Insights and analysisEditorial office

Why do people buy NFTs?

Robyn Abrahams

News Writer

Sep 27, 2022 at 04:42

The Truth about the digital NFT craze is taking the world by storm. This is the true worth of an NFT, and why it is CTRL+C/ CTRL+V will never defeat it!

Image 1: *ALERT* This JPEG is NOT an NFT

NFT stands for Non-fungible Token. The term has become synonymous with JPEGs and Bored Apes, but it did not start that way. The idea behind the NFT was decentralized and irrefutable ownership over something. Most of that absolute ownership is used to flex one’s collections of smoking apes, but the sentiment remains. The NFT craze started slowly in early 2014 with a little project called “Quantum.” Kevin McCoy wanted to immortalize the circle of life, but he unknowingly gave life to a new era of life. The Age of the NFT!

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How do I buy NFTs?

Getting into the NFT space has never been easier. The world has never been more dynamic and interconnected than it is now, but one problem persists. When everything, and we mean everything, is online, how do we prove our ownership of anything, including our identity? This is a terrifying question to ask yourself!

This is the actual value of NFTs! It is the logical extension of blockchain technology. It gives control back to the people and allows us to flaunt our newly minted Cyberpunks without care. How we can buy our own NFTs is as simple as 1, 2, OpenSea!

  1. Get a Crypto Wallet: MetaMask or Coinbase Wallet are best for beginners.
  2. Open an NFT account on one of the popular NFT marketplaces: OpenSea, Rarible, and SuperRare are our go-to!
  3. Buy and mint your very first NFT!

It is as easy as that. Welcome to the NFT buyers’ club.

Why do people buy NFTs?

People are strange creatures with many motivations in every aspect of life. In the last five years, people worldwide have been pouring money into NFTs with no sign of slowing down. These are just a few reasons why this is happening:

  1. Scarcity – The actual value of anything comes from the most fundamental rule in the universe, supply and demand. Nothing on this planet increases demand more than an increase in scarcity. After all, how can you brag about owning something that everyone else already has? When minting an NFT, the minter can determine the amount of that NFT they want to stamp. An external person cannot alter this number; thus, the scarcity of that NFT is guaranteed… and so are your bragging rights.
  2. Irreplaceability and non-replicability – NFTs are traded on the Ethereum, and now Solano, blockchains. Every transaction or newly minted NFT is first entered on the blockchain, and the respective crypto ledgers thus back its identity. Everyone knows that nobody messes with blockchain ledges, especially when it comes to Ethereum. The NFT is assigned a unique Ethereum ID that a third party cannot refute. So regardless of anyone making a digital copy of your Decentraland plot, you will always be its proper owner.
  3. It is a new-age investment class – The two reasons previously listed compounds make NFTs an epic new asset class that rivals REITs and Fiat currencies. In the past, investing was an exclusive activity reserved for people with three-piece suits and tobacco pipes. That is no longer the case, as anyone with money, an internet connection, and too much faith in the system can now enter the investment space. Couple that with the ease of purchasing digital assets; it’s no wonder kids as young as ten is capitalizing on the digital version of their school art projects.
  4. They want to support their favorite creatives (directly) – This is probably one of the best outcomes of the NFT marketplace. NFT technology has had a profound impact on the art world. For one, it allows people to sell their art and advertise it on a scale that has never been seen before by the average artist. That should be enough, but NFTs offer artists one other benefit they’ve never had before. The blockchain serves as permanent proof that they made the artwork. The cherry on top is that any art piece sold pays a percentage of the selling price to the original artist that minted it.
  5. The sense of belonging in the crypto community – This last reason to buy NFT taps into something so core to humanity that it almost goes without an explanation. But here’s one anyway. When someone buys an NFT, they often buy into an NFT project that comes with an attached community on either Discord or digital space. Either way, most of the time, you’re not only purchasing a digital asset but also access to a global community. This means that you can congregate with a worldwide community of like-minded people. This alone can be invaluable to many of us.

Differences between NFTs and regular JPEGs

Why buy an NFT of a digital cat painting if you can copy and paste it for free? To those people, fair point. That being said, that misses the purpose of the technology and its value. There are 5 main reasons people buy NFT assets, but none of them means anything if we don’t understand what makes NFT value.

That leaves the most critical question still floating in the air. What is the difference between an NFT and a JPEG?

The primary difference is that JPEGs belong to the world once uploaded to the internet. At the same time, NFTs, even if every single person has a copy of it on their pc, will only ever be a single authentic owner. This is key to understanding the appeal of NFTs. This is also what makes it so attractive for art collectors, who find pride in the authenticity and uniqueness of their collectibles. This is the case for Pablo Rodriguez Fraile, an art collector, who bought a 10-second video clip for $67,000. He even managed to flip it afterward and sell it for $6.6 million. Try doing that with a selfie.

Overall, the best way to summarize the difference is to understand that a JPEG will only ever be an image, while an NFT is a digital proof that you own an image. This becomes more exciting when you consider that NFTs are not limited to JPEGs or PNG files and can eventually be made of videos and even physical real estate!

How Many People Are Buying NFTs?

Country No. of NFT Users
Thailand 5.65 million
Brazil 4.99 million
United States 3.81 million
China 2.68 million
Vietnam 2.19 million
India 1.50 million
Canada 1.40 million
Indonesia 1.25 million
Germany 1.23 million
South Africa 1.23 million

Table 1: top 10 countries with the most NFT buyers

It is no secret that NFTs have taken the entire world by storm. From Indonesia to Canada, no country can escape this digital phenomenon. The list above is a snapshot of the nation’s most invested in the NFT space, with the number of users each boasts as of September 2022. There are obvious reasons why certain countries are investing in cryptocurrencies. It provides a certain level of protection from local inflation. Still, it helps other countries engage in international tech without relying on their national technological industry. All in all, Cryptocurrency and NFT technology offers people a level of financial and technical freedom that was unprecedented only ten years ago. It’s no wonder that millions of people are adopting technology.

The Most Expensive NFTs Purchases in History

Image 2: This is a JPEG of an NFT, but it is still NOT an NFT

The image above is the infamous “Everydays: The First 5000 Days” by Beeple, aka Mike Winkelmann. This is currently the second most expensive NFT ever sold. It held the first position until Pak, a pseudonymous artist, sold their “The Merge” NFT for a mind-blowing $91,3 million! Either way, Beeple’s “Everyday” collection of his first 5000 daily readers will always be immortalized for breaking the globe’s perception of the value of the NFT market. It also became the first and most expensive piece of NFT, and digital art, ever sold from a physical art house auction to a single buyer.

A Token of Appreciation

The NFT space and its supporting technology are relatively new compared to many others, so it makes sense that some people are still skeptical about it. The idea that all NFTs are ridiculous is quite ignorant, and really, it depends on why the person is investing in NFTs; to begin with, that will determine if it’s worthwhile or not. The truth is that the space is quite volatile and vulnerable to further innovation. This means that, as they will, there are very few experts in the NFT space and fewer, if any, that can predict how the market will look in the next few years or even the next few months.

Regarding secure investments, an NFT backed by the Ethereum blockchain is far better than the business idea proposed by your cousin Donny last week. The opportunity to have actual ownership over an asset will protect you in ways that other asset classes simply can’t. If investing is not your end goal, nobody will be able to take away the fact that you can now own a legendary moment in the NBA, which comes with a lifetime’s worth of bragging rights! That being said, before you invest any of your money into the NFT or any other market, it is always best to do your research.

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