If you are here reading this piece of content, you sure have your interest inclined towards Non Fungible Tokens (NFTs). And in this article you will get an idea of how NFTs aka Non Fungible Tokens create wealth.
Let’s start with an example – We all know the value diamonds hold. Both, financial value and emotional and sentimental value. Diamonds have been signified as the symbol of wedding proposals. Even though reports state that lab created diamonds are just as real as the diamonds mined from earth, the demand for mined diamonds is always on the rise. Ever wondered why? This is because of the rarity they hold. The sole reason why mined diamonds are always looked above the lab ones is because people from around the world have been marketed it that way. The concept of wedding proposals with diamonds is now a regularized tradition.
In fact, social media has even reached an extent where proposals without diamond (or “the rock” as they call it) have been frowned upon and trolled. It has been embarked as a global norm for wedding proposals since a few decades now and is here to stay. Now if you are wondering about why we are emphasizing on diamonds and their value is because – NFTs are not much different. Diamonds are rare, and so are Non Fungible Tokens (NFTs). The value each NFT holds is on the basis of its uniqueness and more so – rarity.
Small brief on – Non Fungible Tokens (NFTs)
Non Fungible Tokens also widely known as NFTs are unique cryptographic tokens. They have the ability to assign value to digital assets like artwork, collectibles, music etc. and even selfies – A 22 year old Indonesian college student named Sultan Guataf Al Ghozali made $1 million by selling his selfie as an NFT on OpenSea. This NFT was a series of selfies he took between 2017-2021 to reflect upon his graduation journey. Below is the selfie.
Blockchain technology gives designers and creators the freedom to create and upload their talent up for sale in the form of blocks which are immensely secure and credible. This allows designers and creators to reach out to a larger audience across the world without any middleman involved. They can create music, game collectibles, avatars, property and much more and attain financial freedom with
Non Fungible Tokens were first invented in 2014 and have become a global sensation since the pandemic. Social media attention is greatly responsible for the explosion of the NFT trend across the globe – Penetrated in all seven continents.
**Stats Say – The global NFT market size is expected to grow from USD 3.0 billion in 2022 to USD 13.6 billion by 2027. (This is at a compound interest growth of 35.0% from 2022-2027)
NFTs that broke records
- “The Merge” sold for a whopping $ 91.8 million (30,000 collectors bid together to purchase parts of this NFT)
- “Every day – The first 5000 days” by Beeple, sold for $69 million
- “Clock” sold for $52.7 million
How will NFTs help in generating wealth all over the world
Non Fungible Tokens are being recognized as an essential tool to create global wealth. NFTs have a profound impact in the crypto market. Non Fungible Tokens primarily act as a token or ticket that grants the owner access to any particular digital asset. And what makes them even more unique and fascinating is that they function on cryptocurrency, which is completely decentralized and is also known as the “global currency”. This means that the NFT creators have total control over their work. This is why most believe it to be a new ecosystem for global wealth generation.
Cryptocurrency works on the Blockchain technology. Each metadata encrypted on the token is unique and cannot be altered or replicated in any way and hence NFTs give the creator complete copyright of their work.
Different types of NFTs to monetize on
- Video Games
- Trading Cards
- Domain Names
- Virtual Fashion
- Sports Collectibles
- Miscellaneous Online Items
With the Metaverse and Web 3.0 becoming a reality now, it is only opening up new revenue streams of income for people from all around the world.
Top 3 factors that determine the value of Non Fungible Tokens (NFTs)
1. Total control over circulation
NFT creators have total control over their digital asset. Designers and creators can add as many NFTs as they like based on the market demand and supply situation. It is a volatile space. The rarer the NFT, the higher the demand and value.
2. No space for intermediaries
NFT owners have complete freedom to reach out to their audience without the need for any middle agent or medium, at a price they wish. This has been also termed as an ecosystem which will give designers and creators financial freedom and independence.
3. Limited supply and uniqueness
Non Fungible Tokens are limited in supply. No two are the exact same. This make them rare assets. People love the essence and power of owning rare collectibles, and NFTs are just one of them. The reason they are priced at different values is because of how rare they are to get.
It is imperative to understand that in the NFT world, the price of a particular digital asset is dependent on its demand and has nothing to do with the economical or technical attributes. NFT is a fairly new marketplace and governments from all over the world are trying to impose taxation on it, so it is advisable to first consult a tax professional before venturing out into the world of Non Fungible Tokens (NFTs).
Marketing Head, TECHVED Consulting
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