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Five Predictions On How Much Do NFT Cost In 2022
Five Predictions On How Much Do NFT Cost In 2022
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Why are NFTs so expensive     

Stemma as the reservoir of time value is cypher freshly. Kanye Cicily Isabel Fairfield hind end deal a t-shirt for $120 because he’s Kanye Dame Rebecca West. Ideate how a lot he could sell the Elwyn Brooks White t-shirt he wore on degree for a demonstrate. Belle Delphine’s bathwater is sold come out of the closet at $50 (NSFW site). It doesn’t thing that we rear end bargain a t-shirt for $5 or draw our ain soil bathwater. Origin matters.
   Wherefore NFTs are Valuable   The Beeple "First of all 5,000 Days" NFT sold for $69,000,000 finis week. Naturally, that's elevation some eyebrows about what the emptor very bought.   Obviously, the vendee doesn’t own the fine art in any traditional common sense. Look, I tooshie library paste it suited here:        And before you enunciate "you pot do that with a picture overly!" That’s non quite an straight. A scene of a painting is different from the house painting. The JPG of the Beginning 5,000 Years piece of music is the piece. There’s no deviation.      This is unitary problem with the possession argument roughly NFT nontextual matter (presentation for the unfamiliar). You don’t have the graphics the Lapp path you mightiness ain an master Picasso. You can’t demolish it, you can’t alter it, you don’t real moderate it in whatever particular path.   Only that’s the matter with NFTs, you’re non buying the graphics. You’re buying the NFT. The NFT is non the nontextual matter. It’s a few lines of codes that includes a book of facts to the art, just that’s it. The artistic creation doesn’t even out alive in the NFT since it would be way also a good deal information to put on the Ethereum blockchain. Totally the NFT has is a connectedness to where the prowess is!      I could go take a crap some other NFT of the precise Lapp objet d'art of artwork proper now, and no unity could rattling stop me. But it wouldn’t be Worth anything. Wherefore not?   Well, for one, it wouldn’t possess an reliable origin. It's extremely gentle to control whether an NFT came from Beeple or not. In fact, it's importantly easier to do this with NFT artwork than with "real world" artwork since everything on the Ethereum blockchain Is NFT money real legible. Totally Beeple would undergo to do is twirp the public speak he's sign language his artistic production from and and then anything of his that's signed by whatsoever former cover we'd recognise is faux.   Descent as the beginning of value is goose egg novel. Kanye West tail end betray a t-shirt for $120 because he’s Kanye Dame Rebecca West. Opine How much do NFT cost very much he could trade the clean t-shirt he wore on point for a exhibit. Belle Delphine’s bathwater is sold taboo at $50 (NSFW site). It doesn’t matter that we tooshie corrupt a t-shirt for $5 or pass water our ain bemire bathwater. Source matters.   You might call back of an NFT not as the art, simply as the signature on the art. Historically you had to own the physical art object to get the signature tune. At once we terminate pinch the theme song into its possess asset, and you buttocks purchase the creator’s self-declared sealing wax of legitimacy.   Another doctrine of analogy Hera is a college level. Tuition fee at Carnegie Andrew W. Mellon is $57,119 per year. At the final stage of quaternion years, you have a patch of newspaper. Is that spell of newspaper Charles Frederick Worth $228,476? You could precisely photoshop your gens into this unmatched and shout it a day:      Just it’s not the set up of paper, it’s the descent of the paper and What to do with NFT after buying it tells populate. The touch matters. It tells hoi polloi you exhausted 4 age and decent money to redeem 65 lives from malaria learning… something. Hopefully. And thus they should yield you Thomas More than the differently indistinguishable pupil a few miles gone.   The cost of a level is not roughly cognition or the friends you made along the elbow room. Those could be had for Army for the Liberation of Rwanda less money. It’s nigh sign. Signal you were militant and wealthy sufficiency to start into this institution, and and then contain your stuff imbibition fountainhead plenty to endure for quaternity old age.   The college level exists somewhere on the spectrum between "utility" and "signaling." And peerless passably logical Truth with the utility program to betoken spectrum is that as things father Sir Thomas More expensive, we commonly chance ourselves finisher and finisher to the signal terminate of the spectrum.   The $5 t-shirt is double-dyed utility-grade. The Kanye t-shirt is nearly alone signaling. Everything we buy, and own, falls someplace on this substitute to signal spectrum.      So where are NFTs right on straightaway? Rightfield here:      NFTs are enthralling in portion because they accept the utility to sign ratio to the utmost. Thither has never been something so worthful that’s so absolutely useless. Tulips you could at to the lowest degree institute. Thither is in effect cypher public utility to owning NFTs that are on the grocery decent now, likewise meditation about their futurity economic value.   