NFTs have been popular for a long time. Mainly, in the creative part of the blockchain space with digital artists being able to list their artwork without fear of losing it to fraudsters and a clever royalty system.
Non-Fungible Tokens (NFTs), a fancy way of stating that a creation such as a digital piece of art is unique and can not be replicated; this of course is made possible by the blockchain which “mints” the specific creation preventing it from ever being replicated.
NFTs have been around for a long time, and they are built on top of the Ethereum dApps network.
The 2021 cryptocurrency bull run has meant that there is of course more people in the crypto space, and as people make profits in their cryptocurrency investments, it is natural for their flow of money to start moving towards collectibles in the same market. Now why do people start investing in NFTs and spend crazy amounts on it?
It is simple, there is a saying that human behaviour is rather predictable. When people invest, especially wealthy people they start to diversify their portfolio into “treasure assets” as they find it enjoyable, and usually do not look at this as a financial investment such as stock which gives it a subjective and emotional value. A Barclays report called “Profit or Pleasure” has these results:
- Enjoyable way of diversifying a portfolio
- Not seen as a traditional investment class thus, allows flexibility
- Once people own something, they tend to become attached to it and are unlikely to sell it for a value less than they acquired it
From this we can see that the art asset class is far more emotional and subjective. Therefore, the crazy NFT values are nothing new, as the value of art pieces is speculative in nature and if deemed valuable by a certain clique then it has a natural leaning towards upward price movements.
Now, just relate this to the NFT boom and you will understand why wealthy individuals in the crypto market are purchasing NFTs for crazy amounts such as the bidding for the Jack Dorsey tweet or Logan Paul’s collectibles.
There is nothing shocking about the NFT market boom, history just repeats itself. People bid crazy amounts for “fine treasures” in the past, people will bid crazy amounts for “modern fine treasures” now.
How can you get involved?
We have a guide written on how to get started on platforms such as superrare. We will soon be creating a course where one can learn how to get involved in the digital art and NFT marketplace.
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Written by Rodrick Chattaika © Crypto University 2021