A Useful Guide To Understanding How NFTs Create Value

Non-fungible tokens (NFTs) are the future of value. They are games or items that are unique to their owner, with no chance for duplication. This means they can be traded much more easily and efficiently than traditional artwork because their value comes from their uniqueness, rather than scarcity value.

Below is a list of some of the benefits NFTs provide:


How Traditional Art is Valued?

How Traditional Art is Valued

The value of artwork is typically determined by its scarcity value. This means that the value is in how many other people have the same copy. For example, if you are an art buyer and are interested in purchasing a specific painting, you would want to purchase it before anyone else does because once another buyer comes along they will want it too! The value of traditional art is also heavily based on historical value: the more important and influential artists of their time contributed to driving up demand for that artwork.

Take, for example, the Mona Lisa. Its value is driven by its historical value. It was painted by Leonardo Da Vinci, who is known as a great artist of his time and therefore it is considered a valuable piece of art. Not only that but because this painting is a highly sought-after piece by collectors, the value has been driven even higher. But as it is stored in the Luvr and not up for sale, no one can take part in its value as it is a single, physical piece.


How do NFTs Create Unique Value?

NFTs create value through their uniqueness. Because NFTs are unique to each owner, there can never be another person with the exact same item or game piece as what you own. Therefore, if you plan on trading in the jungle, take note that you may have a very valuable piece and should not give it away lightly.  Their value comes from their uniqueness and you should value them as such because if another person gets ahold of your NFTs they will have value as well.

Investor confidence is key. The value of NFTs can be uncertain at first so it's important to build up investor confidence which will automatically lead to increased value through the network effect. The more people believe in the value of NFTs, the higher value they will hold; therefore it is very important that we value these items appropriately and don't give away our most valuable pieces easily because we could lose all their value!


NFT Benefits: Why They're Better Than Traditional Artwork

There are many reasons why NFTs make for better artwork than traditional art, but the biggest reason is that they are infinitely more easy to value because of their uniqueness. People can value traditional art through its scarcity value which is typically based on historical value; however, NFTs value comes from their uniqueness and therefore they should be valued by network effect rather than their scarcity value like traditional artwork.

Blockchain technology is also far better for storing information about digital assets (like NFTs) than its physical counterparts, making it an ideal storage tool for these types of items. You no longer need climatized museums and curators to keep it but only a  computer to maintain it, which makes the value of NFTs increase dramatically.

NFTs are also very easy to trade because they are unique without duplicates. They can easily be traded in an immutable environment that is transparent and decentralized, one of the key things for online trading, making for more value than traditional artwork.


Trading NFTs 

Trading NFTs presents a much better value proposition than trading traditional artwork because NFTs' value comes from their uniqueness. This means that the value of an NFT is based on how unique it is, not how rare or promised to scarcity value like traditional art.

An example would be your favorite CryptoKitty: because there are so many copies of this exact same cat and they're all extremely rare, you see one at a stand and decide to purchase it for $5 because you believe that if another CryptoKitty collector were to come along they would have no choice but to purchase it off of you!

However, purchasing an NFT with money changes its value entirely because now your copy will never be worth more than what you paid – simply due to the value of the money you paid to receive it from someone else. This means that when trading NFTs, value is determined by their uniqueness value, not scarcity value!


Artwork Scarcity VS Uniqueness

The biggest difference between artwork scarcity and uniqueness is that with rarity you know for a fact what other copies exist at any given time whereas with something unique there is no telling just how many copies actually exist until someone decides to sell theirs!

For example, if you were to have a Mona Lisa hanging in your home, you could value it at $1 million dollars because you know there is only one of those existing. However, if a copy of the Mona Lisa were to appear somewhere across the world and sell for only $5, you know that this value will go down tremendously because although it's still a part of history, its value decreases substantially due to how many copies exist.

This means traditional artwork values come from scarcity value whereas NFTs value comes from their uniqueness! Once an NFT has been bought by someone else, its value will immediately change based on the value that person had received – not on how rare or promised to rarity value like traditional art.

Artwork Scarcity VS Uniqueness

The value of non-fungible tokens (NFTs) is determined by their uniqueness, not rarity value.  This means that the more unique your NFT is, the higher its value will be on a network effect basis rather than scarcity value like traditional artwork has. Traditional art values come from how rare or promised to rarity it is whereas NFTs are valued based on their uniqueness!

Once an individual purchases an NFT for money, any copies they have thereafter will never hold a value greater than what was paid because of the amount of money exchanged in order to receive them. When trading these digital assets with other individuals, you should consider your item's uniqueness and not just its scarcity value when determining the best price point for trades.

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