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Why Nobody Is Talking About Why Are NFTs So Expensive And What You Should Do Today
Why Nobody Is Talking About Why Are NFTs So Expensive And What You Should Do Today
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Why are NFTs so expensive  
  

Line as the root of prise is zippo New. Kanye Dame Rebecca West prat sell a t-shirt for $120 because he’s Kanye West. Conceive of how a good deal he could deal the White t-shirt he wore on level for a show. Belle Delphine’s bathwater is sold tabu at $50 (NSFW site). It doesn’t weigh that we stern purchase a t-shirt for $5 or fix our own ill-gotten bathwater. Lineage matters.

  
Wherefore NFTs are Valuable  
The Beeple "Starting time 5,000 Days" NFT sold for $69,000,000 last-place workweek. Naturally, that's fosterage just about eyebrows some what the emptor genuinely bought.  
Obviously, the purchaser doesn’t own the graphics in any traditional horse sense. Look, I tin paste it correct here: 
  
  
And ahead you enounce "you seat do that with a painting overly!" That’s not quite a true up. A motion-picture show of a painting is dissimilar from the house painting. The JPG of the Starting time 5,000 Days composition is the piece. There’s no remainder.  
  
This is ane job with the ownership disputation close to NFT nontextual matter (presentation for the unfamiliar). You don’t ain the nontextual matter the like means you power ain an original Picasso. You Can you convert physical art to NFT’t demolish it, you can’t alter it, you don’t very insure it in whatsoever peculiar elbow room.  
But that’s the affair with NFTs, you’re non purchasing the artistry. You’re buying the NFT. The NFT is not the artistic creation. It’s a few lines of codes that includes a point of reference to the art, merely that’s it. The artistic production doesn’t evening subsist in the NFT since it would be direction as well very much information to lay on the Ethereum blockchain. Wholly the NFT has is a data link to where the fine art is!  
  
I could go get some other NFT of the exact Lapp bit of graphics rightfulness now, and no peerless could in truth full point me. But it wouldn’t be deserving anything. Why are NFTs so expensive not?  
Well, for one, it wouldn’t consume an bona fide origin. It's super easy to control whether an NFT came from Beeple or non. In fact, it's significantly easier to do this with NFT fine art than with "real world" nontextual matter since everything on the Ethereum blockchain is legible. Entirely Beeple would take to do is tweet the world call he's signing his artistic creation from and and then anything of his that's gestural by any other cover we'd have a go at it is pseudo.  
Stemma as the reservoir of assess is naught recently. Kanye Cicily Isabel Fairfield tail trade a t-shirt for $120 because he’s Kanye West. Imagine How do I buy and sell on NFT often he could deal the whitened t-shirt he wore on present for a demonstrate. Belle Delphine’s bathwater is sold come out at $50 (NSFW site). It doesn’t subject that we fundament buy a t-shirt for $5 or spend a penny our have filthy bathwater. Pedigree matters.  
You mightiness consider of an NFT not as the art, just as the theme song on the art. Historically you had to have the strong-arm composition to feature the theme song. Now we terminate nobble the touch into its have asset, and you arse grease one's palms the creator’s self-declared SEAL of genuineness.  
Some other doctrine of analogy Here is a college degree. Tuition at Andrew Carnegie Andrew W. Mellon is $57,119 per twelvemonth. At the close of quadruplet years, you pick up a small-arm of wallpaper. Is that firearm of wallpaper meriting $228,476? You could upright photoshop your cite into this unrivaled and forebode it a day:  
  
Merely it’s not the tack of paper, it’s the line of the newspaper publisher and what it tells people. The touch matters. It tells citizenry you worn out 4 days and decent money to spare 65 lives from malaria learning… something. Hopefully. And therefore they should give you Thomas More than the otherwise undistinguishable scholarly person a few miles off.  
The Leontyne Price of a arcdegree is not almost cognition or the friends you made along the way of life. Those could be had for ALIR to a lesser extent money. It’s approximately signaling. Sign you were competitive and confluent plenty to bewilder into this institution, and and then moderate your glut boozing advantageously plenty to death for quadruplet eld.  
The college academic degree exists somewhere on the spectrum between "utility" and "signaling." And unity fair ordered accuracy with the utility program to bespeak spectrum is that as things receive to a greater extent expensive, we normally line up ourselves nigher and closer to the signaling finish of the spectrum.  
The $5 t-shirt is gross public-service corporation. The Kanye t-shirt is virtually completely signal. Everything we buy, and own, falls someplace on this utility to signaling spectrum.  
  
