If you’re wondering why, who, and what the heck, we understand. It’s a whole new world for lots of people, so wrapping your head around NFTs, and why people spend hundreds/thousands/millions of dollars on digital collectibles might seem off the wall on the surface.
But actually, it’s not really that different from any other form of collecting, and we want to demystify rarities and the value of NFTs.
Firstly, let’s say up front that just like with physical products, the sale of an NFT for €69 million is an anomaly. The vast majority of NFTs are not priced anywhere near that amount. So, if you’re thinking NFT collecting is just for the super rich, we’re happy to debunk that myth (we’ve debunked a few others in our recent blog too). In fact, you can get your hands on some wicked art on our marketplace for just €100, and some of our collectibles are just €12 – and these are officially licensed products! (You can find more bargain NFTs in our ‘What can I buy for $25 or less?‘ blog.)
Right, let’s get down to business.
If you’ve been browsing the Terra Virtua marketplace, you might have noticed that each NFT has a different rarity category.
We have 8 different rarity levels (from most rare to least):
The general concept of rarities largely comes from gaming, with RPGs like World of Warcraft having items that can be gathered throughout the game. The rarer an item is in a game, the less likely you are to find it, and the more valuable/powerful it will be when/if you do.
A similar thing applies to NFTs, and naturally the rarest items tend to be the most expensive. But that’s not the only factor that influences the value of an NFT.
So, What makes an NFT valuable?
Put simply? The same things that make anything valuable. How rare it is, the quality of the work, the name/brand involved in it’s creation, how easy it is to buy, and the price someone is willing to pay.
The simplest way to explain the value of NFTs is to compare it to a physical product. Let’s go with art, because you can buy both of these in physical form and as an NFT.
If you are an art collector, you will pay big bucks for rare pieces of art from well-known artists.
The exact same applies for NFTs. With digital art, you can get your hands on really rare pieces, from some of the most talented artists on the planet.
The difference is, when you buy an NFT, you know for sure that you are the one and only owner of that super rare piece. And, more importantly, you can prove it!
With physical art, this isn’t possible. Forgeries are a huge problem in the art world, and although there are checks that can be made, and pieces can be authenticated by experts, it’s not a fool-proof system. Experts can be wrong (or possibly in on the con), and you can end up with a fake despite paying a lot of money.
With NFTs, you get proof from the off that you’ve got the original piece, and while other digital versions might pop up for common viewing, that doesn’t change the fact that you’ve got the original.
So, proof of ownership is one of the major components of why NFTs have value, alongside the rarity of an item, the brand/artist involved, and the price someone is willing to pay.
But that’s just what gives an NFT a fiscal value. At Terra Virtua, we’re also interested in the other side of value: the sentimental side.
We want to bring fans closer to their favourite franchises, and give them a chance to interact with them in new ways. So while some people might see a financial value in NFTs, we know that in the long run, what gives an NFT value will be how much joy and delight it brings to someone. And honestly, that’s what we get most excited about, and where we see the true value of NFTs in the future.