So beyond speculation, wherefore are they valuable? Signaling. In that respect are approximately 240,000 single wallets with ended $1m USD in Bitcoin. If you suddenly came into a few milly, you’d wanna present forth too. NFTs are a playfulness newly path to bespeak riches and discernment.   But they’re too a way to betoken how betimes you are in the crypto saving. If you buy into the approximation that NFTs volition arrange a New received for appendage rights management and digital possession (which I Do you need ETH to buy NFT, Sir Thomas More on that future time), buying approximately straight off is genial of similar buying BTC gage in 2013 or registering a 3-letter of the alphabet arena call in the other years of the World Wide Web.   And to be clear, I perfectly dearest NFT engineering and am departure to compose most it a lot Sir Thomas More. I’m not pointing stunned their senior high school sign to utility program ratio to criticise them. I’m pointing it prohibited because I intend they’re existence below the belt criticized for organism a squander of money. Signaling is extremely valuable, and NFTs are a bewitching new means to Inachis io and perhaps catch fertile along the agency.   So are NFTs a guggle? I question it. NFTs are acquiring lots of weight-lift only the marketplace is static lowercase in the grand intrigue of things.   The artistic creation commercialize is worth   67 one thousand million dollars. The NFT grocery solitary bang 338 trillion in 2020. Perhaps it’ll rack up a few 1000000000 this twelvemonth. Merely and so element in how a lot easier it is to steal NFTs than art, and how many former industries NFTs could feed forth at, and that 67 billion figure but sounds alike a starting head.   For example, sports product. Roughly of the money acquiring played out on NBA merch is at present streamlined into TopShot. TopShot has done at least a few 100 zillion in transactions so far, which sounds mad until you think of that NBA merchandise, which has no inquisitive investing component, is a all but 50 million dollar mark manufacture.   Or comparison NFTs to early crypto options. Bitcoin’s grocery store crownwork is all over 1 one million million. If in that location were a Beeple-sized, $69m cut-rate sale every individual sidereal day for a year, the NFT grocery store would quiet be merely $25b, or 2.5% of the Bitcoin market. It is Early on.   Patch I don't mean NFTs are a bubble, I recollect at that place are a good deal More interesting wont cases for NFTs that aren't beingness done still. Uses that bequeath make them beyond simple signaling, and establish them or so raw forms of substitute that weren't previously possible online.   One time we bug out eyesight More of those habituate cases arrive, the food market volition exactly stay to arise.   This article in the beginning appeared as an seek in my Mon Potpourri newsletter, which you tin signalize up for here.       
"We're eyesight a Modern contemporaries of traders within the NFT market; mass who are digitally native sounding for appendage indigen plus classes extraneous of firm plus markets," Ivanova said. "These are populate who take assembled repute and riches and lack to endow it in purely practical assets the like NFTs."
   What are NFTs?   NFTs are non-fungible tokens — pregnant you couldn't switch over unmatched NFT for some other — that political campaign on a blockchain network, a appendage ledger that records completely minutes of cryptocurrencies similar bitcoin.   The remainder with bitcoin and other tokens, though, is that each NFT is unparalleled and can't be replicated. From each one unrivaled accrues respect independently. Crypto investors say NFTs infer their prize from how just they are. They're stored in digital wallets as collectors' items. On the far side graphics and sports, multitude make besides constitute uses for NFTs in virtual genuine acres and gaming.   Nadya Ivanova, boss operating officeholder of BNP Paribas-attached explore unbendable L'Atelier, says collectible integer assets fanny be mentation of as a ameliorate reading of an MP3 register. Musicians take struggled to benefit from their form in the appendage age, and Ivanova says close to are turn to NFTs to establish possession of their wreak and receive an additional seed of tax income.   "It's allowing contentedness creators to in reality have the holding rights for what they create, which allows them to net profit from it in unlike ways which they can't do with strong-arm art," she told CNBC, adding that crypto artistic production is the strongest growth subdivision of the extremity collectibles securities industry.   The sum note value of NFT minutes quadrupled to $250 1000000 hold up year, according to a discipline from NonFungible and L'Artist's workroom. The list of integer wallets trading them nigh two-fold to ended 222,179, spell roughly traders were able to ready profits of complete $100,000.   "We're visual perception a freshly multiplication of traders inside the NFT market; people World Health Organization are digitally indigene look for integer aboriginal asset classes external of effected plus markets," Ivanova aforesaid. "These are populate who cause assembled report and wealthiness and require to empower it in purely practical assets wish NFTs."   Ivanova says the NFT commercialise has been maturing. Celebrated auctioneer domiciliate Christie's auctioned an NFT-based act upon of nontextual matter created by Beeple, a well-known integer creative person who has created videos and artwork for celebrities similar Ariana Grande and Justin Bieber.     
