Non-Fungible Tokens (NFTs) are digital data that are encrypted and kept on the blockchain. They are tokenized versions of digital objects like photos, videos, works of art, graphics etc. What is tokenization, then? The idea is complicated, but in essence, it refers to converting a physical object into a digital token that can be transferred between computers and recorded on a blockchain, like Ethereum or Solana, for instance.
Before diving in and showing why people are buying NFTs and how to buy an NFT on OpenSea, you might want to check an explanatory article on what NFTs (Non-Fungible Tokens) are.
Why Are People Buying NFTs?
People buy NFTs for a variety of reasons. They desire to invest in a brand-new, speculative, and extremely volatile asset, which is the most fundamental reason among them. In 2021, the NFT market boomed, and several collections, like the Bored Ape Yacht Club and the Crypto Punks, saw their values soar.
But other investors opt to buy NFTs as a sort of digital art instead of gambling on their potential value. Many individuals desire to acquire rare, verifiably authentic digital art as the world advances more and more toward a digital future in which most of our interactions and time are spent online and as the idea of a metaverse continues to gain momentum.
Another option is to purchase an NFT as a present for someone you know would value it, and so on. Although there are several reasons, it cannot be denied that the market has grown significantly. I’ll highlight some key reasons below why people are buying NFTs:
1. To protect digital rights and ownership
A safe technique to confirm digital ownership is using NFTs. Since each individual NFT is monitored and validated on a decentralised blockchain, forging or stealing is very impossible. They are therefore perfect for protecting digital rights, particularly for protecting physical assets like real estate, precious metals, physical artworks etc.
The most significant factor cited as the primary driver of NFT purchases is scarcity. It is regarded as the main cause of the rising acceptance of NFTs. In reality, a few creators have included this characteristic in their NFT works. For instance, each of the 10,000 individual pieces that make up the CryptoPunks and Bored Apes initiatives. Each piece’s unique quality adds to its scarcity, which raises its worth.
3. To Make Money
Because of their distinctive qualities, NFTs are frequently viewed as an investment potential. Each NFT is worth more than any of the cryptocurrencies used to purchase it since they cannot be split. Since their value is greatly influenced by demand and how much someone is prepared to pay for them, this makes them an appealing investment for those trying to earn a profit.
4. To get special benefits
The primary advantage of NFTs is that they grant their holders exclusive ownership. Users will be able to possess unique access to specific benefits, such as membership in exclusive online forums and early access to new NFT collections, by becoming the owners of digital assets that are not accessible to anyone else.
5. To preserve value
Due to their capacity to maintain value, NFTs may be thought of as a digital store of capital. Certain NFTs provide an investment alternative that is secure and stable since they are not prone to inflation like conventional currencies. This isn’t always the case, though; according to some analysts, the value of the majority of the existing NFT offers might decline by up to 90% in the years to come.
Although some people think those who purchase NFTs are silly, it really depends on why they do so. Some individuals invest in them because they think they will retain value over time and provide a secure investment alternative. Others make investments in NFTs to gain access to premium benefits as well as digital ownership of physical items.
Over the past two years, there has been a constant influx of new audiences into the NFT sector, which is expanding and changing. According to some analysts, NFTs will eventually develop into a more valuable asset class and open up new ownership options. To determine whether they are a good fit for you before spending any money, conduct your own research, as you should with any investment.