NFTs sell for exorbitant prices, but why do people buy NFTs?
Beeple, a single digital collage, sold for a stunning $69 million last year. It’s almost as if NFT is the new Bitcoin, and everyone wants one. But why do individuals purchase NFTs?
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CenturyLink polled 1,000 US citizens to determine their purchasing habits about NFTs. The findings showed some intriguing things.
For example, 22% said they wouldn’t buy NFTs, and 32% said it’s like buying expensive designer clothes or a home in cyberspace. Furthermore, 36% of those polled said they bought it intending to sell it for a profit.
This essay will go into detail on what is driving the NFT mania. We’ll also discuss why you should include NFTs in your investment strategy.
Why Do People Buy NFTs? 10 Top Reasons
Scarcity
The NFT market is based on scarcity, which is the primary reason for its appeal. Therefore, when making NFT art, many creators make use of rarity.
A good case study is the Bored Ape Collection. This NFT project consists of only 10,000 individual NFTs. Each piece’s distinct feature contributes to its scarcity, raising its value.
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The Bored Ape collection’s exclusivity has resulted in record-breaking sales. For example, #8817, the most expensive Bored Ape, sold for $3.408 million.
Irreplaceability and Non-Replicability Nature of NFTs
The smart contract that governs everything an NFT performs is stored on the blockchain. This technique assures that these digital assets are immutable, making them non-fungible.
It also prevents dishonest traders from forging original artwork and defrauding buyers. In addition, the blockchain stops them from replacing the original NFT.
As an Investment Class
Some people think of NFTs as a modern method to invest in art. NFTs, like Bitcoin, gold, and silver, can help investors store their riches. It’s also worth noting that some buyers profited from their NFTs.
Pablo Rodriguez-Fraile, an NFT investor, paid approximately $67,000 for a 10-second video NFT in 2020. In 2021, he sold the artwork for $6.6 million.
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Also, read our article on How To Buy NFTs — Ultimate Guide
Distrust of Fiat Currencies
The COVID-19 pandemic resulted in enormous inflation, affecting many people and businesses. It has also increased people’s distrust of fiat currencies, and many are concerned about the value of their investments if such inflation occurs again.
Cryptocurrency prices, on the other hand, soared during the outbreak. This increased tendency has had an impact on the growing popularity of NFTs.
Also, see what’s the best NFT Crypto for your art.
A Way to Support Their Favorite Creators
The NFT movement has greatly benefited artists and musicians. For example, artists such as Steve Aoki, Grimes, and Kings of Leon have sold their works as NFT.
Most people purchase NFTs to support their favorite artists and creators while feeling like they own a piece of the song or album. Additionally, most people prefer to buy music NFTs because they can also be used as event tickets.
Membership in the Cryptocurrency Community
The Bitcoin world’s strong sense of community is one of its primary strengths. NFT communities contain digital creators that create collectibles that other members can purchase.
According to experts, this sensation of belonging explains why NFTs sell so well. It’s also why people would pay hundreds, if not millions, of dollars for a digital token.
People Buy NFTs as Collectibles
People also invest in NFTs to enjoy possessing a specific set of products. Many sports companies, artists, and industries are issuing NFTs in this regard. Some of these NFTs offer perks such as VIP access, celebrity meet and greets, and so on.
Contrary to popular assumption, NFTs are not only images. For example, the NFL is selling game highlights as NFTs. When You See Yourself, the Kings of Leon album, was available as an NFT compilation. Marvel also released NFTs of classic comic books. People buy these NFTs for the same reasons they buy physical goods.
NFT Gaming
Many blockchain-based games have released NFT tokens with in-game utilities. These NFTs include trade cards, characters, skins, virtual property, etc.
Some games demand you buy their NFTs to play, and others let you play for free, and as part of the game, you can collect or buy NFTs.
People also buy gaming NFTs because they let them own a part of the game and appreciate being able to sell or trade their NFTs with other players. Some gamers also take pleasure in obtaining in-game money that has real-world value.
New Experiences and Interactivity
NFTs have unlocked a realm of innovative and interactive experiences that go well beyond the traditional concept of owning physical or digital items. One of the most exciting possibilities is the integration of NFTs with virtual reality (VR) environments.
Imagine stepping into a digital world where your NFT art collection adorns the walls of a virtual gallery. You can walk among your prized pieces, view them from different angles, and even invite friends from around the globe to join you in this virtual art space, fostering a sense of shared appreciation and connection.
Virtual Events and Exclusives
Imagine holding an NFT that grants you entry to a live-streamed concert by your favorite artist. These events can be intimate and immersive, fostering a direct connection between the artist and their most dedicated fans.
Such experiences redefine the concept of attendance, enabling global participation without physical barriers.
NFT ownership can also unlock the doors to private online communities. These communities gather spots for like-minded collectors who share a passion for a particular artist, genre, or collection.
These forums facilitate discussions, exchanges of ideas, and collaborations, creating a sense of belonging and camaraderie among NFT holders.
This exclusivity fosters deeper connections among participants, who can interact with creators and fellow collectors in an environment tailored to their shared interests.
Disclaimer
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Buying an NFT doesn’t guarantee the value will increase in the future. The NFT market is non-volatile yet unpredictable. Several factors are in play that determine the value of NFTs. But, in the end, it depends on people’s interests.
For example, the owner of Dorsey’s first tweet put the NFT back on sale, but the interest and offers have been dismal. This scenario reveals that NFTs are operating under a bubble that might burst soon.
Frequently Asked Questions
How do NFTs provide authenticity for digital art?
NFTs establish authenticity by linking a specific digital file to a unique token on a blockchain. This creates an immutable record of ownership and provenance that cannot be duplicated or tampered with. Buyers are drawn to NFTs because they can prove they own an original digital creation.
Why are NFTs seen as valuable if digital files can be copied?
NFTs introduce scarcity to digital assets. While digital files can be copied, NFTs can represent limited editions or unique items, adding a sense of rarity that mimics the value-boosting effect of scarcity in traditional art markets.
Are there risks associated with buying NFTs?
There are risks associated with buying NFTs. NFT markets can be volatile, and the value of NFTs can fluctuate significantly. Environmental concerns related to blockchain energy consumption, copyright issues, and potential market bubbles are other factors to consider.
Why Do People Buy NFTs? Summary
NFTs blew the internet in 2021 & 2022, 2023 and 2024 is still looking promising despite the dip. We’ve highlighted in this article some of the reasons for the rise in the popularity of NFTs.
Should you invest in NFT in 2024? We do not recommend NFTs as an investment right now. But, if you want to buy NFTs for a specific utility like supporting a creator, access to a concert, and so on, do it.
Remember to research an NFT project before investing any money. Many sketchy projects would leave you with a worthless JPEG at the end. Also, like any other investment, invest what you can afford to lose.
