NFTs have made waves online, and people’s rising demand for digital commodities like NFT art, tickets and collectibles has created a billion-dollar market that continues to grow each year. Platforms or marketplaces have sprouted online and well-known auction houses have also become involved in curating and auctioning NFTs.
Non-fungible tokens or NFTs are digital items like memes, sports video clips and virtual real estate, the details of its ownership and creation of which are recorded on blockchains. So far, the most expensive kind is NFT art, which can sell for tens of millions of dollars, like Pak’s The Merge which took in more than $91 million.
There are various reasons buyers flock to platforms that sell these items, from owning authentic and unique NFT art and memorabilia to simply being able to flash an expensive and popular meme on social media, for example. Some fans rush to collect NFTs created and sold by their favorite artists, sports personalities or celebrities, while others are on the lookout to purchase rare and popular memes.
Nobody wants a fake or an artwork that has questionable ownership, which is why authenticity and verifiable ownership are the main advantages when dealing in NFTs. By saving the data of these unique digital properties on blockchains, it becomes non-editable, and the record of ownership becomes immutable.
Selling physical art like paintings usually require its sellers to show purchasers provenance, and in the same way, NFTs offer ownership information readily to the public. This lessens fraud in market of non-fungibles, and prevents consumers from buying stolen or counterfeit NFTs.
In addition to the security that the technology of NFTs provide, the transfers and transactions are transparent. This is because NFTs are also governed by smart contract rules that can specify floor and ceiling prices, as well as put a limit on the number of times the NFT can be sold. Smart contracts may also allow for the value of a certain NFT to increase when a certain demand is met. For instance, an in-game NFT may increase its properties as a player wins in the game.
These factors have encouraged both buyers and creators to be active in the NFT market. Creators have gained more control in monetizing and pricing their NFT art, and the use of middlemen is no longer as necessary as in selling artwork before. There is also a growing market and a community of enthusiasts or collectors for their product. Buyers, on the other hand, are at ease knowing that they are buying an authentic product, and that the item is unique in itself, though some NFTs may have similarities.
Many people have also profited by reselling an NFT they bought at a higher price. Still, it must be remembered that with the advantages in NFT transactions, there is also the possibility that the value of a token may fluctuate, like any other real-world art or commodity. Cryptocurrencies are usually used for these transactions, and changes in the crypto exchange rate can affect the value of NFTs.
Some NFTs may be more in-demand than others, but it cannot be denied that NFTs attract the interest of many, and people around the world have benefited from the new digital economy which it has created for artists, art enthusiasts, collectors and investors. There are many positives that NFT has brought to the market of digital art, but one must enter it with sufficient knowledge to minimize the risks associated with a non-fungible purchase.