According to somewhat recent data presented by CryptoSlam, in a few months to March 2021, people have spent well over a billion dollars on digital assets.
As you probably know, digital arts have been the rave for a while for most crypto enthusiasts, but recently, even people outside the crypto ecosystem have started delving into the trend of NFTs — this sprouted from nowhere. So, this begs the question of what is really attracting more individuals into the NFT mania, making them invest hundreds to thousands to millions of dollars on these assets? Some investors opine that this is triggered by a range of factors that may include the surge in BTC prices or the COVID-19 pandemic.
Just a few months ago, Mike Winkelmann (Beeple), sold crypto art for around 70 million USD. Also, a similar trend can be seen in several other artists like Grimes, which made several million from their cryptic art collection just in a few hours. Besides, the buyers and the creators of this art have also accessed sizable profit from them. In February, Pablo Rodriguez, an art collector from Miami, indicated how profitable the market could be when he resold Mike Winkelmann’s piece for an almost 1000% increase relative to the actual price.
What Do You Get When You Purchase a Non Fungible Token?
Anytime you buy an NFT, you access the rights to an immutable and unique token. However, this is only relevant to the blockchain. Anytime anyone purchases a meme or an image, they can only claim its possession on the blockchain, with no control over its distributional rights. In most scenarios, when you purchase an NFT asset, you’re not purchasing the content; instead, you are purchasing a token that links your identity to the creator’s art on the blockchain.
NFTs work based on the same concept as cryptocurrencies. The main difference is that NFTs, unlike cryptocurrencies, can’t be traded or replaced with one another. Every NFT is different, setting it apart from fungible tokens, such as cryptocurrencies. No one can duplicate them, they are immutable, and as such, you can easily authenticate the authenticity. However, there is no guaranteed approach to identifying whether they can maintain their values as passes. So, what caused this frenzy?
So, Why Are More People Buying NFTs Today?
According to various enthusiasts, this new craze could be attributed to the surged price of BTC as well as the influence of the COVID-19 pandemic, with USD distrust creating a perfect breeding ground. However, it could also be said that more and more people are exploring this space as a result of their awareness of other benefits embedded in it. There are some obvious benefits you can access by investing in NFTs, and as such, these benefits may tempt even the average doe to invest;
Increase in value — this is the fundamental premise for every investment. As highlighted by InvestorTrend, the fundamental reason NFTs tend to surge in value is as a result of their use in blockchain games and the growth in the trend of gamification in DeFi. A good example of this is Black Eye Galaxy, which is a cross-chain blockchain system allowing users to explore the planets and galaxy while earning sizable rewards. It tokenized planters in the form of NFTs, and some of these assets can considerably grow in value as the popularity of the platform keeps rising.
The apparent surge in the NFT ecosystem — As aforementioned, the NFT ecosystem keeps growing, and it’s seeming more likely that their use cases will gain more traction. And as we know it, as they gain more traction, owners of such assets can gain substantial profit from them.
The joy of holding something unique — NFTs are unique in nature, and there’s a special feeling the accompanies owning what others do not. This same premise could be applied to those who purchase limited-edition fashion brands at exorbitant and seemingly unreasonable costs. Besides the joy of holding something unique, they also tend to grow in value, and as such, this ties into the benefits previously highlighted. Essentially, Most people are inclined to purchase NFTs as a result of the unique connection which it births to the creator, which is not in existence for any other art form.
Want to Explore This Trend? Here’s How to Buy an NFT
Before buying an NFT, there are a few questions you should ask and answer; where are you purchasing the NFT from? What is the required cryptographic token? What is the required wallet?
Some NFTs are only available on particular platforms. For instance, suppose you want to purchase lands on a specific planet, Black Eye Galaxy is one project offering that form of NFT. As such, you cannot buy such an art via a platform offering books or other real-life utilities. With that in mind, you’d then check out the token pertinent to such a platform and other requirements. Pretty easy, right?
What Does the Future Hold for NFTs?
By the end of 2021, a few analysts projected that the NFT market could surpass the 1.5 billion USD mark. This feat is expected as more brands, icons, and artists keep leveraging the space to develop their unique identities and tokens. As more and more blockchains are in the competition to create more robust NFT services, and considering the ever-increasing range of platforms you can select from, now is the best time to become an active part of the space. Even as a relatively recent feature in blockchain, NFTs are currently experiencing a big boom and almost everyone is rushing to jump into the craze, especially when it comes to art NFTs.
As time passes, no one could say whether NFT fever will fade out or not. However, those who jumped in early will witness a sizable explosion in their profitability goals within a negligible period. Its popularity is making several creatives to eliminate barriers and come back to develop new and innovative concepts on how to better explore what NFTs have to offer. As such, 2021 is just a starting point of an explosive innovation, and we all should expect diverse use cases for this innovation in the future. Ultimately, NFTs will become an integral part of our daily activities and people will be able to implement them seamlessly.
Disclaimer: This article is not intended to be a source of investment, financial, technical, tax, or legal advice. All of this content is for informational purposes only. Readers should do their own research. The Capital is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by reliance on any information mentioned in this article.
Why Are People Spending Crazy Amounts on NFTs? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.
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