Take a look at the image below, it’s one of the first-ever NFTs created, a part of the Crypto Punks collection released back in 2017. What if someone told you that digital images like these could be sold for millions of dollars? Would you want to buy one? Maybe even make one?
CryptoPunk #6046 (Source: OpenSea)
Projects like the Bored Ape Yacht Club (BAYC) see non-fungible artwork sold for over a million dollars each. BAYC is a collection of 10,000 ape-shaped NFTs with different traits, some rarer than others, but even those bearing the more common traits have been sold for upwards of $200,000.
When you can simply right-click and save a JPEG, or better yet, take a screenshot, why should anyone spend money on them? This article will explore why people buy NFTs, and why they might not be as bogus as they sound.
Are NFTs Just Glorified JPEGs? What Sets Them Apart?
The blockchain enables NFTs to be publicly authenticated without a centralized authority, and serve as a digital signature to certify ownership and originality. However, much of the hype surrounding NFTs has come from the ability to flip them for profits. An art collector, Pablo Rodriguez Fraile, bought a 10-second video clip from an artist for $67,000 before quickly selling it for $6.6 million.
However, this isn’t the only utility of NFTs – they’re also used as digital collectibles, and for important digital mementos. The New York Stock Exchange announced last year that they would be handing out NFTs representing the first trade of a few notable listings on the exchange to respective companies. In another example, Twitter founder Jack Dorsey sold his first-ever tweet from 15 years ago as an NFT.
While JPEGs can be replicated infinitely, NFTs cannot, since they often represent more than just an image. This makes them ideal for representing digital artwork, rare collectibles, or in-game items. When you take a screenshot of a picture online, you don’t own that image, and while NFT rights management is still in its infancy, the technology could set the stage for an entire era of digital ownership.
Why Do People Buy NFTs?
1 To Access Exclusive Perks
The key benefit of NFTs is that they confer exclusive ownership to their holders. This means that users can own digital assets that are not available to anyone else, and this can be used to provide them with exclusive access to certain perks, such as entry into exclusive online forums and early access to upcoming NFT collections.
2 To Profit
NFTs are often seen as an investment opportunity due to their unique characteristics. Because they cannot be divided, each individual NFT can be worth more than any of the cryptocurrencies they’re bought with. This makes them a desirable investment for those looking to make a profit, since their value depends heavily on demand and how much someone is willing to pay for it.
3 To Preserve Value
NFTs can be seen as a digital store of capital due to their ability to preserve value. Because they’re not subject to inflation like traditional currencies, certain NFTs offer a safe and stable investment option. This isn’t always the case, however, with some experts claiming that most current NFT offerings could lose up to 90% of their value in the years to come.
4 To Secure Digital Ownership & Rights
NFTs are a secure way to verify digital ownership. Each individual NFT is tracked and verified on a decentralized blockchain, making it practically impossible to forge or steal. This makes them ideal for safeguarding digital rights, especially in the case of physical assets like real estate.
How Many People Are Buying NFTs?
The trading activity of NFTs globally hit $10.7 billion in the last quarter of 2021. Audiences within the NFT market are evolving and are no longer limited to a niche group of speculators. Here’s what the numbers say:
- A survey by Morning Consultant found that 23% of Millennials in the US collect NFTs while one in three American adults collect them as an investment or a hobby.
- A poll by Finder found that out of 28,000 responders from 20 countries, the top five countries with the largest share of NFT adoption are in Asia.
- Research by CivicScience reveals that people who earn less than $25,000 per year invest in NFTs at a similar rate as those earning over $150,000.
A Token of Appreciation
While some believe that people who buy NFTs are stupid, in reality, it depends on what purpose buying them serves. Some people invest in them because they believe that they’ll hold value in the future, offering what they consider a safe investment option. Others invest in NFTs to secure digital ownership of physical assets and collectibles, as well as access to exclusive perks, since they are difficult to forge or steal.
The NFT market is growing and evolving, with new audiences being drawn in consistently over the last two years. Some experts claim NFTs will create new ownership opportunities and evolve into a more valuable asset class over time. However, like any investment, make sure to do your own research to see if they’re the right fit for you before investing any money.
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FAQs
Many people are also serious collectors and enjoy buying NFTs to invest in an artist or musician as they simply love collecting unique artwork or cool digital collectibles. Gamers buy NFTs for various reasons too, perhaps to upgrade their gameplay or to own a valuable in-game item.
