what are nfts and why are they valuable

NFTs: What They Are & Why They Are Valuable

These new types of digital assets are causing a stir on the web. NFT tokens are going crazy on the internet, so it may be worthwhile to understand what they are and why they are valuable.

In this article, you will learn about what NFTs are, how you can benefit from them, and the downsides of trading them.

What, exactly, is NFT Art?

A non-fungible token, also known as an NFT, is a digital representation of any item, such as sports cards, virtual lands, and digital art.

Video, music, gifs, games, text, memes, and other digital assets make up NFT art. The decentralized ledger technology – blockchain – is used for registering ownership over a specific artwork. A digital wallet is used to store the tokens that you own.

Unlike other NFTs, these tokens contain unique information, making them both unique as well as easily verifiable on the blockchain.

Celebrities and influential figures have recently gotten involved in NFT arts, making them more popular than ever.

How does their value come about? What makes them so special?

How Can NFTs Be Valuable?

As with any speculative market, the value of NFTs is largely determined by demand and supply. Value of a digital art piece is driven by the thrill of getting a coveted piece.

NFT tokens are sought after by collectors and investors because of their scarcity and degree of uniqueness, which makes them expensive.

Now that we know what gives NFTs their value, how do these tokens help people?

What are the benefits of buying an NFT?

Investors have a lot of questions about non-fungible tokens, such as what they are purchasing.

The argument goes that you are purchasing the property rights to the item while others argue that you are buying an item representing the internet sensation at a given time.

In reality, you are neither buying a piece of digital art nor the copyright to that art.

Are you surprised? You shouldn’t be.

NFTs aren’t just digital artworks. They are a piece of art in a larger sense. NFT arts may take the form of audiovisual items or visual artwork.

Then, anyone on the internet can view and even download them free of charge on any device they own.

Thus, if you buy only the image or video of a piece of crypto art, it is not necessary because someone else can download it for free.

Additionally, you are not purchasing the item’s copyright. NFTs are not all genuine. Often, they are just reproductions of the original. Even if you have a particular piece of NFT, that doesn’t mean there aren’t other versions.

In addition to that, it is impossible to visually distinguish an original crypto art from a copy.

In that case, what are you buying?

By purchasing the code, you gain ownership of the NFT. Regardless of how many versions there are of a particular work of digital art, what you are buying is a code that identifies you as the rightful owner of the work.

On the blockchain on which the token is built, it has a unique barcode, and it is public and transparent who owns the token once it is added to the blockchain.

Therefore, you should keep in mind that you are buying a certificate of authenticity when you purchase an NFT, which is a barcode that proves to the seller that you hold the exclusive rights to an original version.

Using non-fungible tokens to make money

Due to the fact that NFTs cannot be directly exchanged between each other, like other fungible tokens such as bitcoin, the methods of making money with them are very unique.

Using the blockchain, these NFTs are stored, ensuring very transparent ownership proofs. NFTs can be purchased on various marketplaces designed for the sale of these tokens.

When you trade NFTs, you can earn money in two ways. They are as follows:

1. Creators and Artists

The NFT chain starts with creators. If there were no creators, there would be no market to trade. The creators of NFTs choose their characteristics.

Even though conventional artists don’t often earn more from their works, NFT creators are able to make money from resale of their crypto art throughout their lifetime.

Creating non-fungible tokens can be a way for digital artists to make money by programming royalties into their works. Each time their artwork is resold, they are entitled to certain percentages of the sales profit.

As long as the NFT exists, the creator will receive part of the interest from the sales. The percentages are usually between 2.5% and 15%.

Moreover, creators can keep a bigger share of the sales proceeds from their artworks. Their digital art does not have to be sold at auction houses or art galleries since the marketplace serves a worldwide audience.

For most platforms, however, artists must spend some money in order to list their artwork for sale. As a result, it is very critical to create digital art that drives sales, otherwise you will end up losing money.

2. Collectors and traders

The current boom in NFTs is due to these individuals in the marketplace. Art creators would be unable to sell their works without collectors and buyers.

