What key factors make an NFT valuable in 2023?
There may be no measure of the popularity of non-fungible tokens. What started as profile picture (PFP) “JPEGS” has evolved into more fascinating use cases. What is more impressive about NFTs is how they have different uses and purposes and appeal to different types of people. For example, some users keep NFTs for their utility, some for their aesthetic value, while other NFT collectors are in the market to trade and make money.
NFTs, unlike many other tradable assets, have the distinctive properties of immutability and provable uniqueness. The decision of a collector to buy such an asset depends on various factors. It is worth noting that there are collectors who get pleasure from the purchase itself. However, it is undeniable that collectors seek NFTs that retain their value over time. Thus the question arises: Which attributes contribute to the value of an NFT?
The NFT space is known for record sales numbers and huge profit returns, sometimes for days or weeks. In this article, we explore the basics of what makes an NFT valuable. Whether you are an experienced NFT collector or a beginner, this article will provide you with everything you need. All you have to do is read till the end. Let’s go!
Understand the value of an NFT in 2023
The single event that drew the world’s attention to NFTs was the multi-million dollar sale of Beeple’s “Everydays: the First 5000 Days” and many other high-number NFT sales that quickly followed. As a result, many people pouring into the room did so, hoping to strike such luck as well. It is no surprise that the most common use of NFTs is as tradable assets.
The value of an NFT depends on its rarity and the demand for it. NFTs from teams like Yuga Labs often carry hefty price tags. For example, the Bored Ape Yacht Collection (BAYC) is one of the most expensive NFT collections. Similarly, BAYC’s sister collection, Mutant Ape Yacht Club (MAYC), ranks highly in the NFT market. .
However, even within recognized collections, certain NFTs command a higher price tag due to their rarity. Checking the rarity of an NFT is a simple process, as you can simply use a rarity calculator. However, it is important to note that rarity alone does not guarantee a high selling price. Instead, it means that the NFT is a rare gem in the collection, increasing the likelihood of fetching a higher price tag.
Now that we’ve covered the basics of understanding an NFT, let’s look at some other things that increase the value of an NFT in more detail.
What makes an NFT valuable?
As mentioned earlier, the rarity of an NFT adds to its value. This factor is particularly relevant in cases of NFTs within a larger collection. For example, the BAYC NFT pool has 10,000 NFTs. While all of these 10,000 monkey-like NFTs are similar in appearance, a few have characteristics that make them unique from the rest. An example of such quality is the “King’s Crown”, which only 77 NFTs in the collection have.
However, the rarity in the case of 1-0f-1 or limited edition NFTs is different. These NFTs come in fewer numbers; therefore, their rarity is based on the fact that only a few of them exist. It’s just one edition of Beeple’s “Everydays: the First 5,000 Days,” which is one of the reasons it sold for $69 million.
Consideration of utility is another important factor to keep in mind. Utility refers to the various capabilities and features associated with an NFT, as well as the benefits of holding a specific NFT. As the NFT frenzy began to subside, collectors began to pay closer attention to the tools and benefits that an NFT offers. In response, a number of NFT projects began to prioritize this aspect when developing their collections.
BAYC holders, for example, have many benefits from holding NFTs. It includes free airdrops of MAYC and Otherdeed NFT, which are now worth thousands of dollars. Likewise, holders can commercialize their NFTs and earn passive income. The holders of BAYC NFTs can also use them as in-game characters in Yuga Labs’ Otherside Metaverse.
In an oversaturated NFT market with thousands of NFTs created monthly, the chances of success are slim, especially for newer projects. The name or team behind a project often increases its value. Yuga Labs is a good example of how much added value reputation provides.
During the Otherside coin, the demand for NFTs in the collection was so high that it crashed the Ethereum network. Some users even paid double the NFT value in gas fees just to mint the Otherdeed token. The reason everything happened is that Yuga Labs consistently releases top-rated collections, which increases their desirability. So without a doubt, for many collectors, Otherside Otherdeeds had a lot of potential. Since its launch, it has maintained its status as a top-rated NFT collection, even during the crypto winter.
NFTs form part of the core of a huge and rapidly growing Web3 ecosystem. NFTs are not just JPEGs for social media, but are now used for various purposes. The use cases are many, from in-game assets in games to earn money to tokens in virtual casinos and digital wearables.
Interoperability therefore refers to the ability of an NFT to be used across multiple platforms and for different purposes. This ability gives NFT holders more flexibility in using their NFTs for many uses across multiple platforms.
Social media is an important part of the NFT ecosystem. They are often found on social media platforms such as Discord and Twitter. These communities are sometimes exclusive and limited to holders of specific NFTs, but other times they are open to the general public.
NFTs with strong and active communities are often highly sought after. This is because the community acts as a space where people discuss NFTs, teach newcomers how to get into the project, and hype upcoming drops. In addition, the size of a community affects the value of an NFT. For example, there are some NFT communities with over 100,000 members. This means that there will always be a demand for the NFTs, and a holder who wants to sell does not have to wait that long.
Community is also one of the ways to verify if a project is legal or not. A sketchy or shady community often indicates that such a project is not transparent.
In summary, NFTs are highly sought after and traded on NFT marketplaces daily. Although there are opportunities to make a huge profit, not every NFT will be valuable. But with the factors we have discussed above, users can selectively choose which NFT they want. Likewise, NFT creators can use these factors to improve their current and future NFT projects.
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*All investment/financial opinions expressed by NFT Plazas are from personal research and experience of our site moderators and are intended as educational material only. Individuals are required to research all products before making any type of investment.
A blockchain maximalist who believes that technology is necessary for the future we are heading towards. An avid researcher and author who uses his writings to inform the outlook in the blockchain space.