Why are people buying NFT art?
The reason is simple – it gives them the satisfaction or joy of owning something rare that has immense value and can function as an investment – this is very enticing!
But there’s more to this!
NFTs are unique, irreplaceable, and non-transferrable digital assets. They can be used as collectibles like cards and game characters or provide a virtual reality experience with real estate investment. These decentralized assets are growing so popular; they are the next big thing in the crypto world!
But what is it that makes them so unique? Why is it gaining popularity, and why are people buying NFT art? Before diving into why people buy NFTs, let’s first understand what an NFT is.
What is an NFT?
To understand the concept of non-fungible, let’s get familiar with what assets are fungible. Money is fungible. You can exchange a dollar for another one because they are of the same value. Even bitcoin is a fungible token because you can buy and sell them with other bitcoins containing the same value. But it’s not the same with NFTs.
NFTs are non-fungible tokens that are created and traded on the blockchain. These unique digital assets cannot be replaced. For example, real-life art pieces like Mona Lisa cannot be traded for other pieces because they are one of a kind.
Similarly, on the blockchain, NFTs are considered unique art pieces that can never be replaced or recreated. And since they are entirely created and sold on the blockchain, their transaction history is producible. Hence, duplication is prevented.
An NFT is a limited crypto asset with transaction verification on the blockchain. Although this means that you can create an NFT of your art piece, it will hold a different value than the other artist creating an art piece.
So, what is all the recent craze of people behind NFTs? Let’s find out.
Why Do People Buy NFTs?
NFTs are bought mainly for two reasons. Some make it a means of investment, while some purely enjoy buying and collecting unique digital collectibles. Even gamers invest in NFTs to expand their gameplay collection or own a valuable game item.
Many innovative NFT projects provide merchandise, utility, community benefits, and more! This increases people’s interest. Let’s dive into some statistically backed details.
Many people use NFTs as a commodity that helps them make money. According to a survey by DEXterlab, 64.3% of people out of 1,318 said that the main reason why they take an interest in NFTs is to make money.
In April 2021, when Bored Ape Yacht Club NFTs were launched, they were priced at .08 ETH, roughly $190. But by September, each of their NFTs was sold for around 769 ETH, about $2.3 million! And this is why the majority of people choose NFTs to make money.
But what makes them so valuable?
Since these tokens are non-fungible, their unique qualities and scarcity drive the interest and demand rate. This means that the rarer an item is, the more demand it has, and the more its value is.
In the same survey aforementioned, the second most-rated reason why people chose to invest in NFTs was that they wanted to join a community and flex. NFTs, bring a sense of togetherness for many collectors. Not everyone wants to make a profit or own a digital asset. Communities give identity to some people.
Some creators have turned some of their NFT projects into communities by creating exclusive offers accessible only to the owners of the NFTs. The Bored Ape Yacht Club built its community by creating:
- Members-only discord
- Exclusive live events and merchandise
- Vote in fund allocations, rules, governance, projects, and partnership
- Commercial usage rights of their NFTs
As NFTs continue growing in popularity, many artists have started joining the community to gain support from their fans. For example, the American band Kings of Leon released their album as an NFT for $50. Even Steve Aoki successfully earned thousands of dollars from a single NFT sale.
By selling their music on the NFT marketplace, artists enable a great bond with their fans by allowing them to own their music. And due to this reason, many people are willing to invest in NFTs. They get to support their favorite creators.
The traditional currencies are targeted to inflation. But NFTs offer one of the safest capitals to invest in due to their capability to preserve value. Since they are not subject to inflation like other currencies, they are known to be one of the stable investment choices.
One of the major reasons why people want to invest in NFTs is because of their ability to be irreplaceable and non-duplicable. It is impossible to replicate NFTs because their transactions are recorded on the blockchain. Hence, this makes people more interested in investing. A simple theory of human psychology goes into this.
According to the Chicago Booth Review, humans are willing to pay more if the thing is rare. This is a reflection of our human nature. We tend to put more value on things that others cannot have simply because they can’t possess them.
Collectibles have immense value. Take an example of rare basketball cards. It might have taken only a few cents to make the 1952 Mickey Mantle rookie card, but today, it was sold for $5.2 million! Why did this happen? Because it’s not just about the physical material but the history, cultural relevance, rarity, and fandom the card represents.
The fact that you can collect something so rare is exciting for people who invest in NFTs. Hence, this is also proven to be one major factor for the increasing number of NFT investors.
When we talk about collectibles, we shouldn’t forget that trading cards are just one type of gaming NFT. An NFT can represent anything from cards, and virtual real estate to gaming characters, skins, materials, and potions!
People buying gaming NFT get the satisfaction of owning one piece of the game. They can trade them with other players or sell them. This thrill makes gamers enjoy investing in NFTs.
How Many People Buy NFT Art? (With Statistics)
In 2021, the sales of NFT grew massively. The global NFT market hit approximately $25 billion. People were buying everything from cartoon characters to videos.
While art was among the most benefitted collectibles, influencers, brands, and celebrities are also getting involved with the rising demand for NFTs.
Financial Times and Chainalysis reported that approximately 360,000 NFT owners held around $2.7 million in NFTs.
Nonfungible.com said the NFT sales are rising, with 13118% growth seen between the first quarter of 2020 and the first quarter of 2021. Their data also showed that around 15,000 to 50,000 purchases happen within a week, with NFT sales ranging from $10 million to $20 million; which is a drastic change compared to 2017, where 100 sales used to happen weekly. There are some weeks where the weekly purchases sometimes hit the $170 million mark!
Among this population of investors, research by Morning Consult reported that millennials are three times more likely to invest in NFTs than Gen Z.
The same research concluded a third of eSports fans are also involved in NFTs. Among them, 20% of the 2,200 respondents concluded that they were highly interested in NFTs as a hobby or an investment. While other 35% said they were somewhat interested.
Should You Invest in NFTs?
No matter how interesting NFTs are and how many people invest in them, it all comes down to your preference. Here are some points that can help you decide:
- If you want to support your favorite creator, find a community, or want to gain a sense of owning something, NFTs are great!
- They are still risky and volatile if you consider using them as an investment.
- Despite the growing popularity, they are still new, and it’s never too late to begin something.
Some NFTs are risky with less profit, while others are more profitable. And it isn’t easy to judge which ones provide the most value. So do your research before investing! And if you decide to favor investing, Mesha can help you.
Make NFT investments easier and more affordable! Create a team on Mesha.