Million Dollar JPGs are all over Instagram and Twitter. Even traditional media houses run news about ridiculously priced NFTs all the time. But what makes an NFT valuable ? Is it the JPEG artwork?
In this post, we'll dig deeper into why and how NFTs become valuable. We'll also classify NFTs as depending on whether they provide "access" to a community or a "utility".
Notable NFTs like Cryptopunks popped up in 2018. At that time Ethereum traded for 100 USD a pop. An NFT that sold for 20 ETH would cost 2000 USD. But in 2021, the price of Ethereum shot up to 3000 USD. So the same NFT would not cost 60000 USD.
There is always an appreciation in the price of the NFT, but the major value held by OG projects comes from the rise in the price of the underlying token.
The NFTs were not as valuable when they were sold. Getting in early yielded tremendous returns. This is why it is common for flippers to hustle to get whitelist spots so they can get early.
Crypto Kitties and Crypto Punks are two of the most notable old projects in the NFT space. Kitties was a breeding game and the Punks had a story to back them. But this is not the trend anymore. Projects need more than art to be successful. The added benefits come in the form of "utility" or "access".
Holding an NFT like BAYC, gives you access to their private club. This lets you talk and collaborate with other members. The club also spots early opportunities in the NFT market and shares insights with the members.
It's common for new projects to give free whitelist spots to established NFT projects. This allows the holders of these "access" based NFTs to get into other projects early. Getting in early generates more profits for the holders and the cycle continues.
Established influencers and musicians who launch their NFTs are also a form of access based NFTs. Holding such NFTs might provide you access to exclusive events or free upgrades.
Some NFTs are tools. They are valuable on their own and don't need to provide additional "access". Game NFTs are a great example of "utility" based NFTs.
The "utility" focused NFTs might also provide "access", but the actual value is derived from the NFT itself. Such NFTs are less in number because NFT protocol is primitive and doesn't allow for building rich applications. But this is changing slowly. Aurory, 3moji and StepN are good examples of "utility" based NFTs.
Most projects are a mixture of "access" and "utility".
Sometimes a project succeeds without providing any benefits. But this is not sustainable and such occurrences are rare. In most cases, the project is backed by an established brand, so the community hopes that "access" or "utility" will follow soon.
We built 3moji and its underlying protocol so our NFTs can act as a utility. Our inspirations are Bitmoji and Memoji. We build NFT avatars that can grow forever. This is made possible by our NFT upgrade protocol call Meta Blocks.
By Shivek 🍀
By Shivek 🍀
By Sarthak Khurana 🔮