When asked why non-fungible tokens (NFTs), which are basically tokenized JPEGs, have sold for millions i.e bored ape yacht club most expensive nft,of dollars in recent years, most people would say the following: Because they are works of art, and works of art have intrinsic value. Really. Many people believe it is so simple.
However, this is not entirely correct. PFP NFT projects like CryptoPunks and Bored Ape Yacht Club, as well as digital collectibles like NBA Top Shot, have also sold for a lot of money on the open market, you can check the monkey nft price. Neither of the two examples above could be considered art. As a result, there is still no definitive answer to the question of what makes an NFT valuable.
If there aren’t many of something, whether it’s a piece of art or a digital collectible, the price will rise. What is the connection between the lack of NFTs and monkey JPEGs?
To answer this question, let’s go over the fundamentals of economics. If you stick with me, I’ll keep things simple.
One of the most important things that economics attempts to figure out and comprehend is how to deal with people’s seemingly insatiable wants and needs in a world of limited resources. Simply put, finding a balance between supply and demand.
The general interaction of these forces has an effect on a metric that consumers will eventually see: price. Even if there are a lot of a certain good on the market, if there is a lot of demand for it, the price of that good will be low.
It is also true that the inverse is true. When there are more people who want a good than there are who have it, the supply decreases and the market price increases significantly.
Consider why fruits are frequently regarded as a luxury in Japan. The mountainous terrain of the island nation makes large-scale farming difficult. According to Paku’s report for Wa-Shoku, “family-owned or small-scale businesses” operate the majority of the fruit farms in the region. Despite its small size, the Japanese fruit industry is well-known for its high quality. The picture-perfect strawberries, grapes, and watermelon that line the aisles of a typical Japanese supermarket, according to Paku, are frequently given as gifts to “relatives, business partners, and clients as a way of saying thank you.”
Okay. So, why are NFTs so valuable?
NFTs
Depending on who you ask, NFTs can be very expensive (or valuable) because they have enabled scarcity in the global digital market where it was previously not possible. An NFT is a way to own an image rather than just a prohibitively expensive way to obtain one.
This means that an NFT is purchased rather than just the image. You are purchasing a token that always refers to a specific image or digital asset stored on a blockchain. There are no guidelines. On NFT marketplaces, many people buy and sell NFT art, NFT music, in-game items, virtual property, and other digital goods.
What would the price of something be if it became an NFT? A digital good’s price can be “inflated” by minting it as a non-fungible token (NFT) and limiting the number of them that can be made. Despite what appears to be a simple method, NFTs are not only used to artificially raise the price of a digital good.
What Are Some Other Characteristics Of NFTs That Make Them Valuable?
To begin with, there is art. Masterpieces by well-known artists have sold for millions of dollars on the open market. Similarly, it is difficult for the average person to comprehend the value of fine art. Consider how many works by Mark Rothko have sold for millions of dollars on the art market. At first glance, it may be difficult to comprehend why an orange, red, and yellow painting is worth nearly $87 million.
The price is high because the painting is unique and was created by one of the greatest artists of the twentieth century.
To date, the majority of the most expensive NFT sales have been for one-of-a-kind pieces. These NFTs, like Rothko’s orange, red, and yellow paintings, are one-of-a-kind. The fact that Beeple’s Everydays sold for nearly $70 million in 2021 demonstrates the rarity of these works. Beeple created 5,000 original works for Everydays over the course of 14 years, with the goal of creating something new every day.
Finally, there is the issue of how useful something is.
NFTs are sometimes sold for exorbitant prices for reasons unrelated to art or collection ownership. NFTs are frequently used to raise funds due to the security of blockchain-based transactions.
A good example is one of the most expensive NFT sales we’ve seen so far. As of this writing, AssangeDAO was behind the large-scale sale of Pak’s Clock NFT in early 2022. It was the second most expensive NFT transaction in history.
At the time, the NFT cost exactly 16,593 ETH, or about $52.7 million. Julian Assange, the founder of Wikileakslegal, planned to use the proceeds from the sale to fund his legal defense. Because of how useful it was in this situation, or what it was used for, the NFT was so valuable and expensive.
NFTs that last forever could provide something of non-monetary value to everyone who uses the internet. While limiting the number of digital goods has helped NFT artists and project leaders create a sense of scarcity for their virtual goods, the blockchain could help ensure that these items are always available.
Digital goods used to be practically limitless. In theory, you can purchase as many digital copies of movies, songs, books, and games as you want. Although digital goods will never be out of stock, you will no longer be able to purchase them in the future. Some digital-only items are no longer for sale after digital marketplaces close.
Take Nintendo as an example. The company has a long history of combating piracy and emulation, and it intends to shut down any website hosting games that the Japanese gaming behemoth no longer sells. Unfortunately, this has made it extremely difficult to keep the company’s numerous games alive and well over time.
Using NFTs, all assets stored on the blockchain will be preserved in perpetuity. As blockchain technology evolves, new types of NFTs will emerge. In the future, you may be able to purchase digital masters of your favorite films, but they will not be cheap.
