, music, tweets, articles, domains, virtual worlds, games, collectibles, etc.
Since it exists online, many people wonder how NFTs can be owned, given that people can simply screenshot, duplicate, or edit these files. But technically speaking, the NFT isn’t the content itself. Instead, it’s the digital contract that proves the ownership of the item.
Think of it like a piece of physical art, say, like the Mona Lisa. You can see images of the Mona Lisa everywhere. It’s on t-shirts, mugs, memes, etc. But there’s only one original piece. NFTs follow the same concept. An NFT art has only one original form, and its ownership can be proven with the smart contract, even if people duplicate it all over the Internet.
How Much Are NFTs Worth?
You’ve probably seen the news about NFTs selling for millions. Last year, the most expensive NFT (Mike “Beeple” Winklemann’s collage of daily images since 2007) was sold for $69.3 million. In the same period, Cryptopunks was cashing in multi-million dollar pixel art.
These prices can seem intimidating, but fortunately, not all NFTs have that same value. In reality, only a handful have those crazy prices. The rest, which is largely the majority, are actually not worth a lot—but can still be great investments if they’re pieces to your liking.
Why Are Some NFTs So Expensive?
For NFTs that reach skyrocket value, the question is: what makes them so expensive? Similar to other rare items, the value of NFTs depend on the following factors:
It’s basic economics. Scarcity brings up demand and, therefore, drives up value. If an NFT is rare, like when it’s the first edition or a limited piece, then it becomes more expensive.
There are several values attached to any piece of NFT art: its underlying value, its potential value, and its market value.
Underlying value refers to its value as itself—as the NFT made by a specific creator. This can already be high if the content is rare or if it’s made by a brand, celebrity, or another professional creator.
Potential value refers to what the piece could be worth later on. This can be difficult to determine without the help of statistics and analysts, but if the potential value of an NFT artwork is high, then its current price will reflect that.
Market value is the value of the piece in the current market, i.e. how it fares over its competition.
Even if the piece isn’t valuable by these standards, the NFT art can still also be valuable to the individual buyer, say if the content is created by a friend or resonates with the person.
Get In on NFT Art Today
Though not all NFT art can rake in millions of dollars, all NFT art can be valuable in one way or another—even if it’s not worth a lot by industry standards. This is great news for anyone looking to get into the NFT art space, which is made easier with NightCafe’s AI NFT art generator. You can create NFT art even without a professional art background or any coding skills. With a vision and some keywords, you can make beautiful NFT art that you can sell in no time!