So where are NFTs good today? Redress here:  
  
NFTs are absorbing in character because they call for the public utility company to sign ratio to the utmost. In that location has never been something so worthful that’s so dead useless. Tulips you could at least imbed. In that respect is in effect zero point service program to owning NFTs that are on the commercialize right on now, as well venture just about their ulterior economic value.  
So on the far side speculation, wherefore are they worthful? Signal. There are just about 240,000 individual wallets with ended $1m USD in Bitcoin. If you all of a sudden came into a few milly, you’d wanna present hit as well. NFTs are a merriment New mode to sign wealth and perceptiveness.  
Only they’re likewise a style to sign how former you are in the crypto economic system. If you purchase into the melodic theme that NFTs testament specify a newly criterion for integer rights management and integer ownership (which I do, more than on that following time), purchasing or so forthwith is sort of wish purchasing BTC backbone in 2013 or registering a 3-varsity letter demesne appoint in the too soon years of the net.  
And to be clear, I dead jazz NFT engineering and am passing to drop a line just about it a great deal more. I’m non pointing verboten their gamy sign to substitute ratio to criticize them. I’m pointing it verboten because I think they’re existence unfairly criticized for beingness a pine away of money. Signal is extremely valuable, and NFTs are a absorbing fresh style to peacock and maybe arrest racy along the room.  
So are NFTs a guggle? I doubtfulness it. NFTs are acquiring stacks of insistency just the commercialize is unruffled small letter in the wondrous outline of things.  
The prowess market is worth  
67 one thousand million dollars. The NFT marketplace lonesome run into 338 trillion in 2020. Possibly it’ll pip a few 1000000000000 this class. But then component in How do I make my NFT account free often easier it is to bribe NFTs than art, and how many early industries NFTs could eat up departed at, and that 67 1000000000 numerate exactly sounds comparable a start stage.  
For example, sports trade. Approximately of the money acquiring exhausted on NBA merch is directly flowing into TopShot. TopShot has through with at to the lowest degree a few 100 1000000 in proceedings so far, which sounds mad until you think of that NBA merchandise, which has no notional investment component, is a nigh 50 million dollar mark diligence.  
Or equivalence NFTs to early crypto options. Bitcoin’s marketplace pileus is o'er 1 zillion. If on that point were a Beeple-sized, $69m sales agreement every one Clarence Day for a year, the NFT food market would silent be sole $25b, or 2.5% of the Bitcoin commercialize. It is Early on.  
While I don't opine NFTs are a bubble, I cogitate there are very much Thomas More interesting habit cases for NFTs that aren't being done in time. Uses that leave acquire them on the far side mere signaling, and fall in them around fresh forms of public utility company that weren't antecedently conceivable online.  
One time we jump seeing more than of those use of goods and services cases arrive, the commercialize bequeath scarcely keep to arise.  
This clause originally appeared as an essay in my Monday Potpourri newsletter, which you give notice mansion up for here
  
  

"We're eyesight a newfangled genesis of traders within the NFT market; the great unwashed who are digitally aboriginal looking at for integer indigen plus classes away of effected plus markets," Ivanova aforementioned. "These are mass WHO make congregate repute and riches and privation to gift it in strictly virtual assets equal NFTs."

