After learning about the basics of NFTs and their functionality, the next question that comes to mind is about their value, price, or cost. What gives NFT value is a common question for those who have never dealt with NFTs or blockchain technologies before.
What gives NFT value
The kind of asset that an NFT represents on the blockchain determines its value. If the asset in question is a tangible asset, such as residential real estate, its NFT on the blockchain reflects its real-world price. However, if the asset is a digital piece of content without a price tag, then its worth is entirely speculative. In essence, the market, supply, and demand determine its value.
You may think of this as dealing with a certain kind of artwork, where the worth of each piece depends on the state of the market and the price that purchasers are willing to pay. This means that the seller is free to determine the price of a particular piece of art at any level. Whether the buyer will pay that cost to gain ownership of the asset is a completely different thing altogether.
NFTs With Speculative Value Can Sell For Massive Amounts Of Money
A 2006 tweet by Twitter CEO Jack Dorsey is one of the most famous examples of digital content NFT being sold at a massive value.
As the first tweet by Dorsey, the post is considered one of the most iconic pieces of content on the web. On March 22, 2021, this digital item was turned into a digital asset on the Ethereum blockchain, enabling the tweet's related NFT to be sold for more than $2.9 million. For reference, on December 15, 2020, the bids for the tweet began at $1.
This transaction mechanism demonstrates that an NFT's value can actually begin at the lowest amount possible with Dorsey's tweet-turned-NFT. But if interested buyers are willing to pay higher amounts, you can expect wonderful things to happen. As long as the market shows a high demand for the asset or NFT in question, the bidding can go as high as you can imagine.
This means that the possibilities for NFTs without a rate based on a physical asset are limitless. Because buyers' willingness to pay for them determines their worth, these NFTs are capable of exceeding even the most bullish original sellers' expectations.
Cryptokitties, collectible digital cartoon cats that are stored on the Ethereum blockchain, are another example of NFTs' values far exceeding anyone's expectations. These tradeable digital kittens used to be known as "digital beanie babies" due to the excitement they created. For what it's worth, they continue to be regarded as a popular kind of NFTs with other forms of digital art like NBA Top Shot trading cards.
Other features, such as the signature of the content creators or other distinctive details in the metadata, can also significantly influence the value of its NFT in addition to its uniqueness.
The value of an NFT is mostly increased by the value of the asset it is linked to. The more intensity that surrounds the corresponding asset or its distinct property, the higher the chances a seller has for trading their NFT at a higher price. This is especially true for NFTs that don't actually have a beginning value. Social media posts, unreleased music, and digital artwork are just a few examples in this regard.
