Why do people still buy it

Non-fungible tokens or NFTs emerged as a game changer for artists and art enthusiasts. This technology experienced tremendous growth in a short period of time. As A-listers entered the landscape, it further increased the popularity and legitimacy of a niche digital asset.

But why are individuals pouring so much money into NFTs? Is it limited to investment and enjoyment alone? A recent study conducted by CoinGecko delved into why the community is investing in these tokens.

According to the research, the utility of the token is categorized as the most important reason for making a purchase. “Using NFTs for their intended function” received a rating of 77.6% in terms of importance. About three out of four owners think about the value of a collection or the benefits of ownership before making a purchase.

Non-fungible tokens are not just limited to digital collectibles. Although NFTs initially served only as profile pictures and in-game items in blockchain games and other applications, their variety is expanding as new use cases are addressed by networks.

Long term vs. short term profit

As can be seen from the picture above, long term profit is considered to be of great importance to the masses. The degree of importance for this category is 76.1%. But making money in the short term was ranked eighth with 66.8% significance.

The process of making short-term profits is known as “flipping”. During this period, holders buy with the option to sell at a higher price almost immediately after the purchase. The report elaborates on this and read:

“That said, flipping NFTs requires holders to actively monitor and time the market, which may explain why it is a less popular reason than investing in NFTs over the longer term.”

It is estimated that when it comes to influencing purchase decisions, short-term earnings are 9.3 percentage points less significant than long-term earnings. Therefore, only two out of ten owners are ambivalent about browsing. However, one in ten buyers do not think about the potential short-term gains when buying these tokens.

Get a stake in the venture and become part of the community

Buying an NFT to become a stakeholder is the third most important reason behind buying these tokens. A staggering 7 out of 10 NFT holders buy an NFT to gain a stake in the network or even a decentralized autonomous organization [DAO].

About 68.8% buy these assets because they intend to follow or join a community or project. However, this ranks fifth on the list. While it may not be everyone’s motive for buying NFT, the community is still vital to the success of NFT collections. As a result, teams often make significant investments in creating and maintaining vibrant communities. This further elaborated why it gets the second lowest rating of “Not Important.”

Enthusiasm for the technology, business model and artwork of the NFT collection

The new technologies that are being developed now deviate from the norm and open the way for innovation. The fourth most important factor is a personal passion for the technology of the NFT collection. When deciding whether to invest in an NFT, seven out of ten NFT holders consider the technology underlying the NFT.

Introducing or having a particular preference for a particular business model or idea seems to score highly. About 67.9% of respondents believe that their decision to buy was influenced by their own passion for the NFT collection’s artwork as well as the business strategy or idea. With a plethora of artists on the market, art designs are also considered to be quite essential when purchasing NFTs.

Disruption is of little importance to NFT holders

Along with the above reasons, savings and social benefits also influence the purchase of these tokens by 63% and 60% respectively. The last and least important reason to become NFT holders is “Disrupt established structures or industries.”

Still, about 6 in 10 investors value disruption. NFTs have led to advances in digital ownership, content production, identification and more, changing and enhancing traditional methods of performing conventional activities.

Although these tokens lost steam for a while, they seemed to make a comeback again in 2023.