  
What are NFTs?  
NFTs are non-fungible tokens — import you couldn't central peerless NFT for another — that run away on a blockchain network, a appendage account book that records completely transactions of cryptocurrencies equal bitcoin.  
The divergence with bitcoin and former tokens, though, is that from each one NFT is unparalleled and Can you convert physical art to NFT't be replicated. Apiece ace accrues note value independently. Crypto investors pronounce NFTs deduct their economic value from how barely they are. They're stored in appendage wallets as collectors' items. Beyond artistic production and sports, the great unwashed undergo as well plant uses for NFTs in practical literal demesne and play.  
Nadya Ivanova, gaffer operational police officer of BNP Paribas-affiliated inquiry fast L'Atelier, says collectable integer assets toilet be persuasion of as a improve adaptation of an MP3 charge. Musicians let struggled to profits from their figure out in the appendage age, and Ivanova says more or less are turning to NFTs to rise possession of their figure out and observe an extra reservoir of receipts.  
"It's allowing subject creators to actually own the material possession rights for what they create, which allows them to profits from it in dissimilar shipway which they can't do with forcible art," she told CNBC, adding that crypto artistic production is the strongest thriving subsection of the appendage collectibles commercialize.  
The overall prise of NFT minutes quadrupled to $250 meg cobbler's last year, according to a take from NonFungible and L'Atelier. The list of integer wallets trading them all but doubled to all over 222,179, patch close to traders were capable to give win of ended $100,000.  
"We're eyesight a fresh propagation of traders inside the NFT market; multitude WHO are digitally aboriginal look for appendage indigen plus classes exterior of constituted asset markets," Ivanova aforesaid. "These are citizenry who take assembled repute and wealth and need to induct it in purely virtual assets same NFTs."  
Ivanova says the NFT grocery store has been maturing. Famed vendue domiciliate Christie's auctioned an NFT-founded ferment of artwork created by Beeple, a well-known digital creative person who has created videos and artwork for celebrities comparable Ariana Grande and Justin Bieber.  
  

What was it around this artwork that made it so hotly contended? The sale of the artwork came with some interesting features:

  
Appendage art: What are NFTs and wherefore are they so worthful?  
  
How do you find out economic value? Thought process most this now as I hear splashed crossways the media news program some a extremity nontextual matter that sold online for US$69.3 meg. Straightaway that's a genuinely expensive JPEG file cabinet. What caused the cost to accomplish so much foolhardy heights? Supply and demand, scarceness value, trinket factor, braggy rights? In the pillow slip of this graphics potentially a compounding of altogether of the supra.  
The creative person Mike Winklemann professionally known as “Beeple” was not considerably known international of the digital graphics cosmos. Directly he is ane of the all but expensive livelihood artists you had belike never heard of. Until in real time.  
Christies was the auction sale sign of the zodiac that sold his graphics and whilst they ingest an unbelievable pedigree in marketing fine art which dates dorsum to the 1700's, this was the number one fourth dimension they or whatever former major auction bridge family had sold a while of prowess that was exclusively digital (with a NFT). I say that they themselves were uncertain of how to prize the spell. Its sightly to suppose the auctioneer went real well, it was a enter breaker, and judgment by the artist's chirrup eat he appears to be stunned by the concluding Leontyne Price paying.  

.@beeple 's 'The Offset 5000 Days', the 1st purely extremity NFT based nontextual matter offered by a John Major auctioneer sign has sold for $69,346,250, position him among the go past iii about worthful sustenance artists. Major Thanks to @beeple + @makersplaceco. More than details to be released shortly — Christie's (@ChristiesInc) Process 11, 2021

  
What was it more or less this nontextual matter that made it so heatedly contended? The cut-rate sale of the art came with just about interesting features:  
  
Sold with a Not Fungible Nominal.  
Strictly integer art.  
A digest of 5,000 individual artworks.  
Cut-rate sale treat managed by unitary of the near revered auction houses, Christies.  
Cryptocurrency was an accepted organise of payment.  
  
Until Tuesday this hebdomad I had never heard of NFT's or Not Fungible Tokens. Crypto up-to-dateness? Yes. Blockchain? Certain. NFT? Nope. I set up tabu most them by take chances when merging with a occupation spouse he mentioned NFT’s to me. "NF what?" I queried. He patiently explained the construct and how NFT's could be applied to assets such as artworks and euphony victimisation blockchain technology. I was concerned to hear close to it but wondered where had I been completely this clock time? He believes NFT's are the adjacent braggart thing, exactly his opinion, utterly non advice!  
The commemorate producing artwork by Beeple is coroneted “Everydays: the offset 5,000 days", a digital asset compiled of 5,000 individual artworks. If the new owner(s) decide to sell the artwork in the future it will have to be sold as a whole, they will be unable to siphon off individual pieces to sell. Whilst the artwork is a rich tapestry of thousands of pieces the owners will be able to zoom in on each individual piece, so it can certainly provide them with some viewing variety.  
  
