It’s pretty difficult to pinpoint with absolute certainty why an NFT is priced as it is. With fungible currency, you can know that, at any given moment, a dollar is a dollar. However, the non-fungibility of NFTs puts them in a unique position where the value of the asset comes into question.
So how do you determine how much an NFT is worth? It’s usually a combination of certain factors. We’ve rounded up the most popular ones here.
- Utility: Something to look at with any investment is how it can be used. It’s no different for NFTs. As far as NFT gaming marketplaces are concerned, utility could mean a wide range of applications from real estate to assets and more. The value stemming from utility accrues over time depending on the popularity of the project.
- Interoperability: Closely related to utility, if certain in-game assets could be used on other platforms, their value would skyrocket. This means that they are interoperable. Interoperability of platforms, however, requires a unified ecosystem which may not be realized just as yet.
- Social Proof and Popularity: Most of the time, the value of an NFT boils down to how popular it is. The more hype it gets, the more valuable it becomes, the more it costs. You could also determine the value of an NFT based on how much the owner paid for it.
- Rarity: Arguably the most important, rarity is simply supply and demand. Extremely rare game assets always go for more just as one-of-a-kind paintings are priceless. When there is a scarcity in the market for a particular NFT, its value rises.
Final thoughts
The value of an NFT isn’t set in stone. It can fluctuate from day to day depending on a number of factors including but not limited to the ones mentioned here. At the end of the day, you alone can come to a decision based on one or more of these factors with the consideration of how the investment or sale will pay off.
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