WHY ARE NFTS WORTH MONEY?
In August of 2015, the first NFTs, Terra Nullius, were sold. At this point, NFTs were nothing more than a middling pastime. Seven years down the line, the CryptoPunk NFT, #7523, sold for a whopping 4,700 ETH, or roughly $11 million dollars at that time. But why? What makes an NFT so expensive? For those familiar with the CryptoPunk collection, you will agree that it is not the most aesthetically pleasing art ever created. It is hardly Da Vinci level of art. It looks like a child made it on a tablet. Establishing that the value of an NFT is disjoint from the quality of the art is the first step in understanding its worth. The following are some reasons why an NFT is worth money;
1. Uniqueness: The fact that NFTs are non-fungible (distinct from one another) is one reason they have significant financial value. Owning an NFT is exactly like owning real world art; copies can be made of this art, but they're still remain and will always will be one original. So rest assured that even if an internet troll threatens to “right click and save” your purchased NFT, he does not magically acquire the metadata the NFT points to by doing so.
2. Utility: This perhaps should be the most important factor to be considered when purchasing an NFT. The utility of an NFT can also be called its real world benefit. Nowadays, more and more NFTs offer utility to owners as it lends the project more credibility and meaning. An example of utility could be offering the holder of purchased NFT access to certain privileges. In my career, I have worked on projects with different amazing utilities, such as one where owning an NFT gave you rights to a piece of land in a designated place in the real world. Another project I had worked on in the past offered the members the opportunity to choose what to do with 50% of the sales from the NFT, which was about 15 ETH. Thus, in choosing an NFT to buy, ensure you’re well informed about its utility.
3. Ownership History: a third reason why NFTs have worth is based on who has owned it in the past. For those familiar with football (or as Americans say soccer) we agree that a match-worn football jersey by a star such as Cristiano Ronaldo would be worth more than a regular jersey bought from around the corner. Why is that? They're both shirts. You can even buy one customized with "Ronaldo" behind it. However, one is worth more than the other because of the previous owner's status and the value society collectively attributes to this person. The previous owners of an NFT is public domain, and the buyer can take pride in the fact that he is the sole owner of an NFT belonging to a famous or important person.
There are many, many more reasons why an NFT is worth money, but these are the most important three. Conclusively, before acquiring an NFT, you should crosscheck how many of these benefits it entitles you to so as to make a better and more informed choice.