Why are People Paying a Huge Amount to Buy NFTs? – Future History of Art!

NFT, also as known as non-fungible tokens, are the new trend now. Most people spent their last year trying to figure out what it actually means, and not all of them could understand it. Indeed, the concept of NFT might be difficult to understand – there was a lot of processing going on when Bitcoin first became a thing, but people seem to understand it a lot better now. 

But of course, there is probably more time needed for NFTs to become a “real” part of our lives; and for people to accept them as it is without having any confusion. We are, of course, saying those words by putting NFT nerds into a different category. Today, many people are spending millions on NFTs, and many people are earning millions with NFTs. But why? Today, we are here to talk about why people are so obsessed – and why people are willing to put huge amounts of money into buying something digital, which makes up the big questions in the first place. Without further ado, let’s explore the NFT world together! 

KEY TAKEAWAYS

• NFTs are “non-fungible tokens,” which are accepted as a form of art and thought to bring a new way of seeing art.
• NFTs are today far beyond expectations from them.
• The way digital art is viewed changed drastically with the rise of NFTs.
• Some of the characteristics of NFTs that make them unique are ownership, uniqueness, and being non-fungible in essence. 
• NFTs are a part of Blockchain technology. 
• Some NFTs are worth millions. 
• Anything that can have a digital presence can be an NFT.

What is NFT?

It would be best to talk a little bit about what is NFT so that it can help you to understand why there is so much stuff going on about it. In the simplest terms, NFT (non-fungible tokens) is a form of digital asset, which can be presented in lots of different ways. They can be digital paintings, music, videos, avatars, tweets (yes, tweets can be NFT), and many other things that can have a digital presence. The main characteristic of NFTs is that they are unique and can belong to only one person. 

Let’s compare it to Bitcoin to make things clearer. First of all, both NFTs and Bitcoins are digital assets. However, Bitcoin is not something unique; anyone who has enough money can purchase the very same Bitcoin with the very same characteristics and value. So, there is no such case where one Bitcoin can belong to one person only. In those terms, the definition of “fungible” might be helpful. Fungible refers to something that can be exchanged with another thing that has the same value; for example, one Bitcoin and another Bitcoin are the same, and exchanging them would not create a difference. The situation is quite the opposite in NFTs. Hence, it is safe to say that Bitcoin is one thing; there is no possibility for Bitcoin to come in a different form (yet). 

NFTs and Art World 

One main discussion about NFTs is regarding their place in the art world and whether they will bring a huge difference in the world of art. In essence, NFTs are generally described as “artworks,” because indeed, each of them is a work of art. It might not make sense for some people how the definition of art fits the NFT standards, but even in traditional art, isn’t the situation the same? 

NFTs are bringing the concept of art to blockchain technology, in addition to conceptualizing art in the ways that we are not used to it anymore. We have mentioned how even a tweet can be an NFT; we are not used to naming it as “art,” but this too is happening. Thanks to the technology we have today, anything can be in Blockchain technology. So, almost anything can be an NFT, one way or another.

See how NFT sales are increasing lately.

NFTs as Art World Changers: How Do NFTs Change the Art?

It is obvious that NFTs are not the art we are used to seeing, and people started to talk about whether NFTs are really changing the art world. Of course, we will have to wait and see to see its influence on the art world for real, but we can make observations from what we are seeing up to today. 

The hype about NFTs is not something exaggerated, people are truly obsessed with it, and it is becoming a huge sector. So, what can happen? The definition of art is changing. The way people profit from art is changing. Most importantly, the value assigned to art is changing. We are not only talking about the separation of digital art from traditional art, but that is also the most obvious thing, and digital art has been going around for so much longer than the NFTs. We are talking about a form of transparency here. If you know anything about Blockchain technology, you know what kind of transparency we are talking about.

If you don’t know which kind of transparency we are talking about, let’s say a few words about Blockchain technology. Basically, Blockchain ledgers that NFTs are stored are entirely public. Nothing can be hidden, and within the system, artists are rewarded with resale copyrights. 

Coming back to our point, NFTs are also changing the digital art world as well, even though they are under the same category. Indeed, digital art has been in our lives for quite a while now, but since there is no “ownership” (everyone with the screenshot in the normal digital art can have the artwork), it went undervalued. In those terms, it can be said that NFTs are helping digital artists by bringing up the notion of ownership to the scene. 

What is NFT Good for?

You might be wondering about the whole point of NFT. There is a lot to uncover, but why do we need such a form of art in the first place, and what makes NFT so popular? There are several things we can mention to answer those questions. First of all, there is proof of ownership in NFTs. If you know basic economics and psychology, you know that scarcity creates a stimulus somehow and pushes people to have something even in the cases where they don’t need it. Now, we are talking about something that is one of a kind, something so scarce that there is only one from it in the whole world, and there will not be any other one. This ownership sense, proven by the uniqueness of each NFT, creates a huge demand. 

Another question can come to mind here. But what if we screenshot the NFT? Arent they already all in the digital world? If I screenshot it, I will have the same, right? Absolutely not. You see, technology is not allowing that anymore; there is a foolproof way of telling an original NFT from a copied or screenshotted one. So, even though you have the same thing, it is not that different from owning the Mona Lisa painting and taking a picture of it in the Louvre Museum. You cannot say that they are the same thing! 

Why are NFTs Worth Millions?

The principle of scarcity isn’t enough to explain the astonishing prices paid in NFTs. We are not only talking about thousands of dollars, but we are also talking about millions of them. Yes, there are people willing to pay a couple of millions for a piece of digital art, and in fact, they are already paying. We need to mention that not all NFTs are this valuable, there are some that will go unnoticed, and there are some sold for a reasonable price. But the ones that are sold for millions are not only one or two, and it raises a question, why? 

The answer to this question lies within the characteristics of NFTs. Up to now, we have mentioned several characteristics of NFTs, which can be listed as follows:

• Each NFT is one of a kind. 
• NFTs are “owned” by someone, and they cannot be copied. In other words, one person can own one NFT, and even though it is shared and copied millions of times, the original one is separate. 
• NFTs are irreplaceable.
• NFTs are “non-fungible” (that’s where the name comes from), meaning that it is not possible to exchange it with another asset with an equal value. 

All of those characteristics of NFTs make people willing to pay millions of it. But again, not all of them. What makes some NFTs more valuable than others? The following are some of the determinators of the value of NFTs:

• Future value
• Ownership history
• Utility 
• Liquidity premium 
• Perception
• Similar market value
• Underlying value or the value is given to the creator

See the most expensive NFTs that ever sold!

NFTs as Investment Means: Gather Your Collection

Since we are talking about huge amounts of money, of course, there is a deal of investment in NFTs. It’s similar to investing in crypto, but it is also so much different from investing in crypto. If you purchase a good NFT piece that has a future value, it is possible to sell it for a lot more than you purchased. You see, every Bitcoin owner will have similar profits (if they have the same amount), but two NFT owners will not be able to make similar profits; one can make millions out of it, whereas the other one has to sell it for a lower price they got.

NFT investment is a relatively new concept, and people who are eager to make money out of NFTs are usually those who want to create them. There are thousands of ways of creating NFTs, so the sector is getting bigger and bigger as each day passes! 

Want to buy an NFT? Then check out the post about the best NFT marketplaces right now.