NFTs Explained: Meaning, Characteristics, Why They Are Highly Priced, Etc.
Have you seen people paying crazy amounts for a simple digital asset?
And you wonder, why they spend so much money on that item – when they could easily use the money for other things?
I get you!
People tends to value things differently – since we all have different values and perspectives.
That's why you see people paying different amounts for the same products, same quality, same quantities, etc.
For this reason, some people are willing to pay huge amounts for some simple digital assets – also known as NFTs.
If you're not familiar with NFTs, don't worry!
This article will give you a glimpse of the idea behind NFTs, as well as why people spend a lot of money on these simple digital assets.
So read till the end if you want to learn more about this topic
What You'll Learn:
Without further ado, let me jump straight into more detail.
What Are NFTs?
These are non-fungible tokens – that are digital assets which represents tangible and intangible assets.
In other words, these assets are non-replaceable – meaning, there's only one unique copy of that asset.
They range from non-collectible cards, tweets, drawings, digital real estate, music, etc.
NFTs are part of the ethereum block chain .......
Characteristics Of NFTs
• Indivisible – meaning, they can’t be divided into smaller denominations.
• Non-replicable
• Non-replaceable
• In-destructible
• Verifiable
NB: These are just the few major ones.
NFT Examples
Jack's tweet, which was sold for $2,915,835.47 – since it is regarded as being the first tweet in the history of Twitter.
Another great example is the popular CyptoPunk – which sold for a whooping $761,899. 00.
We also have the CryptoKitties, which is valued at almost $957,000 – which is quite insane for a simple digital asset.
Lastly, we have the popular Monalisa painting – which costs a ton of money (its price is known by most people lol).
Why Do People Pay Crazy Amounts For Simple NFTs?
As mentioned earlier, people tends to value things differently – thus, different people are willing to pay different amounts for the same product.
That's why you see some people pay thousands for a simple pair of shoes – which can be easily bought for few hundreds (same quality, same manufacturer, etc.).
It's a matter of emotional value i.e. if your emotions tells you that an item is worth a certain price, you'll buy that item – regardless of whether the decision is rational or not.
Also, l have come to realise that, rich people likes to spend their money on these NFTs – just for the sake of owning an expensive digital asset.
When you have excess money, you tend to spend it on luxurious items – since you wont have anywhere else to spend your money.
That's why most rich people spend their money on ‘silly' things – but to them, those purchases mean a lot.
For example, someone is willing to pay millions of dollars for Cristiano Ronaldo's signed jersey – which he wore on a crucial game.
And guess what?
People are keen to buy that jersey just to put in their display shelves i.e.:
‘l own an original shirt which was worn by Ronaldo on UCL Final’.
However, this kind of purchase can be meaningless to someone who is not a football fanatic – since he/she might not even know who Ronaldo is.
Thus, it's just a matter of how we value things – since someone's gold can be someone's granite.
Wrapping Up
I hope that you now have a better understanding of the logic behind NFTs.
They are just simple digital assets – which are either tangible or intangible.
What makes them more valuable is that, they are indivisible, non-replicable, non-replaceable, in-destructible and verifiable.
For these reasons, some people are willing to pay insane amounts for these assets – since they hold a high perceived value.
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