Why Are NFTs So Expensive? Explained

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Expensive NFTs

The internet is filled with many cases of people becoming rich overnight by selling “Ordinary Jpegs” as NFT pessimists enjoy calling NFTs. 

This article focuses on why NFTs are expensive and gaining so much buzz. 

To NFT noobs, it’s “Ordinary Jpegs”; however, NFT experts, see it as a money-making venture.

After reading this article, you’ll have clarity on why NFTs are so expensive. Enjoy the ride! The read is worth every second of your time.

What are NFTs

If NFTs are more than “Ordinary Jpegs,” then there should be a solid reason why people are raving over and making money from them. 

NFT refers to a Non-fungible token; when something is referred to as fungible, it can be duplicated. Cryptocurrency and FIAT currencies, for example, are fungible tokens. 

Works of Art like the Famous paintings of Leonardo Da Vinci, the Mona Lisa, and the last supper work of Art are Non-fungible. 

“Non-fungible” is something that cannot be duplicated/replaced. These collectibles’ works of art are one of a kind and have now moved to the digital space.

The various marketplaces where NFTs can be obtained are OpenSea, Binance Marketplace, et.al.

Why is NFT expensive?

Wondering how celebrities like Snoop Dogg and Paris Hilton hopped on the NFT waves to make money? Or the story of digital artists like Irina Yufera making a huge sum of money selling NFTs.

Well, that brings us to the question, “why are NFTs expensive?”

To answer this question, here is a list of the reasons that explain the high value placed on NFTs.

  • Law of Demand.
  • Future Value.
  • Perception of the buyer.
  • Utility.

Law of Demand

One of the most important laws in economics is the law of demand, which explains that if more people want to buy something, given a limited supply, the price will be higher. Likewise, the higher the price of a good, the lower the quantity that consumers will purchase. The owners of the projects create scarcity around their projects, and people tend to buy to avoid missing out.

For example, an NFT from a famous person like Cristiano Ronaldo, Lionel Messi, or Tom Brady with an exclusive meet and greet will be expensive.

Future Value

Another reason NFTs are expensive is the future value of the body of artwork, especially if it is a limited sale and you believe that the resale value will give a bigger return on your investment.

And with what we’ve seen in the NFT space, some investors have made triple their initial investment. A potential investor will also look to make profits by selling, especially if the project is solid.

Perception of the buyer

The perception of buyers plays a role in the price of NFTs. As explained earlier, it depends on the person and team behind a project. 

If an NFT collector has made nice money on previous NFT  projects from a certain team. The NFT collector will place premium value on their next project.

Utility

The use case of NFTs is one of the reasons for NFTs being expensive. For example, a leading artist like Beyonce can decide to give exclusive access only to her NFT holders for her album listening.

NFT collectors are advised not to hold an NFT that doesn’t have a tangible use case as this will plummet the value of their collectibles.

Crypto Market Data

Data is a very important tool when buying NFTs or getting around in the Cryptocurrency industry. If you are looking for cryptocurrency data, Sites like Coinmarketcap are good sources, while if you are looking for NFT projects, Cryptoslam is a good place to start.

List of Expensive NFTs

Expensive NFTs are not rare in the NFT ecosystem; .many people are investing in NFTs ranging from Dog memes to cats, and pixelated apes.

The market for NFTs in 2020 was valued at $100 million; however, by July 2020, this figure had increased 30x to $3 billion. Below is the list of expensive NFTs.

  • The Merge
  • The Clock
  • The First 5000 days.
  • CryptoPunks

The Merge

Digital renowned artist Pak created the most expensive NFT in history, the Merge, which is a series of NFTs. The Merge was valued at $91.8 million as of December 2021. The Merge has so far grossed more than $350 million since it was released to the market.

The Clock

Wikileaks founder, Julian Assange, created The Clock, one of the most expensive NFTs in the World. The clock  NFT was created to raise funds for Assange’s defense. The clock is the third most expensive NFT sold in the NFT ecosystem. This NFT was auctioned for $52.7 million.

The First 5000 Days

“The First 5000 Days” NFT was sold to a Singapore-based cryptocurrency investor Vignesh Sunsarensen, popularly referred to as MetaKovan in the NFT ecosystem, for $69.3 million, making it the second most expensive NFT. The auction for The First 5000 Days NFTs happened in March 2021, and to date, only Merge still thumps it in price.

CryptoPunks

When it comes to NFTs generating buzz and being wanted by all, the CryptoPunks is the one with a disciple-like following, and it’s at the top of the ladder of most popular tokens on various NFT data websites. It has managed to sell out at record-breaking prices simultaneously. 

Larva Labs started the CryptoPunks project in 2017, making it one of the early NFTs available on marketplaces. CryptoPunk#5822 is the most valuable CryptoPunks in the world and number 5 on the all-time expensive NFTs list.

Deepak Thapliyal purchased CryptoPunks#5822  for $23.7 million in February 2022. The reason for the high sale is that it is rare.

Conclusion

The reason NFTs are so expensive is more than a single factor. Various things that have been discussed above play an important role in it. However, before investing in any NFT project, it is very important that you DYOR (Do your own research) as we’ve seen a lot of project prices dip after launch and investors lose money.

Frequently Asked Questions

1. Is NFT Valuable?

The answer to this question is in the list of the Top most expensive NFTs sold. And looking at the story of Jack Dorsey, The Indonesia boy, and Osinachi grass to grace story, it’s evident that NFTs are valuable. However, investment in a wrong NFT project can be detrimental.

2. Is NFTs worth buying?

NFTs are not scams; you can make real-life-changing money by trading and flipping NFTs. NFTs are a real game changer, especially in how the proprietorship of Arts, Real Estate, or creative assets are owned. If you see real NFT projects that interest you, try your hands on them.

3. Who owns the most Expensive NFT?

Famous Digital Artist Pak is the owner of the most expensive NFT in history, yelling for an eye-watering $91.8m price tag in December last year. The Merge has grossed more than $350 million.

4. Is NFT Dead?

The NFT Market is not dead, and it won’t be. Before dabbling into NFT, study it. Blockchain Technology is a wide and broad topic, especially NFTs. Most people want to post a picture of their cute dog on OpenSea and hope someone buys it for millions. Having a solid understanding of NFT is very important.

5. Is the NFT hype over?

NFT hype is not over; it only took a back seat due to the decline in the price of the cryptocurrency in the market. NFTs are still collected as some holders are looking to cash out once another bull run is around.