Like many things in this world, the value of an NFT is in the eye of the beholder.
This doesn’t mean that NFTs can’t fetch a hefty price. For example, in addition to “The Merge’s” $US91.8 million price tag, Beeple’s “Everydays: The First 5000 Days” sold at auction for $US69.5 million.
“The value extends from the authentication and the uniqueness,” Ozair says.
But not all NFTs come with a hefty price tag. Some are valued at less than a dollar. According to data from CryptoSlam, the average price among the $647 million in NFT sales in July 2022 was $US115.15.
In fact, 2022 was the great leveller in the NFT universe, with prices dropping from monumental highs as cryptocurrency values plummeted and some $US9 billion was wiped off the NFT market as result. It is estimated that $US17 billion worth of NFTs changed hands in January of 2022, which dropped to $US400 million by November.
Of course, NFTs don’t have to be art. There are also sports NFTs, which include digital variations on trading cards and highlight reels. For example, a picture of LeBron James taken by Kimani Okearah sold for $US21.6 million. MLB Champions blockchain-based baseball game sold for $US21.3 million, while a signed card of World Boxing Council (WBC) middleweight champion, Jermall Charlo, went for $US19.1 million.
Virtual land, which is space in the metaverse, can also be sold as an NFT. But after many multimillion-dollar purchases in 2021 and throughout 2022, the value of virtual land has reportedly declined by more than 66%.
In the metaverse, however, NFTs can also include accessories for users’ virtual avatars like images and clothing, says Jerry Eitel, partner emeritus and chief metaverse officer at global accounting firm Prager Metis.
As the world becomes increasingly digitised, NFTs could even represent a deed to physical property, a user’s medical records, proof of ownership or proof of attendance. These things may not be as easily transferable from one owner to another, but they could each occupy their own unique space on a blockchain.
Of course, buying an NFT isn’t like buying a stock or putting cash into a high-interest savings account.
As 2022 has shown us: there isn’t a guarantee that the price of an NFT will go up. That means investors need to take time to understand what they’re buying when they buy an NFT and to consider what they believe the value of that NFT will be.
The advice and information provided by ForbesAdvisor is general in nature and is not intended to replace independent financial advice. ForbesAdvisor encourages readers to seek expert advice in relation to their own financial decisions and investments.
Crypto assets are unregulated & highly speculative. No consumer protection. Capital at risk.