In today’s world, while many are ignorant about the NFT concept, others ponder questions like ‘How to find a valuable NFT?‘ Or how to calculate the true value of the NFT?
In recent years, Non-Fungible Tokens, or NFTs, have taken the world of digital art and collectibles by storm, and for a good reason. These gained popularity when the crypto art piece The First 5000 Days by Beeple became the most expensive NFT in the world in March 2021.
Understanding NFTs: An Overview
In the simplest of words, NFT is a unique digital asset that is stored on the blockchain. They denote ownership that enables us to tokenize digital art, music, in-game assets, valuables, or virtual real estate. Unlike cryptocurrencies, these cannot be exchanged and, therefore, generate an immutable and transparent ownership.
Let us delve into the factors that determine the value of NFT, which will eventually answer the question, ‘How do I know if my NFT is valuable?’
How To Find A Valuable NFT?
Since NFTs are unique assets, it can be challenging to assess their value, as it highly depends on their demand and perception. However, certain factors can influence their value. If the task of how to find a valuable NFT is daunting to you, consider the following points:
- Rarity: A core quality that determines the value of an NFT is its scarcity. A limited-edition NFT holds more price in the long run—generally, the rarer the NFT, the higher its value, and vice versa.
- Utility: Another critical parameter that determines the value of NFTs is their utility. Their use and demand define their value in the market. For example, the demand for video games is rising every day in the market, and therefore, NFT video game prices are also increasing.
- Community Size: The community size also helps the NFT market to thrive. The value of an NFT can be easily determined by assessing its number of followers and subscribers. As the community support and engagement of the NFT on social media increases, its value will also increase simultaneously.
- Origin: In some instances, the value of NFT also depends on its creator. If the creator of a certain NFT is distinguished and famous in the market, then their work will also more likely be highly valued in the NFT marketplace.
- Liquidity: Another determining factor for “how do I know if my NFT is valuable” is the ease with which it can be converted into liquid money without affecting the marketplace. In the NFT marketplace, the higher the NFT’s liquidity, the higher its value.
By understanding NFT’s basics, conducting thorough research of the NFT marketplace, and considering the factors mentioned above, one can increase their successful chances of investing in a valuable NFT. Just like cryptocurrencies, NFTs are also highly volatile. Therefore, always make sure to spend only what you can lose.
Evaluating non-fungible tokens with accuracy is very difficult for anyone. Even if you have extensive experience in the NFT space, investment cost judging is tricky. However, some tools like the NFT Value Estimator can provide a resolution for the “how do I know if my NFT is valuable” query. It enables you to check precise estimates of the current price of NFTs from various collections.
Conclusion
There are a few frequently asked questions answered below :
