NFTs Can Gain Value Through Various Ways Besides Scarcity

The NFT market consists of millions of digital assets being deemed as collectibles. What makes them valuable?

Ade Hennis - Author
By

Oct. 18 2021, Published 2:38 p.m. ET

NFT collection
Source: Getty Images

NFTs are still a new concept to many people, and it’s reasonable to see why people question what the hype is all about. NFTs are very similar to antiques and other rare physical goods because they can gain value from various factors. One of the most common questions surrounding these digital assets is how do NFTs gain value?

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Marketplaces like StockX and GOAT have allowed sneakers and similar physical goods to have tremendous resale value. NFT marketplaces are similar except that NFTs can offer much more than just being a collectible. These digital collectibles could be capable of being used in video games, competitions, and more.

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Source: Getty Images
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What determines the value of NFTs?

Rarity

The supply of a certain digital asset can be the leading factor that determines its value. If it’s limited in supply, it can be considered a valuable asset. Of course, other factors will have to contribute as well like who's releasing the NFTs. If it’s a public figure, a widely recognized company, or a brand that people deem to have potential, the limited supply will be more attractive to NFT collectors.

Professional golf player Bryson DeChambeau has a limited edition NFT collection that was released on OpenSea in March. The collection consists of only four cards, with three of those cards having 18 editions. A total of 57 collectibles were released, which can be extremely rare if DeChambeau doesn’t release any future editions and his star career in professional golf continues.

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NFTs are very similar to limited edition sports cards and other collectibles. With millions of NFTs being offered on different marketplaces, having a collection of digital assets that are tied to something appealing helps give the NFTs their rarity.

Capability

Another significant factor in digital collectibles having value is its capability because many NFTs can be used in other ways besides as art. NFT sellers might have a special feature or included bonuses that come with purchasing an NFT. Some sellers might have an NFT release. Buyers can become a member of a certain group, win physical goods, and more. Sorare is one platform that has combined NFTs with fantasy sports.

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Sorare is a fantasy soccer game that allows users to purchase, sell, and own NFTs of players that are licensed from professional soccer teams across the world. There are weekly challenges in which users can set a lineup of their NFT collections and win rewards for scoring the highest points that week depending on what the players do in real life. There are many other platforms like Sorare that allow NFTs to be put to good use.

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Do NFTs appreciate in value?

NFTs have the potential to appreciate in value mainly based on speculation and scarcity. So, if an NFT holder were to resell the asset, the resale value could be significantly higher than its original price depending on where consumers speculate the value of it to be. The famous CryptoPunks collection originally started off costing between $1 and $34 in 2017. Since then, the series has become rarer and has gained popularity. Now, they’re being sold for thousands and millions of dollars.

How do you make money with NFTs?

Along with selling and reselling NFTs, there are also ways to earn interest in NFTs. Charged Particles is one platform where users can attach a stablecoin to an NFT. The “charged” NFT, or particle, can then gain interest depending on how much crypto you deposited to go towards the NFT. The company says that users can withdraw the interest gained on the NFT at any time. For now, selling or reselling NFTs is the most common way to profit from them.

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