Why is NFT art so expensive? If you have ever created anything in this digital space, you probably asked yourself this question. With so much digital land sold all over the world, it is no surprise that the prices of other digital objects are also running high.
In this article, we will be going over all the reasons why digital media are getting more and more expensive. We did thorough research and came up with multiple reasons why people are paying so much money for a digital object. The virtual world Otherside can sometimes surprise you with some pretty good real-life concepts.
Whether you’re interested in investing and selling NFTs or you’re a struggling artist who wants to make a living off your work, you will find a lot of valuable information here. Of course, it does not mean every piece of art will go for some absurd amount. The price of digital objects depends on many things, some of which are within the picture in question.
What Makes NFT Special?
It is probably the main question everyone interested in the topic keeps asking. This new technology is unique because it differentiates it from everything else.
Well, as the name suggests, it changes a single picture online from something familiar to a unique piece of digital content that is non-fungible.
Fungible vs. Non-Fungible Token
In the virtual world, all the paintings are fungible. It means that every digital painting can be multiplied by millions and will be the same every time. Unlike physical art, it does not exist outside the virtual space.
To combat the problem of lack of uniqueness in the digital space, people thought:
What if we found a way to create non-fungible art online? What if one could own a unique virtual reality piece that no one can claim for themselves other than the owner?
And, so they did. Using cryptocurrency and blockchain technology, they developed the concept of NFTs. And, if you have heard of a famous collection called Bored Ape Yacht Club sold for millions of dollars, you probably know the outcome of their work.
Why Are NFTs Expensive?
Non-fungible tokens were then introduced to the world, and here we have this fascinating concept that we all cherish and love.
But what makes them so expensive to buy? Why can a famous artist create a basic picture and earn millions of dollars in profit?
Well, there are many reasons, but before getting into some details, we need to make a disclaimer. Most NFTs are not worth thousands upon thousands of dollars. It is a normal human thing that we speak of those who earned millions, but we tend to forget that those are not the outliers of the industry as a whole.
If you think creating a picture of a coffee mug will suddenly make you a millionaire, we are not telling you that it will not happen, but it is implausible.
In the end, NFTs are like every other piece of art; it all depends on how much people are willing to pay for a work of art. Some will pay millions for a picture of a monkey; some will not even look at a complex and unique artistic expression. It is all subjective, so keep that in mind while reading.
The most critical reason NFTs are expensive is their scarcity. It is a fundamental law of economics. People will value it more if there is a limited amount of something because it is rare.
And nothing is rarer than a piece of digital art created with the latest technology that many people still do not know exists. The fact that no one will be able to have the particular painting you have, and it will belong to only one person at a time, thanks to all the security the blockchains provide, makes the price go up pretty quickly.
And it is the case with every single piece of NFT, whether we are talking about Bored Ape Yacht Club, an online game where you can win rare NFT items like Axie Infinity or real estate in the Metaverse.
The rarer it becomes, the more expensive it will get. And if you are the only owner of paintings sold for an astronomical price, you can show your digital certificate as proof.
Another big thing you probably already had in mind is how popular and valued the creator of the piece of media is. If you would take two pairs of shoes made by the same company, but one of them would be a Gucci logo, you know that one could go for thousands of dollars and the other for dozens.
It is no surprise that one of the wealthiest people in the world is the owner of most luxury clothing brands. With shirts that cost hundreds of dollars, it is easy to earn billions—the same goes for NFTs. No one will probably care if we sell screenshots of our Twitter posts. But, when the creator of Twitter did it, it was sold for millions. It is a matter of perspective in the end and how much someone is willing to pay for a unique thing made by an extraordinary person.
Most critics say that this is the only reason why NFTs are expensive. Well, it is not, but there is something to it. Let’s just say that if a market bubble gets created, some people will earn money, and some will lose money. It is best to keep up with those first, but they are sometimes pretty hard to find.
Speculation usually happens when an asset is introduced to the market, and there is no tangible way of pricing it.
Regarding NFTs, some investors quickly saw those big tech companies and their employees, celebrities, and other big names in the industry and started investing highly into crypto and NFTs. So, to avoid being out of the loop, others also started investing, gauging the price to enormous standards.
The NFT market is full of potential great investment opportunities. Still, many people are driving the prices without thinking about why someone paid millions for a picture of a Twitter post. For some, it is just a tweet with identical value to a thousand others. For others, it has the same value as a lovely house in California.
The other reason NFTs are priced so high is that you can clearly see whether they are authentic. There is no way of falsifying digital media on the blockchain. Of course, you can create your NFT with the already existing picture, but the blockchain will show all the details of the date when it was minted.
It is so easy to prove authenticity that prices go up. You will never be able to be so sure in the real world that your bag/shoes/art or anything else is legit. Blockchain is the best way to ensure you have the only digital copy of an NFT.
Each token has all the information about a piece of digital media and a complete transaction history of every piece. You will see who created it, when it happened, and who they sold it to.
As we’ve said before, blockchain is a giant database maintained by a decentralized group of miners and engineers that keep it running. So, it has a lot of advantages that can be later used in many different ways.
NFT is not only a way of creating art in the virtual universe. For example, they can be used to build the hype to promote your other things. Some artists use the NFT format to promote their art in general to have more fans and orders for their work.
Some, like in the case of GainForest, use it to push their agenda. In this case – to promote blockchain technology and save rainforests from being cut down.
It all depends on how creative you are with this technology.
Why Is NFT Art so Expensive – Conclusion
We hope we can bring you up to speed with this new technology and why it costs so much. Whenever this technology appears, people start to ask questions. Why does my physical house cost as much as some digital assets? Why is a picture of a monkey worth tens of millions of dollars?
Well, as you can see, it happens for many reasons. It is new and fresh; it just does not have the underlying value people tend to ascribe to it. NFT is a bubble, and bubbles tend to pop. We cannot predict the future value of most NFTs that are being bought and sold right now, and for a reason.
Crypto space is something the world does not yet comprehend, and we have yet to see if it will sustain itself the same way as the physical stock exchange had to at some point in history. For now, invest, create NFTs and just have fun with it. Who knows, maybe it will make you a rich person.