What determines the price and what is the value of NFT. We think critically – Crypto on vc.ru

Over the past decade, blockchain has grown from the original decentralized currency of Bitcoin to a multitude of applications and platforms competing for user attention. NFTs, as a know-how in the crypto industry, are interesting primarily because they are a finished product that can be easily bought and sold for cryptocurrency. NFT is a ready-made product that has value in the digital space, and for creative people it is also a way to earn cryptocurrency by creating their collections.

The uniqueness of NFTs lies in the fact that they are a reliable means of giving and maintaining material value to non-material things . But this is not just a price tag on the package – it is rather an “author’s stamp”. It is very important and valuable exactly whose “brand” is and to whom it belongs at the moment . In the physical world, specific instances of collectibles are unique. In the virtual world, records in the blockchain have become the guarantor of uniqueness. And while the picture itself can be easily copied, the blockchain record of authorship, value, and ownership cannot be faked.

What is the value of NFT how assets?

Price and value should be separated. On the one hand, any product costs exactly as much as the seller asks for it. This is a subjective assessment, but if it matches the assessment of the buyer, then a deal can take place.

Another thing, what is its objective value, and what should it be when it comes to NFT?

The fact is that subjective intangible values ​​may well find material expression. Obviously, the NFT collection of Johnny Depp’s paintings will be more popular and attract more money than the collection of some conditional Masha Kulikova from Saratov, even if she draws better than Captain Jack Sparrow. In this case, the value is determined by the popularity of the author himself and the hype around his person.

But if, for example, conditional 10,000 people are sure that a pixelated picture or GIF with a monkey is $1000 then why should it cost less?

Alas, but this also says something about the values ​​of our society. And they are largely determined by the philosophy and life stereotypes of each individual. In an individualistic society, values ​​become individualistic. NFT is just a way to embody these intangible values ​​and determine their financial equivalent. So owning some popular NFT is a digital way of giving yourself value. Now you do not need to deserve it, because you can just buy it.

In essence, all judgments about the value of NFTs can be reduced to one key question: can NFTs have an independent objective value, or must they necessarily have a delegated value? value? Today, in the NFT market, the value of the vast majority of non-fungible tokens is determined only by their price, but it should be the other way around – the value of a certain NFT should determine its price, even if this value is abstract and subjective . And someday it will be. Then all the useless pictures will be of no use to anyone, and only those that will gain the greatest popularity will remain. And both subjective and objective evaluation factors will play their role in this.

How is the value of NFT formed?

NFT is growing in value due to growing interest in it and marketing around it. When creating an NFT token, the author sets the initial price, focusing on his own expectations. It can be an auction or a fixed price. One way or another, the author himself sets the price range. At the same time, the price of NFTs may rise or fall depending on how much this product will be in demand and popular. The price of an NFT collection could skyrocket simply because some popular media person purchased or even advertised some of them.

It should also be taken into account that there are currently many unqualified investors on the NFT market, whose opinion is easily manipulated by scammers, inflating bubbles and luring money out. An unreasonable increase in the cost of NFT should arouse suspicion, since it can be a fiction when one person buys NFT from himself from different wallets, just for the sake of creating a stir and driving up the price. Frequent resales of a non-fungible token rather indicate that none of the previous owners believed in its prospects.

NFT valuation consists of three key factors. Rarity, popularity and usefulness . If NFT is rarely found on sale, while it is quite well known and promoted, these are the main triggers for the growth of its value. At the same time, aesthetic value, as a rule, does not matter much. NFTs, which provide additional and in-demand perks in the digital space, such as club memberships or in-game benefits, are also popular. In addition, the price of NFT is affected by the crypto currency in which it is priced and on which platform it is traded.

An example of NFT on the popular and hyped opensea. Valuation is mostly in ETH.

NFT example on recently opened signumart

. Grade in SIGNA.

Not an unimportant factor is what unique advantages it gives to the one who owns it. For example, owning an exclusive copy created by a popular artist or museum. These criteria should create to give the investor an understanding of how likely it is that in the future there will be those who will be willing to pay for this token a higher price than the one for which it was purchased.

Is the value of NFT as art justified?

NFT is undoubtedly a very large and promising opportunity for artists to show their talents and gain recognition. Truly talented people will definitely be appreciated in the digital world, and these assessments will have a specific material expression. It is impossible to hide a genius, he will stand out brighter than others, especially against the background of thousands of mediocre amateurs.

However, at the moment there is no generally recognized mechanism regulating the legality of the rights to issue and own NFTs, and there are also no generally accepted criteria for assessing their uniqueness and value. And this is the main reason for criticism of technology, a large number of fraud and unreasonably high prices. Therefore, most people today do not take the NFT market seriously, comparing it with a bubble or a financial pyramid.

As in the field of cryptocurrencies, in the future, we should expect the development of the industry. As it develops, regulators and experts will inevitably come to the NFT market, who will consolidate the assessments and potential of certain authors, collections and tokens. At the same time, most of today’s “masterpieces” will simply depreciate, and truly talented artists will be recognized. The bubble will burst, most people will lose a lot of money, and qualified investors will raise the prices of objectively valuable NFTs hundreds of times more.

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