NFTs Are Selling For $1000s – Why Do They Have Value?

Wednesday 03 March 2021, 3:00 PM AEST - 1 month ago

Digital art NFTs (Non-Fungible Tokens) are being sold for thousands of dollars on online marketplaces such as Rarible. And considering some of them are computer generated at low to no cost – why are they selling at such high prices?

An example of NFTs for sale are these Crypto Gems – which are photo realistic unique creations of digital gems handcrafted by Lux Expression.

Crypto Gems NFTs for Sale on Rarible

The price is shown in WETH – essentially a wrapped Ethereum token which has the same price of ETH, but it can be used on DeFi much more easily.

Mozambique Ruby NFT latest bid $1,205

What are Non-Fungible Tokens (NFTs)?

A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable. This is in contrast to cryptocurrencies like bitcoin, and many network or utility tokens that are fungible in nature.
Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms. NFTs are used in several specific applications that require unique digital items like crypto art, digital collectibles, and online gaming.

Wikipedia

Community Gives NTFs Value

According to billionaire investor Mark Cuban, the value of an NFT is determined by its community and the size of the artist’s following. Cuban also estimates that NFT’s adoption will grow to become a $100b marketplace used for music, photography, sports, moments, or even memes.

People seem to be buying NFTs for a variety of reasons, like:

  • “I like collecting things”
  • “It’s fun”
  • “I like the artist”
  • “I like the art itself and want to own it”
  • “I want to put the art in my virtual home in the future”
  • “There is a limited amount of them and I want to resell for a higher price and make a profit”

Celebrities Promoting NFTs

There are many celebrities promoting NFTs such as Gary Vaynerchuck and Linkin Park singer Mike Shinoda. From Gary’s perspective, NFTs will be huge, not really as investments but more as collectables.

CryptoPunks NFTs Collection

An example of auto generated NFTs are these 10,000 unique collectible avatar characters called CryptoPunks, with proof of ownership stored on the Ethereum blockchain.

At the time of this writing, some of them are selling for even $55,000 USD, arguably an insane amount of money to pay for an auto-generated image.

The source code that generates these images is on GitHub and you can see them all in the image below.

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