Non-fungible tokens (NFTs) have gained significant attention since the 2021 bull market. As unique digital assets, they are unlike any other forms of cryptocurrency or digital items. But why do people buy NFTs?
In this guide, we will explore why they buy NFTs and the main reasons behind this trend, discuss whether people are still buying NFTs, and provide answers to common questions.
Key Takeaways:
- NFTs, or Non-Fungible Tokens, are one-of-a-kind digital items stored on the blockchain, that prove ownership for items like digital art, music, and collectibles, unlike regular cryptocurrencies that can be exchanged equally.
- People buy NFTs for ownership, supporting creators, scarcity, investment potential, use in gaming, access to exclusive content, community belonging, meme culture, and experimentation with new technology.
- NFTs can be purchased on various platforms such as OpenSea, Blur, Magic Eden, Super Rare, and Rarible, which serve as online marketplaces for buying, selling, and trading digital assets.
Why Do People Buy NFTs: Top 7 Reasons
1. Ownership and Collectibility
Ownership is one of the most important motivators for purchasing NFTs. People appreciate the sense of having unique and authentic items in the digital world. NFTs provide a digital certificate of authenticity that proves the buyer has the original material. This approach is comparable to collecting tangible art, rare items, or sports cards.
High-profile NFTs, such as Beeple’s “The First 5000 Days”, have sold for over $69 million, demonstrating the importance of exclusive ownership of digital assets. Also, the NBA Top Shot NFT collection, which allows users to purchase, sell, and trade legally licensed NBA memorabilia, has surpassed $1 billion in sales.
2. Supporting Creators and Artists
NFTs also allow artists to monetize their work directly. Unlike traditional models where intermediaries such as galleries or record labels take a significant cut, NFTs enable creators to sell their work with built-in royalties. This ensures they continue earning from secondary sales.
Emerging artists benefit significantly from this model, as it allows them to retain control of their work. For example, artists can receive between 5-10% in royalties every time their NFT changes hands.
3. Investment and Speculation
Many buyers view NFTs as an investment opportunity. NFTs have been known to appreciate in value, especially those tied to well-known creators or projects. Speculators purchase NFTs with the hope of selling them later at a profit.
For instance, Bored Ape Yacht Club NFTs originally sold for around $160 but later reached values upwards of $413,000, representing a massive return on investment (ROI).
4. Virtual Worlds and Gaming
NFTs have taken the gaming industry by storm. In-game assets, characters, and even virtual land can now be represented as NFTs, allowing gamers to buy, sell, and trade assets across different platforms. This introduces real-world value into virtual worlds. Gamers can now own rare items that they can sell for profit or use to enhance their gaming experience.
The use of NFTs in games like Axie Infinity, where players earn tokens by battling digital pets, has created new income streams for many players worldwide.
5. Access to Exclusive Experiences
Owning an NFT can unlock exclusive access or privileges, making it more than just a digital asset. Many NFTs offer additional perks, such as access to special events, VIP treatment, or early product releases.
For example, Kings of Leon released an NFT that provided holders with unique audiovisual experiences and even front-row seats at future concerts.
6. Philanthropy and Social Causes
NFTs have also been used as a vehicle for supporting charitable causes. Many creators and organizations have minted NFTs specifically to raise funds for various philanthropic efforts.
In 2022, UNICEF launched a collection of NFTs to fund initiatives for schools in developing countries, showing how NFTs can go beyond financial speculation and serve as tools for social good.
7. Community and Belonging
In the NFT market, many projects build strong communities where buyers feel a sense of belonging. These communities often hold events or meetups, such as Bored Ape Yacht Club’s “ApeFest”, which attracts hundreds of attendees. The community aspect makes NFT ownership feel more like being part of an exclusive club.
Are People Still Buying NFTs?
Yes, despite some fluctuations in the market, people are still purchasing and trading NFTs. However, the overall demand has become more selective. The initial craze has cooled down, and buyers now focus more on quality and long-term value. Interest remains strong in niche areas such as digital artwork, gaming, and virtual real estate.
Based on our 2024 NFT research report, 96% of NFTs have become inactive. On average, an NFT lasts for 1.14 years, which is 2.5 times shorter than the lifespan of typical cryptocurrency projects. The year 2023 recorded the most NFT failures, with almost one-third of them becoming inactive during that time.
However, as technology evolves, the use cases for NFTs continue to expand, which helps maintain a level of interest in the market. While it may not be as explosive as it once was, NFTs are still relevant. You can also check out our guide on the best NFTs to buy.
Conclusion
To sum up, people buy NFTs for different reasons, including the chance to invest and a personal interest in digital collectibles. Although the initial excitement around NFTs has decreased, many still find value in owning these special items.
NFTs provide a mix of digital ownership, exclusivity, and new ideas, which attract various buyers. Whether for making money, gaining social status, or joining digital communities, the hype surrounding NFTs is likely to continue in some way.
FAQs
Why would a rich person buy NFTs?
Wealthy individuals often buy NFT projects for several reasons. They may view NFTs as a new investment opportunity, hoping for future appreciation. Some may also purchase NFTs as a way to support artists or showcase their digital collection, similar to owning rare physical art. For others, NFTs serve as a status symbol in the digital world.
What are people using NFTs for?
People use NFTs for various purposes. Some buy them to collect unique digital art or virtual items, while others use NFTs in gaming or virtual spaces. Additionally, NFTs can provide access to exclusive events, communities, or content, making them valuable for more than just ownership. Buyers also view NFTs as investment opportunities, hoping their value will increase over time.
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