Methods to Assess the Worth and Value of NFTs

NFTs, or non-fungible tokens, are in high demand and are finding their way into various crypto-related conversations. For example, with the explosive growth of NFT sales worldwide, job and business prospects for various professions are on the rise. In addition, many businesses want to explore the Metaverse – the virtual world created by Meta Inc. (formerly Facebook) –and require NFTs to build communities and get customers to follow them online. In such a scenario, let’s take a look at the various methods to assess the worth of NFTs.

How to Value an NFT?

There is no manual to determine the value of an NFT. The measures you use to evaluate private companies or traditional investment vehicles such as stocks do not apply to NFTs. Instead, let’s look at certain factors that can help you ascertain the ‘Value of an NFT’:

1. Non-replaceable and scarce:

One way you can gauge the value of NFTs is to find out how scarce and difficult it is to own a specific NFT. For example, the first-of-its-kind artwork by a prominent creator in the digital arts business, or an NFT published by a celebrity, are both examples of rarity. 

Another uncommon consideration is the effect such an NFT would have in, say, a video game. People gravitate to such NFTs due to their inherent value, in which the NFT’s owner holds the blockchain evidence of ownership. This creates a sense of difference and defines an NFT’s premium value.

2. Utility:

This is another way to understand the usefulness of an NFT. The usefulness or utility of an NFT stems from its actual implementation, whether in the natural or virtual worlds. Some NFTs, for example, are so much more than collector’s items because they may be employed in games as virtual places or avatars. 

This feature of NFTs provides them with immediate value, which contributes to the rise in popularity of the NFT project over time. When the community of participants increases in a decentralised game, plenty of them will be prepared to pay a premium amount for a one-of-a-kind card.

3. Liquidity:

The value of an NFT can also be determined by evaluating the liquidity. For many NFTs, one of the significant problems is asset liquidity. NFTs are not very liquid assets. For instance, NFTs cannot be immediately sold and converted into cash because there are several other factors at play. 

The liquidity of an NFT is determined by characteristics such as utility, past ownership, brand, and value appreciation. 

These elements essentially increase the visibility of NFTs among consumers. NFTs can be effortlessly sold, only if the consumer is aware of NFTs and there is a high demand for a particular brand. 

Moreover, if an NFT caters to a specific consumer group, the likelihood of purchasing that NFT is reduced. This, in turn, further diminishes the asset’s liquidity. However, if an asset draws a small but passionate set of people who continuously pursue it, the liquidity for that asset will be high. 

4. Appreciation value:

You must examine the NFT’s historical values and comprehend the pattern. If the NFT does not demonstrate any value appreciation, the value of that specific NFT will be impacted correspondingly. Again, the NFT value monitor plays a significant role in determining this. 

Keeping track of the price via an NFT value monitor aids in comprehending and estimating the price of an NFT. For instance, an NFT Tracker uses Blockchain analytics to aid in the understanding of numerous data points related to an NFT. Therefore, Crypto enthusiasts must examine the trend in blockchain and NFTs in order to determine their worth.

Closing Thoughts and Key Takeaways

Overall, keep in mind that if the NFT you are interested in can attract attention and is compatible with all the four methods stated above (that is rarity, liquidity, usefulness, and increase in value), then it is a solid NFT to bank on. 

It is always advisable to conduct your due diligence and research before purchasing any NFT. Zebpay makes it easy to purchase and sell numerous crypto assets on one platform. Furthermore, you may keep track of real-time crypto market price swings and ensure a seamless crypto trading experience with a user-friendly interface.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The views, thoughts, and opinions expressed in the article belong solely to the author, and not to ZebPay or the author’s employer or other groups or individuals. ZebPay shall not be held liable for any acts or omissions, or losses incurred by the investors. ZebPay has not received any compensation in cash or kind for the above article and the article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.

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