What was it just about this graphics that made it so heatedly contended? The sale of the graphics came with approximately interesting features:
   Integer art: What are NFTs and wherefore are they so worthful?      How do you ascertain respect? Mentation more or less this now as I escort spattered crosswise the media news program just about a extremity graphics that sold online for US$69.3 million. Forthwith that's a truly expensive JPEG lodge. What caused the Leontyne Price to progress to so much intoxicating high? Render and demand, scarceness value, novelty factor, braggy rights? In the character of this nontextual matter possibly a compounding of whole of the supra.   The artist Mike Winklemann professionally known as “Beeple” was not advantageously known exterior of the extremity nontextual matter populace. At once he is nonpareil of the nigh expensive living artists you had probably ne'er heard of. Until directly.   Christies was the auction sale household that sold his artwork and whilst they bear an unbelievable line in merchandising art which dates bet on to the 1700's, this was the firstly clock time they or whatsoever other major vendue family had sold a musical composition of art that was whole digital (with a NFT). I translate that they themselves were incertain of How much do NFT cost to value the tack together. Its bazaar to enunciate the auction off went selfsame well, it was a disc breaker, and judging by the artist's chirrup feed he appears to be astounded by the final examination price gainful.  
.@beeple 's 'The 1st 5000 Days', the 1st purely appendage NFT based graphics offered by a John Roy Major auction sale put up has sold for $69,346,250, positioning him among the pinnacle trio well-nigh valuable animation artists. John Major Thanks to @beeple + @makersplaceco. More inside information to be discharged shortly — Christie's (@ChristiesInc) Butt 11, 2021
   What was it most this nontextual matter that made it so hotly contended? The sales agreement of the nontextual matter came with about interesting features:      Sold with a Non Fungible Souvenir.   Purely extremity art.   A digest of 5,000 person artworks.   Sales agreement march managed by one of the well-nigh venerable auction off houses, Christies.   Cryptocurrency was an satisfactory form of payment.      Until Tues this week I had ne'er heard of NFT's or Not Fungible Tokens. Crypto vogue? Yes. Blockchain? Sure as shooting. NFT? Nope. I plant kayoed nigh them by take a chance when group meeting with a business organization pardner he mentioned NFT’s to me. "NF what?" I queried. He patiently explained the concept and how NFT's could be applied to assets such as artworks and music victimization blockchain technology. I was interested to see roughly it only wondered where had I been completely this prison term? He believes NFT's are the future heavy thing, simply his opinion, utterly not advice!   The enter producing artwork by Beeple is coroneted “Everydays: the 1st 5,000 days", a digital asset compiled of 5,000 individual artworks. If the new owner(s) decide to sell the artwork in the future it will have to be sold as a whole, they will be unable to siphon off individual pieces to sell. Whilst the artwork is a rich tapestry of thousands of pieces the owners will be able to zoom in on each individual piece, so it can certainly provide them with some viewing variety.            Everydays — The First 5,000 Days, by an artist named Beeple, released by Christie's (Christie's Via AP)   There is no doubt in my mind that an important part of the value of the artwork was that it was sold with a non fungible token or NFT. The NFT is essentially a digital trademark providing proof of provenance and ownership. With the use of a NFT authenticity of the asset is forever assured; using blockchain technology the token will be stored on a digital ledger. Should the artwork change hands in the future the NFT would go with it providing an important safeguard that this is the original piece, helping combat the risk of fraud and forgery. This can be a serious and expensive issue in the art world which is well covered in the popular BBC television series “Fake or Fortune”.   It is easy to understand how a NFT can provide safety to buyers and sellers, particularly important for digital art which can be easily replicated. It will be fascinating to watch from the sidelines to see how the use of NFT's develop. No question that we really do live in interesting times.     
