What makes NFTs more valuable?

As an investor, you may be wondering if non-fungible tokens (NFTs) are worth your time. What makes them so unique? Why would they be more valuable than traditional tokens or cryptocurrencies?
In this article, we’ll explore the unique features of NFTs that could make them more attractive to investors. We’ll also look at some examples of projects using NFTs to create innovative new products and services.

So, if you’re curious about NFTs, read on! You may be surprised by just how revolutionary they could be.

What is fungibility?

To understand the value of NFTs, first, we need to understand the meaning behind fungibility.
Fungible means that two objects are similar enough that their individual units can be mutually substituted.

When an item is non-fungible it means that the item’s ownership lies only with the person who purchased it or obtained it. It cannot be replicated, and there’s only one of these objects ever.

What is Blockchain?

NFTs redefine the ownership of digital assets. In the past, there was no way to prove ownership of a digital asset from someone who downloaded the file on the desktop.

Blockchain technology, where NFTs have their foundations, makes this possible. Blockchain technology allows NFT marketplaces to verify ownership between their owners.

To make things even more secure, creators also have the option to store information about the NFT in its metadata. One such example is an artist adding their signature to the NFT.

Blockchain technology allows users to trace the history of prior ownership of an NFT, and they enable the option to be transferred across crypto wallets. While not entirely immune to phishing scams, NFTs are hard to counterfeit.

On top of that, NFTs are more than simply digital certificates of ownership. Blockchains can be programmed, allowing NFTs to be bestowed with utilities for their holders. Not only are they investment vehicles of their own, but they can also provide their owners with valuable features in the Metaverse and the physical world.

NFTs are priced in crypto.

NFTs tend to be bought using cryptocurrency. Cryptocurrencies usually increase or decrease in price swings overnight, with even the more stable coins regarded as more volatile than the riskiest investment vehicles.

While purchasing NFTs isn’t the same as investing in crypto, they have a lot to do with crypto’s volatile pricing because their worth is calculated using cryptocurrencies.

Investing in crypto is generally seen as risky but profitable. The numbers of people who have gotten wealthy investing in crypto are similar to those who have lost large sums of money doing the same.

NFTs are similar in that regard, but their artistic value and possible utility, thanks to blockchain programming, make them seem like a safer choice for investors.
Also, who wouldn’t want to own a monkey JPEG worth millions of dollars?

NFTs can generate value through scarcity.

Since NFTs are unique and are also safe, this means they can generate value through scarcity. Most NFT projects only mint a limited amount of NFTs as part of their collection, so once the original collection is sold, you’ll only be able to purchase NFTs through the resale market.

Of course, it’ll be more expensive to buy through resales as the original owners will sell them for a profit, thus increasing their value.

NFTs can have utility.

NFT utility is defined as the number of possible uses an owner can use the NFT for their means. Many of the significant NFT projects that have earned more than a hundred thousand dollars obtain such prices: it’s not only a piece of artwork you’re purchasing.

Bored Ape Yacht Club NFTs come with many benefits for their buyers. They get access to the BAYC Discord, other NFT collectibles that are airdropped for free, access to the BAYC virtual lounge, and all the future media outlets that BAYC will be releasing, such as their upcoming film trilogy.

Generative Dungeons NFTs, which we interviewed here, are NFTs and roguelike video games simultaneously. When you purchase one of their NFTs, you also get access to their rogue-like game featuring wizards, goblins, dungeons, and hidden treasure.

Edenhorde NFTs make you part of the story once you purchase one of their animated pieces featuring the characters in their world-building.

Finally, utility is primarily seen as a benefit in a videogame, play-to-earn NFTs. When you purchase an Axie from Axie Infinity Marketplace, you obtain both a cute digital critter and an asset that you can use to generate income by playing the game. The Axies themselves are NFTs and tokens used to battle, breed, and trade within the game’s marketplace to earn real-life money.

Other more artistic NFTs also have a lot of utility behind them. Music and video NFTs have the innate utility of being playable infinitely and can serve entertainment purposes that might go more profound than the traditional image NFTs.

Another way for NFTs to obtain more value is by serving as online cards for digital courses, memberships, and access to events. They can provide buyers with special discounts, digital keys to online spaces, and merchandise for holders to engage with each other.

On top of that, because the blockchain is public, NFT owners can provide other digital products to those who own a token.

Ownership history affects the value of an NFT.

NFTs gain value due to ownership history and the perception of the buyer. For example, NFTs dropped by celebrities seem to be perceived as higher value than those dropped by less famous content creators.

Celebrities like to invest a lot of their money into physical assets. With the advent of NFTs as investment vehicles, stars can now put their money into NFTs to gain a return on investment.

Creating a buzz around an NFT project increases visibility and triggers speculation. Celebrities have an easier time causing hype on anything they endorse, including NFTs.

The same principle applies to influencers and NFT creators with an established reputation, such as Beeple or XCopy. These crypto artists have a long history of minting and selling NFTs that easily fetch high amounts of money, so if they were to publish newer NFTs, it’s safe to say that they would attain a high-value thanks to their history.

NFTs earn value from speculation.

NFTs earn value from speculation. Speculation can be summarized as an investment with the hope of gain but with the risk of loss. This means that NFT traders purchase NFT with hopes of them appreciating it.

Future value is primarily based on supply and demand. Considering how many NFT projects are minted every day compared to how many are purchased, it’s no surprise that some NFT projects never take off or obtain any funding, no matter how much marketing is done.

NFTs are booming, but to make your NFT project stand out and gain value based on speculation, it has to be high-quality art that provides utilities for buyers and extra benefits for holders.

On the other hand, an NFT released by a big company or a brand, let’s say luxury clothing brand Gucci’s x SUPERPLASTIC = SuperGucci NFTs, will appreciate easier than one released by a lesser-known brand.

Exclusive, bragging rights NFTs tend to attain a high value too. Jack Dorsey’s first tweet is an NFT that sold for $2.9 million, as it cannot be replicated and represents a mixture of historical and digital value.

On the other hand, their future resale value cannot be accurately estimated, as it’s largely dependent on public perception. Crypto entrepreneur Sina Estavi has expressed a hard time reselling the NFT of Jack Dorsey’s first tweet now that the hype surrounding NFTs and crypto has settled.

NFTs earn value from their community.

NFTs can create community if the projects behind them are committed to building a sense of being part of a group or exclusive club when you own them. When you own an NFT, you become an investor in the group.

Bored Ape Yacht Club is a prime example of an NFT that generates the feeling of being part of an exclusive community, as do the CryptoPunks being used as profile pictures and verified by Twitter.

When there’s an avid Discord group with exclusive perks, tokens, voting rights, and utilities being sold along with the NFT, it earns more value as public perception surrounding the NFT becomes more positive.

Even Bored Ape Yacht Club haters would think twice to decline being gifted a BAYC NFT, given its resale value and intricate community.

Final words about NFTs becoming more valuable

So, how can you help your NFT appreciate? By increasing its utility. The more uses an owner has for their NFT, the more valuable it becomes to them. Creating a community on Discord and providing NFT buyers with exclusive benefits increases the sense of scarcity and rarity of the NFT.
They’ll be captivated by the NFT’s utility and possible resale value, thus increasing public perception through speculation. When you look at it that way, purchasing an NFT becomes a matter of quality of work and added benefits from its utility.

Check out our other guides on What are NFTs here to learn how you can use and enjoy your own non-fungible tokens!