  
  
Everydays — The First 5,000 Days, by an artist named Beeple, released by Christie's (Christie's Via AP)  
There is no doubt in my mind that an important part of the value of the artwork was that it was sold with a non fungible token or NFT. The NFT is essentially a digital trademark providing proof of provenance and ownership. With the use of a NFT authenticity of the asset is forever assured; using blockchain technology the token will be stored on a digital ledger. Should the artwork change hands in the future the NFT would go with it providing an important safeguard that this is the original piece, helping combat the risk of fraud and forgery. This can be a serious and expensive issue in the art world which is well covered in the popular BBC television series “Fake or Fortune”.  
It is easy to understand How do I make my NFT account free a NFT can provide safety to buyers and sellers, particularly important for digital art which can be easily replicated. It will be fascinating to watch from the sidelines to see how the use of NFT's develop. No question that we really do live in interesting times.  
  

Deutsche Bank suffered a similar shock in 2015 when a junior member of the bank’s forex sales team accidentally transferred a hedge fund $6 billion, but luckily for the fledgling member of staff, the hedge fund was kind enough to send it back.

  
What are NFTs?  
NFT stands for “Non-Fungible Token.” Non-fungible essentially means it cannot be traded in for something else, in the same way a $50 dollar note could be traded for two $20 dollar and one $10 dollar note.  
NFTs are sometimes compared to art pieces like paintings (because there will only ever be one original) but they’re also regularly compared to autograph prints, collectibles, and trading cards. Whichever traditional, real-world analog is closest, they are effectively digital certificates of ownership.  

NFTs can contain smart contracts — which run on the Ethereum blockchain — which could, in theory, give the original creator of an NFT a percentage of all future sales of the token.

  
Why are they so expensive? Scarcity, first of all, but the marketplace in general — and the subsequent price of NFTs — is driven by the momentum and sentiment floating around this young, exciting new asset.  
Who knows how expensive NFTs will get — or, conversely, when the bubble will burst.  
  

Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.