Deutsche Bank suffered a similar shock in 2015 when a junior member of the bank’s forex sales team accidentally transferred a hedge fund $6 billion, but luckily for the fledgling member of staff, the hedge fund was kind enough to send it back.
   What are NFTs?   NFT stands for “Non-Fungible Token.” Non-fungible essentially means it cannot be traded in for something else, in the same way a $50 dollar note could be traded for two $20 dollar and one $10 dollar note.   NFTs are sometimes compared to art pieces like paintings (because there will only ever be one original) but they’re also regularly compared to autograph prints, collectibles, and trading cards. Whichever traditional, real-world analog is closest, they are effectively digital certificates of ownership.  
NFTs can contain smart contracts — which run on the Ethereum blockchain — which could, in theory, give the original creator of an NFT a percentage of all future sales of the token.
   Why are NFTs so expensive are they so expensive? Scarcity, first of all, but the marketplace in general — and the subsequent price of NFTs — is driven by the momentum and sentiment floating around this young, exciting new asset.   Who knows how expensive NFTs will get — or, conversely, when the bubble will burst.     
Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.
   NFT explosion: Why are people buying digital art?   You are free to share this article under the Attribution 4.0 International license.   Built on the same technology as Bitcoin, NFTs have been a hot topic in 2021. They enable a real market for digital works of art while fueling unprecedented speculation.   2021 might become known as the year when digital art exploded. On March 11, a cryptocurrency investor paid $69 million for the digital painting “Everydays: The First 5000 Days” during an auction organized by Christie’s. The blinking GIF Fomo is currently for sale for $2 million—60 times what it sold for only nine months ago. And a series of 10,000 straightforward-looking illustrations of monkeys, called the Bored Ape Yacht Club, are collectively worth more than one billion dollars.   This mind-boggling bubble is fueled by the NFT technology, which enables cryptocurrencies such as bitcoins or ethers to be exchanged against digital objects. An NFT or “non-fungible token” is a digital data string that establishes proof of ownership of a specific item that usually exists in the virtual world. It could be, for instance, a digital work of art, a financial asset, or a patent.   NFTs live on the blockchain, a transaction-tracking decentralized ledger, which until recently was mainly known for being behind Bitcoin. It has generated incredible hype while extending its potential impact on many industries, from finance to art, music, intellectual property, and luxury goods.   NFTs and royalties   “NFT has really enabled a market for digital art,” says Robert Zumkeller, a graphic designer who started creating NFT illustrations while a student at the FHNW Academy of Art and Design in Basel. “I am not certain that I would have found a brick-and-mortar gallery willing to exhibit my digital work, nor buyers who would acquire a physical screen to own it. With NFTs, I could use an online gallery,, to showcase my work and sell it.”   Like everything else recorded on a blockchain, art NFTs allow for tracking all transactions after their initial sale. This tracking allows for a perpetual royalty payback, explains Zumkeller. Under his moniker, Vicarivs, the young artist will receive 10% on any subsequent sale of his work—something that rarely happens with physical objects sold by galleries or collectors.   In physical art, only one original copy usually exists (or a few dozen, in the case of art prints). The original is distinguishable from reproductions, which are sold legally or as forgeries. With digital painting, the work of art is a data file, which can have an infinite number of perfect copies. That is Why are NFTs so expensive an NFT does not comprise the data file of the work of art itself; instead, it functions as proof of original ownership.   Digital versions of luxury goods   NFTs have also entered the luxury market, where recently, digital twins (a photograph or a 3D animation) of collector watches went up for auction in spring 2021. “More and more brands are looking into NFTs,” says Serge Maillard, managing editor of the watch magazine Europa Star. “First, as a useful tool to fight forgery by ensuring traceability and authenticity. Second, to develop and maintain a closer, more personal relationship with their client, without having to rely on intermediaries.”   Swiss IT security company Wisekey has also moved into this business. “Digital twins for luxury items and art are the main markets so far, but other uses of NFTs are emerging, in particular for certifying intellectual property and identity,” says CEO Carlos Moreira. The company provides NFTs to protect luxury objects and has recently launched an art marketplace. It plans to introduce its own cryptocurrency and is working on projects for digital rights management of music and movies.   