There are many factors that contribute towards the perceived value of an NFT.
As we increasingly spend more time online, and our digital identity becomes more important to us, digital items, assets and experiences are becoming more precious, more sought-after, and more valuable. As NFTs enshrine provable digital ownership rights, they help ascribe real value to digital assets.
There are three main considerations that contribute to the value of an NFT:
- Scarcity
- Utility
- Community sentiment
As NFTs enshrine proof of ownership in the digital world, and an NFT creator can decide how many are created (including enforced limits), NFTs introduce the concept of digital scarcity – and if a sought-after NFT is very rare, the value will naturally increase.
NFT utility is an increasingly important factor in determining the value of an NFT? What does the NFT give you access to? What exclusive benefits does the holder receive? Are these perks particularly notable, desired or valued by others?
Community sentiment is a strong influence on the perceived value of an NFT. This includes what the perceived potential of the NFT is, what the standing of the creators is, and its future prospects as a valuable asset.