How the value of NFT is assessed?

How the value of NFT is assessed?

The fluctuation of the market price is primarily based on the object’s relative supply and demand in society.

Because the market price determination matrix is new, defining the accurate values of an NFT is tricky. While tangible artworks such as The Scream and physical collectibles such as ultra-rare Pokemon cards have established prices, investors considering NFTs may find it difficult to determine the valuation of a certain asset or collection.

However, as NFTs gain traction in a variety of industries and attain significant valuations, we will discuss two primary variables for determining their worth in this article. 

  • Provenance

Provenance is known as the history of an item or work’s possession across time.

Authenticity:

The digital asset’s history, past ownership, and absolute legitimacy as a tradable item are all guaranteed by blockchain certification.

This blockchain certification may be accessed by practically anybody due to the method it was stored in the system, but there is no way to edit or forge it.

Influence:

Non-fungible tokens with considerable ownership worth. Are often those developed or produced by prominent artists or global corporations with a great reputation.

Premium fashion corporations like Louis Vuitton, for example, are looking to collaborate with NFTs to advertise their goods, leveraging on the global trend in digital works.

Subjectivity

Usually, the value of an item becomes proposed based on either the subjective or objective components.

Objectivity forms the value of an item where someone’s stereotype, perception, and interest. Have become eliminated, leaving nothing but the real importance.  

However, subjective value refers to the idea that an item’s worth is solely impacted by the preference, opinion. And idea of an individual. 

A person attending an NBA playoff, for example, could pay thousands of dollars for VIP tickets. Because they are die-hard basketball fanatics, and it is a great deal. Some visitors to an art exhibition will become captivated by specific works of art. Furthermore, assign subjective worth to them, while others who are not passionate about artworks will disagree. 

The same is true with NFT art and goods.

“Everydays — The First 5000 Days” has been sold for $69.3 million, shattering the record for digital artwork sales and making it one of the biggest sales in the short history of NFT. [1]

The buyer was aware that the item was worth $69 million and was eager to pay.

As a result, the customer’s own preference and perspective are also critical in determining the real value of an NFT. 

Conclusion

Non-fungible tokens, like many other things, are valued subjectively. Their value becomes determined by the individuals who own them. The provenance of such artifacts becomes easily traced. Allowing prior owners to be recognized. As a result, thereby boosting the asset’s worth. Undoubtedly, all of these elements, as well as other existing ones, boom the promise market of NFT.

Hong Cao Writes: How the value of NFT is assessed?

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References:

[1]: Conor Sheeran, 2021, Beeple’s “Everydays — The First 5000 Days” Sells For Nearly $70 Million, 

<https://www.one37pm.com/nft/beeple-everydays-the-first-5000-days-auction-nft>

How the value of NFT is assessed?