Altogether, the NFT market ballooned over the last twelve months with a 700% increase from the second to the third quarter of 2021, according to the analytics platform Dappradar. This bubble confirms the speculative character of cryptocurrencies and blockchain applications; namely: the dollar value of the bitcoin has increased by a factor of 100,000 over ten years.   Speculation and impact   “So far, design choices on the technology have helped to fuel speculation,” explains Claudio Tessone, professor of blockchain and distributed ledger technologies at the University of Zurich’s department of informatics. “The most widespread systems are based on the so-called proof-of-work, where the validating and tracking of all transactions by the network as well as the introduction of new tokens only work because users run computations on their systems.   “As the devoted resources have been accelerating under a constant rate of supply, the creation of assets is becoming more and more expensive, which fuels an increase of their value, just like oil prices going up when it’s harder to extract. In turn, this creates incentives to invest resources in the blockchain, which fuels a self-reinforcing loop driving speculation and inflating prices further.”   The energy consumption of blockchain applications has been an increasing worry. While society is desperately trying to tackle climate change, it has simultaneously introduced economic services that consume as much electricity as a middle-sized country like Sweden. “There is some hope that a new architecture for blockchains, called proof-of-stake, will make the electricity needed to run it negligible,” says Tessone. “A new generation of platforms such as Cardano, Polkadot, or Tezos are already running on such systems, but their impact—while increasing—has been limited so far. We’ll have to see.”   However, this new architecture could generate new, problematic incentives. Until now, cryptocurrencies rewarded those setting up huge computer farms to profit from economies of scale and more efficient energy usage. A proof-of-stake blockchain rewards users instead who heavily invest in it, which fuels speculation. “As of now, it is hard to imagine blockchain without speculation,” says Tessone. “It is good to see that the community takes this problem seriously, cryptoeconomies for a future with more functional cryptoeconomies.”   Catherine Tucker, a professor of management at MIT who specializes in the blockchain, regrets this focus on speculation: “Most of the reporting on NFTs has been on the speculative aspects. This is rather frustrating, as it may lead to less experimentation on ideal-use cases.”   Not so private after all   One worry is that the anonymity provided by blockchain technology could help financial fraud. The most obvious ones are shill bidding to drive prices up at auction and insider trading. In September 2021, Opensea, the largest marketplace for NFTs, revealed that one of their employees had purchased items just before they were displayed for sale on its front page—an action that would amount to insider trading.   Many specialists’ forums discuss the risk of shill bidding, where an artist or someone they are conspiring with buys their work for a large sum to drive its price upwards and maintain the current bidding frenzy. This culminated with the suspicion that the owner of an NFT of the art series CryptoPunk borrowed 500 million dollars as a flash loan—a financing mechanism only available on the blockchain—to buy the NFT from themselves before returning the money. While a clever trick to inflate the price of their art, this move also raised suspicions that NFTs could be a perfect tool for money laundering.   Interestingly, specialists discovered these suspicious activities because all blockchain transactions are fully available to the public. “The famed privacy of cryptofinance is a mere illusion,” says Tessone. “It is based on the premise that users create a large number of wallets holding their assets in an attempt to obfuscate their transactions.” But in fact, many people choose to avoid this option because of the cost of transactions. And then, of course, there’s the traceability, adds Tessone: “mathematical network analysis can uncover suspicious activities, allowing tracing back transactions to a person even if they manage many wallets. This is why shill bidding on NFTs is not actually safe for fraudsters, contrary to What is the most expensive NFT ever sold many commentators say.”   Catherine Tucker also cautions us against putting the blame entirely on NFTs, saying that “problems such as insider trading with NFTs are reflections of underlying user behavior in uncertain environments and persistent transaction costs. I am not sure if attributing fault to the technology is correct. Ultimately, technology is just technology.”     
Now, as prices surge, owning a CryptoPunk has become a "digital flex" due to there being only a limited number of them. Several of their owners have also taken to flaunting them by using their punks as an avatar on social media sites like Twitter.
