Non-fungible tokens (NFTs) are one of the hottest new trends in cryptocurrency. These tokens are unique (non-fungible) and usually represent the originality of a digital asset.
They are also tradeable, which leads to a very important question.
How does one value an NFT?
Unfortunately, there is no solid way to value an NFT because they are a unique asset. It’s similar to placing a value on a piece of unique art – it’s only worth as much as someone is willing to pay for it.
That said, this article will examine some of the different methods available to value NFTs.
This section will cover some of the methods used to value an NFT. This is useful for those of you that plan on investing in an NFT.
It’s also useful if you have an NFT that you want to sell because you obviously want to get the most amount of money for your NFT, right?
What Someone is Willing to Pay
This is obvious, but it’s worth mentioning for clarity. An NFT is only worth what someone is willing to pay for it.
You could have the most interesting or useful NFT in the world, but if no one is willing to pay anything for it, then it’s not worth anything.
That’s the simple fact of valuing an NFT that underpins everything in this.
Popularity of The Underlying Project, Game, or Band
A good way to value an NFT is by looking at the popularity of the project, game, or band.
Is it a popular project, game, or band?
If it is popular, then the NFT related to it is likely worth more money than if it was unpopular. There is one caveat to this – finding a project that will one day become popular. That is more useful for investing in an NFT than when it comes to selling it.
You can purchase the NFT for a lower amount and it will appreciate in value as the underlying project becomes more popular.
In summary, a more popular project is the best indicator of high value for an NFT.
Usefulness of the NFT
Next, the usefulness of the NFT is a good, but not perfect, way to evaluate the value of the NFT. This is especially true for NFTs in blockchain games.
For instance, if you have an NFT that gives the player a useful ability in a popular game, then you can expect that NFT to be worth a substantial amount of money.
That is simply how it works with an NFT.
Usefulness does not necessarily have to be a tangible benefit, though. Many NFTs are related to unique skins in games, which is strictly cosmetic. However, if the skin looks good to most people, then the price of it will probably be worth more than an ugly skin or generic looking skin.
All of these valuation methods might sound a little vague. Popularity, appearance, desirability, and so on – there isn’t any way to measure those characteristics.
That is why your intuition is the best way to determine the price of an NFT. Unfortunately, that level of intuition only comes with practice.
If you are involved in the NFT space for a long enough time, then you will get a sort of sixth sense about the value of the NFT. And really, that’s our best advice for determining the value of an NFT.
Just stay involved in the community, watch auctions, and follow NFT news and you will start to get an idea of valuable NFTs and dud NFTs with enough familiarity in the industry.
Are NFTs Here to Stay?
Another useful point for NFTs is the long term viability of the industry itself. In our opinion, NFTs are here to stay. We will take it a step further and say this is just the beginning of NFTs.
This industry will explode in popularity in the next decade. Of course, that does not mean that every NFT will become valuable, but the industry itself will expand. This is not Beanie Babies or some other short-term bubble.
NFTs are another part of the digital world eating the physical world.
Well, that covers it for valuing NFTs. The best way to value an NFT is by completely immersing yourself in the industry, but if that is not possible then we recommend sticking to NFTs relating to popular projects.
The good news is that those projects can be literally anything. Official sports clips, songs, and popular art will all become more popular as NFTs become increasingly popular.