If you’ve been browsing the internet recently, you’ve definitely come across the term “NFT.” You’ve also probably seen trending stories of celebrities buying NFTs for mind-blowing prices.
So, what are NFTs, and why are they so expensive?
In summary, NFTs are primarily expensive because they represent the ownership of digital assets and their ownership history. They also have high perceived future value, attracting many current investors who are looking to have a piece of ‘the next Bitcoin.’
In this article, I poked into the expensive world of Non-Fungible Tokens (NFTs), what they are, how you can buy them, and why they’re so valuable.
Read on to learn everything you need to know about NFTs.
What are NFTs?
An NFT is a digital asset representing real-world objects like videos, music, art, and in-game items. They’re basically made with similar technology to cryptocurrency and are often traded online with crypto.
While they’ve been in existence since 2014, they’ve only recently gained popularity, with a mind-boggling $22 billion spent in 2021.
What are they used for?
NFTs are primarily used to ensure the authenticity of products. Since the blockchain technology they’re built on can permanently store information about the product, it’s easy to ascertain its authenticity.
NFTs can also store information about the manufacturing process and ensure everything is fair trade. Additionally, NFTs help content creators and artists monetize their wares by selling their digital rights.
What Makes NFT So Expensive and where do they Get their Value from?
There are several things that make Non-Fungible Tokens valuable and pricy.
Most of these reasons are actually not very different from what dictates the prices of luxury goods in the non-digital market.
So, why are they so expensive?
1. They represent ownership of original digital assets
NFTs are digital assets but represent valuable real-world objects. They are also non-fungible, which means the ownership solely lies with the person who owns them.
Take a Picasso painting, for instance; there can be many copies of one painting, but only one original Picasso. This makes the original painting valuable.
Similarly, NFTs are valuable because they represent the ownership of an original digital asset.
2. Future value
Just like cryptocurrency, NFTs are anticipated to rise in value in the future. As a result, many people want a piece of the action.
After the crypto rush, which left most initial investors as millionaires, nobody wants to be left out in the next currency of the future.
3. Ownership history
An NFT’s ownership history also helps value it. So far, the most expensive NFTs have either been bought or sold by public figures. Just picture a football jersey, for example.
It is worth a dollar or two when you buy it. But once a professional football player signs it, it shoots up in value.
The same logic applies to NFTs and their ownership cycle.
Are NFTs Expensive to Make?
If you want to make your own NFT, you need to learn about NFT minting. This entails creating your NFT and registering it on the blockchain. As complex as it sounds, this is a straightforward process.
Anyone can make an NFT, and it’s easy to create accounts on all the major platforms, including Rarible, OpenSea, and Mintable. All these platforms offer at least two or more blockchains when minting NFTs.
That said, the actual cost of making NFTs depends on the blockchain you choose. Most NFTs use the Ethereum Network because it was the first programmable blockchain that supported the registration of digital products.
Traditionally, creators would spend between $50 and $100 minting on the Ethereum Network. However, popular NFT marketplaces have found a way around those fees, and creators can now mint on the Ethereum Network for free.
Most Expensive NFTs
In recent years, there were several NFTs that sold for mind-blowing prices. Here are a few examples:
1. CryptoPunk NFTs
Price: $23.7 million.
The CryptoPunk NFT collection comprises 10000 pixelated characters on the Ethereum blockchain. A CEO of a blockchain company bought the CryproPunk #5822 for 8000 ETH ($23.7 million).
2. Beeple’s Human One
Price: $30 million
Beeple’s Human One is an 18-second video of a man walking in a spacesuit. It sold on November 9, 2021, for $30 million.
Price: $52.7 million
Clock is a piece of art that acts as a literal clock. It updates every day, keeping track of the time that Wikileaks founder Assange has been imprisoned.
Its goal was to raise money for Assange’s legal defense. It was eventually bought by a collection of 10000 people for $52.7 million.
4. Everyday: The first 5000 days
Price: $69.3 million
This is another NFT from Beeple. It is essentially a collage of 5000 pieces of his work starting from 2007. It is a sight to behold and became the most expensive NFT sold to one individual at $69.3 million.
5. Pak’s ‘The Merge’
Price: 91.8 million
The Merge became the most expensive NFT in history after 30000 collectors pitched together to buy it for $91.8 million on December 2, 2021.
How do People Buy and Sell Non-Fungible Tokens?
As we saw above, you need to learn how to ‘mint’ to sell NFTs. You can mint any digital creation into an NFT, from music to art and video games to writing.
Just bear in mind that the value of your work will depend on subjective factors like quality, creativity your reputation.
Buying is much easier. All you need is a digital wallet to store the NFT and cryptocurrency (preferably Ethereum.) Some of the most popular websites that cater to NFT purchases include Reliable and OpenSea.
Who Buys these Expensive NFTs?
NFTs are a pretty new concept that the general public hasn’t completely wrapped its head around. As a result, only finance experts and tech-savvy people are investing in NFTs.
However, many established wall street traders are also trying to get in before it’s too late.
Is it Worth Investing in Non-Fungible Tokens?
NFTs are still a relatively new way of property ownership. While many crypto experts are enthusiastic about NFTs, the general public is still skeptical.
However, if the growth of crypto is anything to go by, NFTs will continue to rise in value. That said, don’t sell your house to buy NFTs. You should invest with something you’re comfortable losing.
Read Also: Why are Wii Games So Expensive?
Non-Fungible Tokens FAQs
Why are the Bored Ape Yacht Club NFTs So Expensive?
The bored ape yacht club NFTs were inspired by the sensational CryptoPunks NFTs. The main reason behind both their high prices is the creativity behind them. They contain a collection of 10000 uniquely crafted ape pictures.
Why are CryptoPunk NFTs So Expensive?
The CryptoPunk collection consists of 10000 unique characters created by Larva labs. They are considered to be so valuable because of their creativity and uniqueness.
Is it illegal to screenshot an NFT?
No. You cannot get in trouble for screenshots, screen recording, or using an NFT as the background picture on your pc, just as long as you don’t reproduce it to resell it.
Can I get sued for using someone else’s NFT?
Yes, you can. But only if you make money off it without the owner’s permission. Otherwise, you should not worry about printing an NFT and hanging it up in your bedroom.