What makes an NFT valuable

What makes an NFT valuable?

Digital platforms are evolving at a greater pace. Nowadays, people are more fond of digital technology and assets. Hence, they indulge themselves in those digital platforms, such as cryptocurrency, NFTs, etc. The term NFT has become a popular keyword. The digital revolution has transformed tangible art forms into abstract and non-tangible digital assets. 

Subsequently, people are trading them with a high-profit percentage. In this trading, both the creators and traders have mutual benefits. However, not all NFTs are worth buying. A person should know the specifications of a valuable NFT before buying. Currently, the most valuable NFT was sold at USD 70 million. 

Specifications of a valuable NFT

Not all the NFTs are worth buying. Mainly an expert can differentiate a profitable and valuable NFT from the rest. These irreplaceable, non-fungible tokens are unique in their form. Although many make replicas, they cannot make an exact copy of the original version. Due to its originality and uniqueness, its demand is steadily increasing. 

NFTs have specific unique features which designate them as valuable. These properties are:

Utility of an NFT

It is the most discussed topic by buyers. Usually, buyers have certain apprehensions related to NFT’s future worth. Moreover, they have a common question about its profit percentage. Beyond its prospects of the digital art form, it has introduced various applications. This evolution has erased the questions of utility for many NFTs. 

From enhancing the video games experience to creating a wrapper for other tokens, NFTs have many applications. Moreover, many NFTs are yield-bearing NFTs that pay back to stakeholders. This way, it gives profit despite reselling. The utility is automatically enhanced if the asset provides an excellent return. 

Ownership history

NFT value depends upon its previous ownership or ownership history. A valuable owner adds dollars to the existing NFTs’ worth. If the globally recognized celebrity or influencer owns the NFT, its worth will significantly increase. Examples of those valuable NFTs are Mendes’ Digital Wearables, Iconic Crypto Queen, and others. Such NFTs are sold at an exceptionally high price. 

Therefore a person should search the ownership history. Further, you cannot tell its worth in the future as it depends on the celebrity’s popularity in years to come. This way, you cannot accurately determine its value by merely looking at its owner’s popularity.

Rarity

Rarity is another vital sign to determine the value of an NFT. Rarity is defined by how unique and rare is your work. Undoubtedly, every NFT is unique and special. However, salient characteristics and traits distinguish the valuable one from ordinary NFTs. This way, the buyer compares the quality of the work to determine the rarity factor. 

Hence, buyers prefer truly rare NFTs as it increases their worth and gives them a high turnaround. This way, a buyer calculates the rarity from the famous list of collections. Therefore, the creator must instill specific traits that make his NFT rare and unique. The rarity attracts buyers as they see high profit in buying them. 

Liquidity

Every NFT is unique and special. Hence, people are doing overnight business by selling memes and other artworks. Liquidity is the term that determines how quickly you convert the assets into cash. In NFT, people buy art tokens to gain ownership. However, every NFT has specific liquidity. The liquidity determines the efficient buying of these tokens with cash. 

This way, the NFT gains more value when it can be easily bought and sold. Hence, higher liquidity increases the value of NFT. Therefore, NFTs made through ETH platforms have high liquidity. One can buy and sell NFTs quickly through the ETH platform, even across secondary markets. 

Hence, many investors prefer those NFTs with high trading volumes. This way, they can easily trade them in exchange for cryptocurrency. Therefore, these non-fungible tokens must have high liquidity to become valuable assets. 

Authenticity

Many fake NFTs revolve around. Hence, an inexperienced investor can easily fall prey to those scams. For checking the authenticity, there are specific parameters;

  • Fake NFTs are either inexpensive or high-priced than normal NFTs. If the creator has abnormal pricing for the art form, you should avoid buying it. 
  • Do a reverse Google Image search to check the authenticity. 
  • To avoid buying fake NFTs, choose the right platform.

Hence, many NFTs are now placing blue ticks and other verification symbols. This way, you can identify a fake NFT from the original. 

Conclusion

NFTs are considered valuable tokens as their worth is rapidly increasing. Significantly, people prefer to buy these digital assets rather than real estate. However, amateur buys invaluable assets due to a lack of adequate knowledge. It can lead to an immense loss for them. Hence, an investor should look for a trait that makes the NFT valuable and worth buying. Such specific features will help you to gain more profit when reselling them. 

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