Did you know that digital pieces of land, artwork or collectibles can now be worth up to $6.6M? The hype is now all around investing in Non-Fungible Tokens (NFTs), and maybe you should consider investing in them too.
What are they?
You know how you are able to view images or videos online for no costs? Well the concept behind NFTs is that you can actually purchase them and prove ownership over these digital assets. NFTs use blockchain technology to create an official copy of a digital media or content which could be sold by various parties such as sports entities, musicians and artists. These digital copies are also sold at a much higher price than their physical forms. Blockchain based assets work in a similar way to cryptocurrencies, such as Bitcoin, where each NFT receives a unique certificate of authenticity. Thus, when they are sold to a new user, there is a written record of this transaction.What is even more interesting is that this certificate can not be changed or destroyed. It is as authentic as it gets.
Then what is the difference between Bitcoin and NFTs? With cryptocurrencies you are able to exchange it, but with NFTs, every piece of digital content is unique so it can’t be replicated or hacked without it being reflected on the authenticity certificate. These NFTs also can’t be exchanged or divided into smaller portions.
Example case: “Estate 331”
Also known as “The Secret of Satoshis Garden”, Estate 331 is a digital piece of land. Scrap everything you thought you knew about real estate, because this very piece of land is not accessible by car or by foot. The area consists purely of digital codes located in an expensive area known as “Genesis Plaza” and the only way to visit it is on a computer. How much is this piece of land worth? I’m glad you asked, because it was sold in 2019 for $80K!
Why are they so expensive?
You might be wondering why these digital and intangible pieces of media are worth so much money! Let’s use the subjective theory of value to explain the surging prices of these tokens. The theory proposes that the price of an item derives from its importance to the consumer and not necessarily from the value of an item in itself. Although these digital pieces of land or artwork may appear to be invaluable for some, they are worth millions to others purely based on their unique and one of a kind nature. Therefore, a combination of its scarcity and high demand drives the prices of NFTs.
Why would anyone buy it?
You may not be able to relate to the prices of NFTs upon first glance, but much like other original pieces of art- a lot of emotional value is attached to them. To art collectors and such, there is something rather empowering about owning an authentic item that no one else has access to. This also solves the ongoing problem of artists not being paid for their original pieces or having their pieces to be replicated for a much cheaper price.
Not to mention the fact that purchasing these tokens are also seen as making an investment. Recreational investing such as in bitcoin has seen an increase during the pandemic, and being able to purchase these NFTs with digital currencies may drive individuals to purchase them even more.
The future of NFTs
Like previously mentioned, NFTs seem to only be going up from here. Solving various issues and answering numerous demands from the consumers, do you think that NFTs will redefine the artwork and collectible space as well as expand into other industries?