Non Fungible Tokens are the hottest topic in entire blockchain and crypto spaces. In 2021 NFT becomes mainstream adoption among the users and this NFT technology going to disrupt many other industries like how the internet has disrupted the early 90s.
I know about NFT through Twitter, at first I thought it was a scam and ignore and forget about NFT completely. After a few months, I was awestruck to see the news about an NFT sold for $69 million dollars by an artist called Beeple. After reading that news, a few questions that pop up to my mind of them are
- What are NFTs?
- Who buys NFTs?
- Why would some pay millions to buy an NFT?
- Why NFT are expensive?
In this post, I would like to answer a few of the questions that aroused me in the first place.
Table of Contents
The Types of people who are buying NFT are
1. Early Adopter
Early Adopters are those who are the builder of this technology and they can able to see the potential of this great technology called NFTs before anyone would sense it. Opensea was started in 2017 when only a few thousand people knows about NFT. Can you imagine how early it was, the sheer will and belief in NFT among the founder who paves the way for this great technology?
2. Investor
Investors are the ones who invest in great NFT projects for long-term investment returns. They are the ones who find great NFT projects before anyone else could able to identify them. Most early NFT investors have invested in bluechip NFT projects.
3. Collectors
Collectors are those who love to collect exclusive NFT projects to flex and show off. Currently, most NFT collectors are high net worth individuals but within a few years, there would be more NFT collectors with the adoption of VR and Metaverse. Collectible is human nature we are collecting stones, pokemon cards, and a lot more.
4. Flippers
Flippers are those who buy an NFT project and sell it in a shorter amount of time to make larger profits. Flipper holds an NFT project anywhere between 1 day to 2 months.
5. Fans
Can you imagine what if Kanye West launch an NFT project? The fans of Kanye west would buy his NFT project as fast as possible. Currently, the music artist, sports team, brands are launching NFTs and the fans are getting crazy over this NFT.
6.Celebrity
Celebrity like Markcuban, JayZee, Grimes, Paris Hilton, Gary Vee is publicly sharing their NFT purchases which in turn makes a lot of headline around NFT. Famous youtube like Logan Paul and Mr. Beast is the early buyer of CryptoPunk.
7. Normal NFT Purchaser
A lot of normal working-class citizens are getting into NFT and it is clearly visible in the rise in total overall transaction volume in NFTs. This is a huge moving factor for the overall NFT ecosystem.
Why would someone buys an NFT if they were just pictures and spend millions of dollar on it?
Every day our life becoming more digital and we are spending half of our lives on digitals. As everything becomes digital, the things we own in digital form will take over the physical forms.
20 years before we humans never cared about
- The total number of followers, we have on social media
- Bluetick verified social media profile
- Total views, comments, likes
The same reason someone needs a Rolex watch to flex or BMW for a ride. Human needs to communicate through their purchases. The fashion industry exists because of this, otherwise, we all wear the same thing.
In the digital world, How would you communicate? Owning an expensive NFT will communicate our identities and differentiate ourselves among others.
In 10 years, we would care more about our digital identity than our real environment. Some changes we could expect in the future would be
- We care more about what people are holding on their public wallets.
- Profile Picture NFT is a new identity that signifies who they are.
- We care more about digital fashions, skins, and NFTs.
Here are a few different perks NFT holders are benefiting from holding an NFT. Here are the main reasons.
- Community
- Collectability
- Utility
- Exclusivity
- Investment Opportunities
- Likeability
Collectability
We, humans, are collectors in general by collecting our favorite music, stamps, currency notes, and arts. The ultra-high net worth individual always collects arts, and arts are different forms of value storage medium.
Can you imagine how much value the original Monalisa would be? The NFT art collector would represent the tiny pie of the entire NFT collection in the future. Collectability is one of the core aspects that is driving the entire NFT ecosystem. People buy expensive NFTs is to flex and communicate their identity through their purchases.
Checkout: Best NFT Visualizer to Show off Your NFT Collections.
Utility
The utility is going to any benefits you are going to get by holding the NFTs. The value you gonna derives from owning the NFT.
Gary Vee NFT projects Vee Friends allows its NFT holder to attend a VeeCon Conference exclusive for its member.
Few NFT projects allow its holder to stake and earn passive income out of it. The utility is one of the core reasons people are buying NFT.
Community Support
Many NFT project offers a certain percentage of their total sales to a donation of choice or they gather a percentage of sales and give money back to the community.
You can support certain communities or brands by purchasing their NFT so that the money that you are spending will go back to the community or brands to develop furthermore innovative projects.
Surrealist Waone Interesni Kazki is one of Ukraine’s most famous artists who supports the people of Ukraine through his NFT works. 50% of the money raised through the NFT project will go towards funding Ukraine’s medical supplies. Anywho purchase the artist NFT collection who indirectly contributes 50% of their money to Ukraine relief.
Exclusivity
Why do people buy limited edition expensive watches? It communicates status and exclusivity. Most NFT projects are valuable because of the exclusivity it provides to the holder The scarcity and popularity drive the value of the NFT.
Humans are status-seeking creature who needs to flex. What could be more valuable in digital space than holding Cryptopunk and BAYC?
Can you imagine having a $9 million dollar Jpeg image as your social media profile? It makes you exclusive among billion of social media users.
In the digital world having a Cryptopunk and BAYC is like having a Lamborghini or Ferrari.
Investment Opportunities
Investing in NFTs can be extremely risky and highly rewarding. Thousands of people are making quick money by flipping NFTs. Many people are doing NFT flipping as a full-time job.
Another way of investing in NFT is through Long term investment. Most long terms NFT investors are investing in Bluechip NFTs. Investing in an early NFT project is like investing in a startup that may yield high profits some time it won’t work.
The value of the NFT project is highly speculative yet NFTs are highly risky for investment. You should have to do extreme research about the NFT projects before deciding to invest in NFT.
Likeability
Sometimes people invest in the NFT project because they like the art, design of the NFT, vibes of the NFT project, a community of the NFT projects, and much more.
You may find some deeper meaning just by looking at the image or by hearing the music. You may like the artist more than their artwork. These are likeability factor that drives overall NFT sales.
I truly believe, Likeability should be the main factor before buying any NFT purchases. I would definitely buy Music NFT collectible if Mike Posner launches his collections. Will just by Mike Posner Music NFT not for any investment purpose or expecting some utility value out of the NFT.