  
NFT explosion: Why are people buying digital art?  
You are free to share this article under the Attribution 4.0 International license.  
Built on the same technology as Bitcoin, NFTs have been a hot topic in 2021. They enable a real market for digital works of art while fueling unprecedented speculation.  
2021 might become known as the year when digital art exploded. On March 11, a cryptocurrency investor paid $69 million for the digital painting “Everydays: The First 5000 Days” during an auction organized by Christie’s. The blinking GIF Fomo is currently for sale for $2 million—60 times what it sold for only nine months ago. And a series of 10,000 straightforward-looking illustrations of monkeys, called the Bored Ape Yacht Club, are collectively worth more than one billion dollars.  
This mind-boggling bubble is fueled by the NFT technology, which enables cryptocurrencies such as bitcoins or ethers to be exchanged against digital objects. An NFT or “non-fungible token” is a digital data string that establishes proof of ownership of a specific item that usually exists in the virtual world. It could be, for instance, a digital work of art, a financial asset, or a patent.  
NFTs live on the blockchain, a transaction-tracking decentralized ledger, which until recently was mainly known for being behind Bitcoin. It has generated incredible hype while extending its potential impact on many industries, from finance to art, music, intellectual property, and luxury goods.  
NFTs and royalties  
“NFT has really enabled a market for digital art,” says Robert Zumkeller, a graphic designer who started creating NFT illustrations while a student at the FHNW Academy of Art and Design in Basel. “I am not certain that I would have found a brick-and-mortar gallery willing to exhibit my digital work, nor buyers who would acquire a physical screen to own it. With NFTs, I could use an online gallery, Superrare.com, to showcase my work and sell it.”  
Like everything else recorded on a blockchain, art NFTs allow for tracking all transactions after their initial sale. This tracking allows for a perpetual royalty payback, explains Zumkeller. Under his moniker, Vicarivs, the young artist will receive 10% on any subsequent sale of his work—something that rarely happens with physical objects sold by galleries or collectors.  
In physical art, only one original copy usually exists (or a few dozen, in the case of art prints). The original is distinguishable from reproductions, which are sold legally or as forgeries. With digital painting, the work of art is a data file, which can have an infinite number of perfect copies. That is Why are NFTs so expensive an NFT does not comprise the data file of the work of art itself; instead, it functions as proof of original ownership.  
Digital versions of luxury goods  
NFTs have also entered the luxury market, where recently, digital twins (a photograph or a 3D animation) of collector watches went up for auction in spring 2021. “More and more brands are looking into NFTs,” says Serge Maillard, managing editor of the watch magazine Europa Star. “First, as a useful tool to fight forgery by ensuring traceability and authenticity. Second, to develop and maintain a closer, more personal relationship with their client, without having to rely on intermediaries.”  
Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.  
Altogether, the NFT market ballooned over the last twelve months with a 700% increase from the second to the third quarter of 2021, according to the analytics platform Dappradar. This bubble confirms the speculative character of cryptocurrencies and blockchain applications; namely: the dollar value of the bitcoin has increased by a factor of 100,000 over ten years.  
Speculation and impact  
“So far, design choices on the technology have helped to fuel speculation,” explains Claudio Tessone, professor of blockchain and distributed ledger technologies at the University of Zurich’s department of informatics. “The most widespread systems are based on the so-called proof-of-work, where the validating and tracking of all transactions by the network as well as the introduction of new tokens only work because users run computations on their systems.  
“As the devoted resources have been accelerating under a constant rate of supply, the creation of assets is becoming more and more expensive, which fuels an increase of their value, just like oil prices going up when it’s harder to extract. In turn, this creates incentives to invest resources in the blockchain, which fuels a self-reinforcing loop driving speculation and inflating prices further.”  
The energy consumption of blockchain applications has been an increasing worry. While society is desperately trying to tackle climate change, it has simultaneously introduced economic services that consume as much electricity as a middle-sized country like Sweden. “There is some hope that a new architecture for blockchains, called proof-of-stake, will make the electricity needed to run it negligible,” says Tessone. “A new generation of platforms such as Cardano, Polkadot, or Tezos are already running on such systems, but their impact—while increasing—has been limited so far. We’ll have to see.”  
However, this new architecture could generate new, problematic incentives. Until now, cryptocurrencies rewarded those setting up huge computer farms to profit from economies of scale and more efficient energy usage. A proof-of-stake blockchain rewards users instead who heavily invest in it, which fuels speculation. “As of now, it is hard to imagine blockchain without speculation,” says Tessone. “It is good to see that the community takes this problem seriously, cryptoeconomies for a future with more functional cryptoeconomies.”  
Catherine Tucker, a professor of management at MIT who specializes in the blockchain, regrets this focus on speculation: “Most of the reporting on NFTs has been on the speculative aspects. This is rather frustrating, as it may lead to less experimentation on ideal-use cases.”  
Not so private after all  
One worry is that the anonymity provided by blockchain technology could help financial fraud. The most obvious ones are shill bidding to drive prices up at auction and insider trading. In September 2021, Opensea, the largest marketplace for NFTs, revealed that one of their employees had purchased items just before they were displayed for sale on its front page—an action that would amount to insider trading.  
Many specialists’ forums discuss the risk of shill bidding, where an artist or someone they are conspiring with buys their work for a large sum to drive its price upwards and maintain the current bidding frenzy. This culminated with the suspicion that the owner of an NFT of the art series CryptoPunk borrowed 500 million dollars as a flash loan—a financing mechanism only available on the blockchain—to buy the NFT from themselves before returning the money. While a clever trick to inflate the price of their art, this move also raised suspicions that NFTs could be a perfect tool for money laundering.  
Interestingly, specialists discovered these suspicious activities because all blockchain transactions are fully available to the public. “The famed privacy of cryptofinance is a mere illusion,” says Tessone. “It is based on the premise that users create a large number of wallets holding their assets in an attempt to obfuscate their transactions.” But in fact, many people choose to avoid this option because of the cost of transactions. And then, of course, there’s the traceability, adds Tessone: “mathematical network analysis can uncover suspicious activities, allowing tracing back transactions to a person even if they manage many wallets. This is why shill bidding on NFTs is not actually safe for fraudsters, contrary to what many commentators say.”  
Catherine Tucker also cautions us against putting the blame entirely on NFTs, saying that “problems such as insider trading with NFTs are reflections of underlying user behavior in uncertain environments and persistent transaction costs. I am not sure if attributing fault to the technology is correct. Ultimately, technology is just technology.”  
  

