Top 5 Reasons That Make NFTs An Invaluable Asset To Possess
On March 11, an anonymous buyer purchased a non-fungible token (NFT) for $69.3 million at an auction held by Christie’s, making it the most expensive NFT ever sold.
The NFT, called “Everydays: The First 5,000 Days,” is a digital collage of 5,000 images created by the artist Beeple. The buyer plans to display the NFT at the new museum they are opening in Dubai.
But if you want to know that — Why people spending millions of dollars on a CryptoPunk? Why just can’t people screenshot them?
So, here are the top 5 reasons that make NFTs an invaluable asset to possess
- Exclusivity
- Digital Scarcity
- Provenance
- Perceived value
- Functional value
Exclusivity
The critical feature of NFTs is that they are not interchangeable — each is unique and has a different value. This is in contrast to traditional cryptocurrencies like Bitcoin, which can be divided into smaller units and exchanged for other assets.
The uniqueness of NFTs makes them well-suited for use cases where ownership and provenance are essential.
NFTs are often used to represent items in video games or digital worlds that can be owned and traded by players. For example, in CryptoKitties, players can purchase, trade, and breed virtual cats. These cats are each represented by an NFT. Another example is the blockchain-based platform Maecenas, which works to tokenize and trade fractional ownership of artworks. In this case, each NFT would represent a share of ownership in the underlying asset.
The use of NFTs is still in its early stages, but many platforms already support creating and exchanging these assets. The most well-known platform for NFTs is Ethereum, which has several applications that use these tokens.
Digital Scarcity
Digital Scarcity is the concept that items are rare or difficult to obtain because of their digital nature. This can be caused by several factors, including artificial scarcity, difficulty replicating digital items, or the simple fact that a limited number of specific items are available.
For example, only a limited number of NFTs (non-fungible tokens) are available, making them quite valuable. In addition, NFTs are digital assets that cannot be replicated or exchanged for other items. This makes them perfect for artwork, music, or other digital media.
Digital scarcity is an important concept to understand in digital assets. By being aware of the limited supply of certain items, you can make more informed investment decisions and take advantage of opportunities as they arise.
Provenance
The provenance of an NFT is the history of the ownership and creation of the asset. This history is stored on the blockchain, a distributed ledger that records all transactions. The blockchain is public and transparent so that anyone can view the provenance of an NFT.
There are a few different ways to view the provenance of an NFT. However, the most common way is to use a blockchain explorer. Blockchain explorers are websites that allow you to view the blockchain in a user-friendly manner.
Another way to view the provenance of an NFT is to use an intelligent contract explorer. Bright contract explorers are websites that allow you to view the code of a smart contract. This code includes all the information about an NFT, including its provenance.
Provenance is vital for NFTs because it adds authenticity and value to the asset. For example, a digital artwork with a long and verified provenance is more valuable than a similar artwork with no provenance. Provenance can also be used to track the origins of an NFT, which is essential for authenticity and other purposes.
There are a few different ways to create an NFT. The most common method is using a smart contract on a blockchain platform like Ethereum. This method allows anyone to create an NFT. Other platforms, such as EOS and NEO, have native NFT platforms.
Perceived value
There is a lot of speculation surrounding the perceived value of NFTs. Some believe that NFTs are just a fad and that their value will eventually drop. On the other hand, others believe that NFTs will be digital assets, and their value will continue to rise. There are a few factors that will influence the perceived value of NFTs.
The first is the platforms that they are traded on. If only a few platforms support NFTs, their value will likely be lower than if there were many.
The second is the use cases for NFTs. Again, if there are only a few use cases for NFTs, their value will likely be lower than if there were many.
The third factor is the number of people buying and selling NFTs. If only a few people buy and sell NFTs, their value will likely be lower than if there were many.
The fourth factor is the amount of money invested in NFTs. If there is not much money invested in NFTs, their value will likely be lower than if a lot of money was invested.
The fifth and final factor is the perceived value of NFTs by the general public. If the general public does not perceive NFTs as valuable, their value will likely be lower than if the general public perceived them to be practical.
All of these factors will influence the perceived value of NFTs. It is impossible to predict precisely how these factors will affect the value of NFTs in the future, but we can make some educated guesses.
If the platforms that support NFTs continue to grow and the use cases for NFTs continue to grow, the value of NFTs will likely continue to grow. However, if the number of people buying and selling NFTs decreases or the amount of money invested in NFTs decreases, the value of NFTs is likely to fall.
Functional value
The functional value of an NFT comes from its uniqueness. Unlike a traditional currency, which is interchangeable, each NFT is unique and has a different matter. This uniqueness makes NFTs ideal for representing assets in any field. Some of them are mentioned below —
Redeem an asset: An NFT could represent a ticket to a concert or a deed to a piece of property.
Claim the asset: The value of an NFT can also come from the fact that it can be used to represent a share in a company or a piece of a project.
Represent the asset: Here again, the value of an NFT can come from the fact that it can be used to represent a vote.
Buy a membership: The value of the NFT would come from the fact that it can be used to represent a claim on the assets of the club or group.
Digital certificate: The value of an NFT can also come from the fact that it can be used to represent a certificate. For example, an NFT could mean a certificate of ownership of a piece of property.
Represent a right: For example, an NFT could represent the right to use a piece of digital art, meme etc.
Some other reasons why NFTs are so valuable?
Because they are timely, offer bragging rights, are global and transparent, and are permanent. In addition, NFTs offer a way to track who owns what and when they acquired it. This is valuable because it allows for a more efficient market where people can buy and sell without worrying about the item’s authenticity.
NFTs also offer bragging rights. For example, if you own an NFT, you can show it off to your friends and say that you own a piece of digital art that is worth money. This can be a great way to show off your status and make people jealous.
Finally, NFTs are global and transparent. This means anyone can see what you own and how much it is worth. This makes it easy to keep track of your assets and makes it difficult for people to hide their wealth.