Why do people want to buy art as NFTs? ›
Many people are also serious collectors and enjoy buying NFTs to invest in an artist or musician as they simply love collecting unique artwork or cool digital collectibles. Gamers buy NFTs for various reasons too, perhaps to upgrade their gameplay or to own a valuable in-game item.
What is the benefit of NFTs for artists? ›
When you mint your NFT, you can decide what percentage you want on future sales of your digital artwork. This means that every time someone sells your work on an NFT platform, you take a cut, allowing artists and designers to earn royalties and create a steady source of income from their work.
Why are people spending so much money on NFTs? ›
That's because NFTs aren't replicable: Their ownership and validity can be tracked and verified from the moment their data gets uploaded to a blockchain ledger. Rarity is a valuable trait in any collector's world, and each NFT is guaranteed to be unique.
Why would someone pay money for an NFT? ›
It could be as an investment opportunity, hoping that the NFTs will appreciate in value over time. Additionally, they might buy NFTs for status or prestige, to show off their wealth and taste in art or collectibles. Some may also buy it as a way to support artists or creators whose work they admire.
What are the benefits of owning an NFT? ›
An NFT's ownership is transparent and openly verifiable on the blockchain. Compared to proving ownership of a tangible object, proving ownership of an NFT is much simpler. On exchanges, NFTs can be traded. NFTs have a higher value as a result than tangible assets.
Why do people love NFT? ›
So, why do people buy NFTs? They do it to experience art uniquely, blurring the lines between creator and collector and enabling them to be a part of the artistic narrative like never before. Buying NFTs is also a collaboration, as owners support artists' creative endeavors.
Do artists profit from NFTs? ›
Do NFT artists actually make money? Yes, NFT artists can make money by creating and selling unique digital assets, such as digital art, collectibles, and other digital items.
Why do people invest in NFTs? ›
Investors buy and sell NFTs for many reasons. Some are interested in owning the underlying asset, and others may perceive value in tokenizing an asset into an NFT. Some investors might simply enjoy speculating on its potential to appreciate.
What are the advantages and disadvantages of NFT art? ›
NFTs present unique ownership and potential for royalties, but they also come with risks such as market volatility and potential for fraud. Understanding these pros and cons can help individuals make informed decisions about participating in the NFT market.
A non-fungible token (NFT) is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity. It cannot be copied, substituted, or subdivided. The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded.
What does NFTs basically deal with? ›
NFT 101: Non-Fungible Tokens Explained
An NFT (Non-Fungible Token) is a unique digital asset stored on a blockchain, representing ownership or authenticity of specific digital content, like art or collectibles.
Why did NFT become popular? ›
NFTs first came to prominence in 2017 with the launch of the Ethereum-based game CryptoKitties. The game allowed players to breed, buy, and sell digital cats. The success of CryptoKitties showed that there was a demand for NFTs and that they could be used to create new and innovative applications.
Why do people buy art as NFT? ›
Advantages of NFT art
Digital art often costs less to produce than traditional art. Traditional art requires materials that can be expensive, such as paints, brushes, and canvases. Digital art requires a minimal investment to get started.
What is the real purpose of NFT? ›
NFTs are tokens used to represent ownership of unique items. NFTs allow their creators to tokenize things like art, collectibles, or even real estate.
Why are people still buying NFTs? ›
In the music industry, NFTs are being used to sell unique digital memorabilia and even as a way for artists to monetise their work directly. There's also growing interest in using NFTs for identity verification and gaming for unique in-game items.
Is it worth turning your art into an NFT? ›
If you already wonder if you should convert your art into an NFT, the answer is obviously, “yes, why not try.” The process of creating an NFT is neither complex, costly nor technical. All it requires is a set of creative skills and a personal computer.
Do people still buy NFT art? ›
For now, at least, the market's outlook remains grim. A 2023 report from crypto analysis firm dappGambl found that 95% of NFTs are worth practically nothing. The report found that, following the immense hype over NFTs between 2021 and 2022, around 79% of all NFT collections have remained unsold.
What's the point of buying digital art? ›
Access to unique digital communities, creators and artists. As an investment for future monetary returns. Interest in contributing to specific art projects. Financial speculation.
What happens if someone uses your art as an NFT? ›
If you find out your artwork has been stolen and minted as an NFT, let the marketplace it is being sold on know. You can also use the DMCA process to have it removed from whatever website it was posted to.