Now, as prices surge, owning a CryptoPunk has become a "digital flex" due to there being only a limited number of them. Several of their owners have also taken to flaunting them by using their punks as an avatar on social media sites like Twitter.

  
First and foremost, limited quality. Just like there would only ever be 21 million Bitcoin and not a single more, there will only ever be 10,000 CryptoPunks. It is up to the NFT creator if they want to have a rare collectible or have several versions of their NFT. Still, in both cases, the authenticity of the NFT is verifiable through their unique IDs and metadata.  
In CryptoPunks, no two punks are the same. Some have a headband, some have caps, others have small shades, and many are wearing gold chains. Each punk has different attributes, and some are rarer than others. Simply put, the rarer an item, the higher its value.  
  

After all, if you were to spend millions of dollars to buy a piece of work done by Picasso, you could hang it in a gallery and charge quite a bit of money for tickets to simply look at it. But NFTs are different. They’re digital files that can essentially be copy and pasted by anyone.

  
NFTs Are Unique  
First and foremost, it’s important that you understand what the acronym NFT stands for, which is non-fungible token. The non-fungible part of the name points to the uniqueness of the digital asset. These pieces of art simply can’t be replaced.  
To understand the difference between a fungible asset and a non-fungible asset, all you need to do is look at Bitcoin, Ethereum, or a wide range of other cryptocurrencies, which are all indeed fungible. After all, there’s nothing unique about a single bitcoin other than its ownership. One could be replaced with another and the owner wouldn’t mind because the value is the same no matter which coin he owns.  
On the other hand, your dog is a non-fungible asset, albeit one that’s likely a very valuable member of your family. After all, I couldn’t walk in with another dog that looks pretty much the same, take yours and leave mine, without you being upset about it.  
Your dog is unique. You know his personality, he knows yours, he gets along with your kids, friends, and family. Shucks, he’s part of the family. There’s no way to replace him.  
Not that NFTs are living, breathing, animals that become part of the family, but they are just as unique and irreplaceable as your beloved family pet; hence, making them non-fungible.  
Ultimately, uniqueness adds value. After all, value is a concept that’s built on supply and demand. When the supply is high and demand is low, value is hard to come by, but with NFTs, the supply count for each unique token is one! As a result, if someone wants to buy it, they’re not going to be able to unless they pony up the amount of money that the owner of the NFT is willing to accept for it since there’s no competitors to lean on when you don’t want to pay the price asked.  
  

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Why are NFTs so expensive?  
  
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Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are some so expensive?