Collections of collectible tokens that these collectors like or believe will gain in value are added to their portfolios. In order to make profits, they sell these accumulated tokens.

A collector/trader can buy or sell NFTs on the peer-to-peer market and either sell immediately or decide to hold on to them, hoping their value will increase over time.

Sales of NFTs can surge at times, causing the already existing speculations on the market to soar. I will show you a few of the most popular NFT drops.

The Most Popular NFT Drops

Until recently, Christie’s had never held an art auction conducted exclusively digitally. Two weeks have passed since the auction ended for the digital art collage created by Mike Winklemann, popularly known as Beeple.

This digital artwork comprises Beeple’s original crypto art over the first 5,000 days (13 years) of his art career.

Beeple’s work sold for over $69 million at the end of the auction, making him one of the top three most valuable living artists.

Founder of Twitter Jack Dorsey has also put up some of his first tweets for sale through the trading platform for tweets. Dorsey’s has already received bids of $2.5m.

Additionally, NBA Top Shot, a platform for collecting sports cards, is also experiencing an unprecedented amount of sales. NBA flashbacks, known as “Moments,” seem to be flying off the shelves in the NFT marketplace.

More than $230 million worth of transactions have been transacted through the peer-to-peer NFT marketplace in less than a year since it launched. An unusually high price was sold for the latest pack drop ($1.05 million).

NFTs in the Future

CryptoPunks, the first set of ETH-based NFTs launched in 2017, have led the entire digital arts market to strong growth.

Since more and more people are becoming aware of the market’s potential, over $300 million in assets have already been sold, and several other industries are set to be disrupted besides art.

NFTs, therefore, would become the digital haven for collectors as more creators realize the benefits they stand to gain if they tokenize their works.

In the near future, NFTs will become the standard for real-life collectibles.

NFT Advantages and Disadvantages

What is the hype about NFTs? Are there any downsides? Here we will discuss some of the things that make the NFT scene appealing to many people as well as some of the things that make it unappealing to others.

Advantages Of NFTs

Investors and creators alike find non-fungible tokens attractive for several reasons. Among them are

  • In contrast to physical collectibles, blockchain technology creates a form of authentication. A replica of crypto art cannot be created on the blockchain that is not authentic.
    Due to the immutable and permanent nature of the decentralized ledger, the property rights or proof of ownership of a crypto collectible cannot be altered no matter how many times it is sold.
  • No matter where you are located, NFTs can be transferred easily. Global buyers and sellers can connect and conduct business on the peer-to-peer marketplace.
  • One of the most appealing features of certain NFTs is their uniqueness. One of the major factors driving the value of crypto collectibles is their scarcity.

Disadvantages Of NFTs

Even though NFTs have many benefits, there are also some downsides to them. Some of these disadvantages are:

  • A negative environmental impact may result from the growth of NFT mining via proof-of-work blockchains like Ethereum. For several NFTs to operate, a large amount of computing power is needed.
    In spite of plans to reduce the energy consumption of the Ethereum blockchain, a single transaction consumes more power than a typical household requires in a day.
  • In contrast to fungible tokens, most NFTs cannot be divided into smaller units. Others find it unfavorable, especially art collectors.
    Inclusion is not fostered since those without enough money to purchase the full token cannot participate. Additionally, those holding it can inflate its price to their hearts’ content.
  • Analysts have suggested that the current frenzy in the NFT market could possibly be another speculative bubble that will burst when the excitement dies down. A great deal of money will be lost if this occurs.
  • Creating NFTs at will on free and public self-serve platforms has led to many people exploiting some upcoming artists. Due to its anonymity, the blockchain makes it impossible to tell who created digital art and who owned it.


Although the NFT market has not yet stabilized, it has been slowly gaining in popularity as an offshoot of the crypto and blockchain industries. It looks like it could be on its way to becoming a massively adopted technology given the level of interest that it is receiving from investors and collectors alike.

NFTs are still too new to know if they will live up to the hype and become a significant part of the future collectibles market. It would be very exciting to watch their growth and development as they have a lot of potential.

Categories NFT Guide

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