Table of contents
- 1. Introduction
- 2. What is an NFT?
- 3. What gives value to NFTs?
- 4. Most Expensive NFT Projects 2022
- i. The Merge: $91.8 million
- ii. Everydays – The First 5000 Days: USD 69.3 million
- iii. Human One: $28.9 million
- iv. CryptoPunk #5822: $23.7 million
- v. CryptoPunk #7523: $11.75 million
- vi. CryptoPunk #3100: $7.58 million
- vii. CryptoPunk #7804: $7.57 million
- viii. Right-click and Save As guy: $7.09 million
- ix. Ringers 109: $6.9 million
- x. A Coin for the Ferryman: $6.01 million
- 5. Conclusions
NFTs experienced exponential growth throughout 2021, with tens of thousands of investors flocking to collect digital artworks of various kinds. Some NFT sales reached price records. What are NFTs and why do they have value?
What is an NFT?
A non-fungible token (NFT) is a token issued on a blockchain to represent a unique asset, which can be a document, artwork, music, or even real estate.
Even when two NFTs look very similar, they are not interchangeable. And it is that while a Bitcoin is always the same and exchangeable for another Bitcoin, an NFT is not. That is why NFT technology is used to generate proof of authenticity and ownership in the blockchain. NFTs can be fully digital assets like play-to-earn game items and metaverse lands , or tokenized versions of real-world assets.
What gives value to NFTs?
The value of an NFT is determined by market supply and demand. It is generally easier to value an NFT when it is created as a representation of a physical asset. But most NFTs only exist on-chain, in the digital world.
Each collection of NFTs has a different supply, and each unit of NFTs can have a different rarity. But there are other factors that can determine how much an NFT is worth. For example, limited series NFTs with specific use cases tend to be more valuable. The founding team, along with the artists and the community, can also affect the demand for an NFT.
In other words, the value of an NFT can be related to the creator, its usefulness in play-to-earn games, or simply market sentiment. There are many cases of successful NFT projects, but the number of projects that have failed is even higher. Make sure you do your own research (DYOR, Do Your Own Research) before trading or investing in an NFT, and don’t risk money you can’t afford to lose.