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Attaching value to art has always been nebulous, and assigning monetary significance to digital pieces of art that exist somewhere in the ether is no different. While there is no rule book for judging the price of an NFT, there are certain factors that bring all artwork intrinsic value.
NFT art has value in its uniqueness
Just like paintings or sculptures, demand for an NFT is proportional to its scarcity. Exclusivity alone brings each piece of NFT artwork inherent value, and each one — whether stand-alone or part of a greater collection — is unique by nature. Its value is subjective and based on many individual characteristics. Just as one sculpture cannot be swapped for another, NFT artwork is impossible to trade at face value. That one-of-a-kindness brings an NFT value in the same way it brings worth to an original oil painting.
NFT artwork has value based on ownership
An NFT is a digital token with code embedded to prove ownership. While digital files can be downloaded or copied, NFTs are identifiable as originals. An NFT turns a digital photograph, piece of music, or video clip into an indisposable collector's item.
Some argue that the notion of shelling out real money for digital items seems ridiculous. After all, can't a digital image be captured with one click of a mouse? Absolutely, but while anyone can download a copy of an NFT from the internet, they could also buy a poster of Monet's “Water Lilies” from a museum gift shop. While copies of artwork are beautiful to look at, they are virtually worthless.
The value of any artwork lies in ownership and originality. Like a painting's certificate of authenticity, NFTs contain digital verification of ownership. Anyone can capture a screenshot of “Everydays: The First 5000 Days,” but only one person can own Beeple's digital collage, which sold for over $69 million in 2021. A quick Google of “Mona Lisa” will conjure thousands of online images, but only the original painting hanging in the Louvre is priceless.
The value of NFT artwork transcends aesthetics
The value of NFT art does not correlate to the amount of time or talent that went into its creation. Many digital pieces are visually stunning and invoke strong emotions, while others might be perceived as little more than scribbled sketches. Artistic quality and aesthetic beauty are not reliable factors in assessing price.
Some collectors purchase artwork based solely on its visual appeal. Perhaps they want to hang a particular work on their wall and enjoy it every time they enter the room, but what appeals to one person does not appeal to another. Beauty, it seems, is indeed in the eye of the beholder.
Still, some collectors may value art for the idea behind the work, the style it represents, or the story of the artist. This aspect of NFTs mirrors real-world art appreciation. For example, while Andy Warhol's painting of a Campbell Soup can doesn't fit most of our decorating schemes, it nevertheless sold for $11.7 million at a recent auction.
NFT art has value in social capital and community
As artwork, NFTs are like a VIP membership to a club. They represent a limited commodity. If the collection increases in value, owners of those pieces have proof that they are "in the know."
Looking back, CryptoPunks was the first-ever digital artwork to emerge on the blockchain in 2017. These 10,000 algorithmically generated portraits feature pixelated portraits with random hairstyles, hats, glasses, and pipes, with a few added zombies and aliens. The collection started with a cult following, but according to CryptoSlam, it has generated close to $2 billion collectively. Now, owning a Cryptopunk NFT boasts quite the status symbol. These token holders have tangible proof they were in the right place at the right time and had enough sense to act on it. That status in itself is worth something, as holding a token in a rare NFT collection builds an instant connection to its community.
Moreover, NFTs track their ownership on the blockchain. Whenever a token changes hands, it generates a digital record for anyone to see. This historical path of ownership becomes a kind of pedigree that further enhances the work's status.
While NFTs are a relatively new innovation, the human need for affirmation, status, and belonging is as old as time. Just like a rare painting, an NFT links monetary motivation to people's drive to collect, boost social capital, and assert authority.
NFT art offers value in creativity
The nature of the technology behind NFTs makes them incredible vehicles for artists, and new forms of artwork are constantly emerging. Artists are breaking barriers by blending technology with photography, drawing, music, videography, writing, and storytelling.
Recently, NonFungible.com tracked over 45,000 people creating online wallets to purchase NFTs for the first time between September 2020 and June 2021, highlighting a significant boom between March and April of 2021. Clearly, digital tokens represent a growing trend in the art world.
Like any piece of art, an NFT is worth what someone will pay for it. Experts have a difficult time pinning down exact numbers, but the amount appears to be on the rise.
Amit Aburman is co-founder of EyeSeeYou Project
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.