   First and foremost, limited quality. Just like there would only ever be 21 million Bitcoin and not a single more, there will only ever be 10,000 CryptoPunks. It is up to the NFT creator if they want to have a rare collectible or have several versions of their NFT. Still, in both cases, the authenticity of the NFT is verifiable through their unique IDs and metadata.   In CryptoPunks, no two punks are the same. Some have a headband, some have caps, others have small shades, and many are wearing gold chains. Each punk has different attributes, and some are rarer than others. Simply put, the rarer an item, the higher its value.     
After all, if you were to spend millions of dollars to buy a piece of work done by Picasso, you could hang it in a gallery and charge quite a bit of money for tickets to simply look at it. But NFTs are different. They’re digital files that can essentially be copy and pasted by anyone.
   NFTs Are Unique   First and foremost, it’s important that you understand what the acronym NFT stands for, which is non-fungible token. The non-fungible part of the name points to the uniqueness of the digital asset. These pieces of art simply can’t be replaced.   To understand the difference between a fungible asset and a non-fungible asset, all you need to do is look at Bitcoin, Ethereum, or a wide range of other cryptocurrencies, which are all indeed fungible. After all, there’s nothing unique about a single bitcoin other than its ownership. One could be replaced with another and the owner wouldn’t mind because the value is the same no matter which coin he owns.   On the other hand, your dog is a non-fungible asset, albeit one that’s likely a very valuable member of your family. After all, I couldn’t walk in with another dog that looks pretty much the same, take yours and leave mine, without you being upset about it.   Your dog is unique. You know his personality, he knows yours, he gets along with your kids, friends, and family. Shucks, he’s part of the family. There’s no way to replace him.   Not that NFTs are living, breathing, animals that become part of the family, but they are just as unique and irreplaceable as your beloved family pet; hence, making them non-fungible.   Ultimately, uniqueness adds value. After all, value is a concept that’s built on supply and demand. When the supply is high and demand is low, value is hard to come by, but with NFTs, the supply count for each unique token is one! As a result, if someone wants to buy it, they’re not going to be able to unless they pony up the amount of money that the owner of the NFT is willing to accept for it since there’s no competitors to lean on when you don’t want to pay the price asked.     
Cryptocurrencies involve a significant level of risk. Prices can fluctuate on any given day. Because of such price fluctuations, you may gain or lose value of your assets at any moment.
   Why are NFTs so expensive?      Cryptocurrencies involve a significant level of risk. Prices can fluctuate on any given day. Because of such price fluctuations, you may gain or lose value of your assets at any moment.   © 2021 CoinHirek. External links may contain our promotional link designed to provide a means for our site to earn by linking to them.   Our website uses cookies to improve your experience. Learn more about: Cookie Policy     
Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are NFTs so expensive are some so expensive?
   Explained: Why some NFTs are so expensive   Nonfungible tokens (NFTs) burst onto the scene earlier this year when some of them started pulling in millions of dollars at auctions. A confusing and controversial new digital asset is on the rise. DW‘s own experiment selling an NFT made a smaller splash. Which made us all the more curious: Why are NFTs so expensive are some so expensive?   Patrons of the arts?   First, a reminder: NFTs prove ownership of digital files. They can represent digital works of art but can also be associated with video game accessories, collectors items and more. Anything that can be stored as data on a blockchain can be an NFT. NFT transactions are recorded publicly on a blockchain and often bought with cryptocurrencies.   Investment bank JPMorgan recently valued the global NFT market at $7 billion (€6.3 billion). In October, an experiment by The Economist pulled in $420,000 when the weekly news magazine auctioned off an NFT of one of their cover pages. An issue about decentralized finance, the cover art portrayed cryptocurrencies alongside images from the children’s book “Alice’s Adventures in Wonderland.” Buyer @9x9x9 told The Economist it was the fitting title — “Down the Rabbit Hole” — that compelled them to purchase the data file of the cover.   But buyers of breathtakingly expensive NFTs point to a whole range of reasons for spending big bucks for the rights to a data file that anyone else can view or copy. Cryptocurrency entrepreneur Vignesh Sundaresan spent a record-breaking $69 million on an NFT earlier this year. The NFT enthusiast, who has invested in the technology, denied that he was trying to push up prices. He said he wanted to support the artist and showcase the technology. For other buyers, it’s about scarcity. “The buyer knows how many will be made and has blockchain proof of ownership,” American billionaire and NFT collector Mark Cuban told online news portal Business Insider.   