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Whether you are new to NFTs, everyone knows that it continuously increases their value. How did it happen? What are the reasons behind this? That is what you are going to learn in this article.
What is NFT?
If you are not new to NFT, you probably don’t need this information anymore. But if you are a beginner, NFT is short-term for non-fungible tokens. Before you can understand NFTs completely, you first need to understand what fungibility is.
Fungibility is the ability of a property to be interchanged with other properties of the same type. Let’s take a well-known currency as an example. One dollar bill can be freely exchanged with another one-dollar bill. Similarly, one dollar bill can be freely exchanged with some pounds if it gives the same value as a one-dollar bill.
How do NFTs differ from other non-fungible properties?
As the long name implies, NTFS is a non-fungible asset. For example, when you exchange NFT for other cryptocurrencies like bitcoin, its value will differ.
Blockchain technology is immutable. It means no one will be able to change the historical transactions and current data being hosted in the network. Having said that, once you own one NFT, your name will automatically be associated with it.
The technology is also traceable. Even if you sell it, the ownership history of that asset will forever be available.
Reasons why NFTs are so valuable
Since you already know what NFTs are, your next question will probably be, “Shall I have it now? Why does it cost so much?” It is because of its features, namely:
- First Of Its Kind
- Utility – Real-World Benefits
- Uniqueness and Rarity
- Ownership History
First Of Its Kind
Who doesn’t want a thing that happens for the first time?
Each of us feels rewarded every time we experience some things for the first time. Of course, bad and traumatic things are exceptions.
Nevertheless, people generally love all firsts the most, especially if it is unique.
Utility – Real-World Benefits
People will never purchase or hold a property without any value.
More importantly, people will never own any good if it comes with no benefit. An interactive community of trading, buying, and selling NFTs is a receipt for success for an NFT project. The larger and more active the community, you can expect dialogue and social media mentions.
The value of NFTs is not just a tiny thing. It is known to have a tag of a real-world benefit. It means that NFTs are highly tangible.
How could we say that? We can equate its value to valuable traditional properties in the world. Because of this characteristic, people value it so easily.
Uniqueness and Rarity
Often, people are highly attracted and get interested in unique things.
An object’s uniqueness also creates a perception that such a thing is rare which can be a catalyst of a supply shock.
When one thing is rare, it will create a motion in people to grab it right away, increasing its value.
Ownership history
This is the last NFT feature, at least. However, this is definitely not the least reason we can have. For instance, have you lost some money from the bank, but the company could not trace who stole your wealth? NFT is totally different.
If you purchase NFTs, you will be able to find all the previous owners of those NFTs. Similarly, we can also trace where your sold NFTs go.
Conclusion: Should you own NFTs?
NFTs and cryptocurrencies have great potential and are even considered acceptable assets worldwide. The answer to whether you own an NFT or not will be your choice.
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