The price of art and collectables has been a particularly hot debate for generations, it leaves us wondering how one ascertains the value of a painting? Why are some pieces of art valued more than others? Why do Pokémon cards continuously phase in and out of popularity?
From stamps and baseball cards, to Rembrandt and Banksy, collector markets are fascinating, and some of their valuation principles can be applied to Non-Fungible Tokens (NFTs). This brief guide will display the criteria to look for in order to identify and understand the value of NFTs, using three key principles: Rarity, Utility, and Tangibility.
Before we embark, here are some key factors you need to know.
- NFTs have applications beyond collectables, they can have real-world use outside of intrinsic value.
- Many NFTs from limited collections have ‘rare traits’, which are often cosmetic and can wildly influence price.
- Time matters; consider how long the NFT has existed on the market, was it previously traded, and what that could mean for the future.
- Is the NFT you’re looking at part of a limited collection?
- Is it a first-of-its-kind piece from a well-known/famous artist, creator, or brand?
- Is it a new release from a previously successful artist/brand/company?
- What ‘unique traits’ does the NFT possess?
Using the above querying analysis, one can roughly determine whether or not an NFT has any current or future value. There are many tools available on the internet such as NFT Stats, in order to review every last detail of the NFT, its creator and branding.
Many will wonder what ‘unique traits’ are. Nonfungible.com is a website where NFT ‘metadata’ can be viewed and also displays the particular elements that make up the NFT. You’ll come across other words for ‘traits’ such as ‘accessories’ or ‘meta attributes’.
For example, CryptoPunk Ͼ #6634 which sold for a whopping 300 ETH ($846,192).
In order to determine how valuable these traits are is to search the NFT and identify its “Meta Attributes” and determine whether or not this one sticks out from the collection, as some traits are rarer than others.
As we mentioned earlier, NFTs can be programmed to do a number of things outside of granting you permanent digital ownership. Some NFTs are designed to be used in video games or virtual worlds, such as weapons, characters, and in-game items. They can even be empty virtual plots of 3D land, which owners can then build on within the metaverse and use other NFTs within. There are also digital collectable card games that combine the best of both rarity and utility worlds.
In terms of value, an NFT boasting utility can increase in value, so long as the project continues to grow in popularity.
There are some NFTs that are connected to physical, real-world objects or at least places. For example, legendary digital artist Beeple sold NFTs that also came with physical copies of the art, as well as QR coded certificates of authenticity, and even samples of his hair.
Another example of tangibility is the case of NFTs granting access/permissions to particular places or events. For example, the UEFA Euro 2020 football tournament trialled a blockchain ticketing system where digital tickets were represented as NFTs. Another example is the Kings of Leon NFT, which contained not only an album and artwork, but granted access to all future concerts, VIP luxuries, and so on.
In short, the value of an NFT with tangibility is based both on the credibility of the creator, and whether or not they offer any practical functions/luxuries that can be used in the real world.
Knowledge is Money
So there you have it, these are the fundamentals of valuing an NFT. Naturally, there is the element of humans arbitrarily obsessing over a collectable item, but for the most part, the above info should have you on your way.
If all else fails, try one of the many AI-powered valuation tools such as DappRadar, as they do quite a lot of the heavy lifting for you.
$BURP — Uniquely Approaching the NFT Space
The NFT space is seeing rapid growth, with new digital art concepts, use cases, utility and the likes popping up daily. The $BURP ecosystem brings together a wide array of NFT project partners within the industry sector and applies a unique approach by allowing users to potentially win rewards in NFTs through an NFT Raffle. The project boasts NFT partners from the likes of The Sandbox, Avastars, NFT Boxes, Polychain Monsters, Ethermon, ChainGuardians, CryptoProphecies, with more to come. The NFT Raffle concept allows users to potentially win exclusive generative and partner NFT drops. The first series of MealDrops was recently announced along with the much anticipated first $BURP partner NFT drop in collaboration with The Sandbox!
Stay up to date with everything by following the channels and joining the social communities!
$BURP is the official token of the $BURP ecosystem of products including but not limited to non-custodial token management, staking mechanisms, NFT raffles and swap-fee rewards via $BURPback.
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