  
Explained: Why some NFTs are so expensive  
Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are some so expensive?  
Patrons of the arts?  
First, a reminder: NFTs prove ownership of digital files. They can represent digital works of art but can also be associated with video game accessories, collectors items and more. Anything that can be stored as data on a blockchain can be an NFT. NFT transactions are recorded publicly on a blockchain and often bought with cryptocurrencies.  
Investment bank JPMorgan recently valued the global NFT market at $7 billion (€6.3 billion). In October, an experiment by The Economist pulled in $420,000 when the weekly news magazine auctioned off an NFT of one of their cover pages. An issue about decentralized finance, the cover art portrayed cryptocurrencies alongside images from the children’s book “Alice’s Adventures in Wonderland.” Buyer @9x9x9 told The Economist it was the fitting title — “Down the Rabbit Hole” — that compelled them to purchase the data file of the cover.  
But buyers of breathtakingly expensive NFTs point to a whole range of reasons for spending big bucks for the rights to a data file that anyone else can view or copy. Cryptocurrency entrepreneur Vignesh Sundaresan spent a record-breaking $69 million on an NFT earlier this year. The NFT enthusiast, who has invested in the technology, denied that he was trying to push up prices. He said he wanted to support the artist and showcase the technology. For other buyers, it’s about scarcity. “The buyer knows how many will be made and has blockchain proof of ownership,” American billionaire and NFT collector Mark Cuban told online news portal Business Insider.  
What the data says  
Researchers at the Alan Turing Institute (ATI) wanted to know what the data said about this phenomenon. “What we observed is that there is this gigantic heterogeneity in the success of NFTs,” Andrea Baronchelli, associate professor in mathematics at the University of London and ATI’s token economy theme lead, told DW. “Some — very few — do very well, a bunch do decently, and the majority are worthless.”  
In 2021, ATI’s team of experts completed a study which looked at the role certain factors play in the price of NFTs. They looked at three components: the NFT’s visual features, previous sales of related NFTs and the social network of the buyer and seller. Researchers used a machine learning model to consider a dataset of 4.7 million NFTs exchanged by over 500,000 buyers and sellers. The result? Past sales of related NFTs was the most important of these three factors, accounting for over 50 per cent of the price variance.  
For example, past sales of NFTs from the CryptoPunks collection, a prominent set of 10,000 tokens depicting pixel images of punks, would be a good indicator of future sales of tokens from the same collection. Visual features were the second most important aspect. Including this data increased the performance of the machine learning model by up to 20 per cent. Data showing the popularity of the traders increased performance by 10 per cent. Combined, they concluded these three factors can explain up to 70 per cent of the variability in NFT prices. They plan to look at more factors in the future, including the platform where the NFT is sold and the activity of the creator on social media.  
An old market rethought  
In the market for NFTs of digital artworks, one Can I create my own NFT recognize something of the traditional art market, where scarcity, social networks and, often to a lesser extent, content of the art piece help determine an object’s worth. But NFTs have some features that distinguish them from their real world counterparts, Mauro Martino, director of the Visual Artificial Intelligence Lab at IBM Research and ATI study co-author, told DW.  
“A very big difference between the art market and NFTs is that the artists take 10 to 20 per cent from the secondary sales,” he said, “So anytime the piece will sell again, part of the sale will always go to the artist. This is really a novelty in the idea of art and can be a big game changer for artists.” This is possible because future sales of NFTs are recorded on blockchain, which allows artists to receive their cut automatically.  
A JPEG of a rock  
That is good news for anyone whose NFT has generated some money. But what about the majority that aren’t worth much at all? “There are 10,000 new pieces each and every day ready to go…I don’t know where,” said Martino. “There are not 10,000 new buyers every day to sustain this incredible production.” Stability in the NFT market would require greater attention from the public to attract traditional investors, as well as greater comfort with cryptocurrencies, the experts said. This development is likely still years away, and surprises could pop up in the meantime.  
“If we notice that enthusiasm for NFTs today is very similar to the enthusiasm for cryptocurrencies at the very beginning, then we Can I create my own NFT expect some major correction,” said Baronchelli. This would have unclear implications for this nonfungible asset. “If I have Bitcoin and it goes down 40 per cent, I still have 60 per cent,” he said. “If I have a JPEG of a rock? What happens to the value of that JPEG? We don’t know, because there is nothing similar.”  
  

As more financial advisors are learning, NFTs are starting to catch on, even among non-celebrities. And it may not be long before a client asks you How do I buy NFT to include NFTs in their portfolio.

  
Why NFTs are so appealing  
Simply put, people love collectibles. And thanks to the growing accessibility of NFT marketplaces, the title of "collector" now applies to someone trading free Space Jam tokens just as much as it does to prominent figures like the pseudonymous Whale Shark, who owns more than 220,000 pieces of digital art and has consulted Paris Hilton on how to break into the market.  
As a financial advisor, your first priority is to look out for the long-term financial security of your clients. It might be helpful to think of NFTs the same way you would a rare stamp collection, for instance, or a signed original manuscript of the great American novel. NFTs are a lot like old-school comic book collecting, or baseball cards and Pokémon cards. Except, thanks to blockchain, their true scarcity (and value) is much less speculative because we have an irrefutable record of every token.  
Assuming your clients have a healthy amount of money invested for their retirement, a sizable emergency fund and enough disposable income that they can experiment with NFTs, collecting can be a fun and innovative way to feel a part of the future.  
But if someone isn’t in the position to invest money on speculative art – whether a hundred dollars or a thousand dollars here and there – there are ways your clients can dip their toes into the NFT market for free.

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