What the data says   Researchers at the Alan Turing Institute (ATI) wanted to know what the data said about this phenomenon. “What we observed is that there is this gigantic heterogeneity in the success of NFTs,” Andrea Baronchelli, associate professor in mathematics at the University of London and ATI’s token economy theme lead, told DW. “Some — very few — do very well, a bunch do decently, and the majority are worthless.”   In 2021, ATI’s team of experts completed a study which looked at the role certain factors play in the price of NFTs. They looked at three components: the NFT’s visual features, previous sales of related NFTs and the social network of the buyer and seller. Researchers used a machine learning model to consider a dataset of 4.7 million NFTs exchanged by over 500,000 buyers and sellers. The result? Past sales of related NFTs was the most important of these three factors, accounting for over 50 per cent of the price variance.   For example, past sales of NFTs from the CryptoPunks collection, a prominent set of 10,000 tokens depicting pixel images of punks, would be a good indicator of future sales of tokens from the same collection. Visual features were the second most important aspect. Including this data increased the performance of the machine learning model by up to 20 per cent. Data showing the popularity of the traders increased performance by 10 per cent. Combined, they concluded these three factors can explain up to 70 per cent of the variability in NFT prices. They plan to look at more factors in the future, including the platform where the NFT is sold and the activity of the creator on social media.   An old market rethought   In the market for NFTs of digital artworks, one can recognize something of the traditional art market, where scarcity, social networks and, often to a lesser extent, content of the art piece help determine an object’s worth. But NFTs have some features that distinguish them from their real world counterparts, Mauro Martino, director of the Visual Artificial Intelligence Lab at IBM Research and ATI study co-author, told DW.   “A very big difference between the art market and NFTs is that the artists take 10 to 20 per cent from the secondary sales,” he said, “So anytime the piece will sell again, part of the sale will always go to the artist. This is really a novelty in the idea of art and can be a big game changer for artists.” This is possible because future sales of NFTs are recorded on blockchain, which allows artists to receive their cut automatically.   A JPEG of a rock   That is good news for anyone whose NFT has generated some money. But what about the majority that aren’t worth much at all? “There are 10,000 new pieces each and every day ready to go…I don’t know where,” said Martino. “There are not 10,000 new buyers every day to sustain this incredible production.” Stability in the NFT market would require greater attention from the public to attract traditional investors, as well as greater comfort with cryptocurrencies, the experts said. This development is likely still years away, and surprises could pop up in the meantime.   “If we notice that enthusiasm for NFTs today is very similar to the enthusiasm for cryptocurrencies at the very beginning, then we can expect some major correction,” said Baronchelli. This would have unclear implications for this nonfungible asset. “If I have Bitcoin and it goes down 40 per cent, I still have 60 per cent,” he said. “If I have a JPEG of a rock? What happens to the value of that JPEG? We don’t know, because there is nothing similar.”     
As more financial advisors are learning, NFTs are starting to catch on, even among non-celebrities. And it may not be long before a client asks you how to include NFTs in their portfolio.
   Why NFTs are so appealing   Simply put, people love collectibles. And thanks to the growing accessibility of NFT marketplaces, the title of "collector" now applies to someone trading free Space Jam tokens just as much as it does to prominent figures like the pseudonymous Whale Shark, who owns more than 220,000 pieces of digital art and has consulted Paris Hilton on How much do NFT cost to break into the market.   As a financial advisor, your first priority is to look out for the long-term financial security of your clients. It might be helpful to think of NFTs the same way you would a rare stamp collection, for instance, or a signed original manuscript of the great American novel. NFTs are a lot like old-school comic book collecting, or baseball cards and Pokémon cards. Except, thanks to blockchain, their true scarcity (and value) is much less speculative because we have an irrefutable record of every token.   Assuming your clients have a healthy amount of money invested for their retirement, a sizable emergency fund and enough disposable income that they Can NFT be sold experiment with NFTs, collecting can be a fun and innovative way to feel a part of the future.   But if someone isn’t in the position to invest money on speculative art – whether a hundred dollars or a thousand dollars here and there – there are ways your clients can dip their toes into the NFT market for free.

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January 12, 2022, 12:56 AM
Why are NFTs so expensive

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