Thread: Why Are People Paying Millions of Dollars for NFTs?

Non-fungible tokens, or NFTs, witnessed massive growth in value over the past six months. Year-to-date, the market capitalization of major NFT projects has skyrocketed to over $14.5 billion, representing a 60,000% rise in a little more than six months.

Non-fungible tokens are digital assets built on a blockchain to show ownership of a unique virtual item such as art, music, pictures, videos, or even collectible cards (remember Pokémon cards?).

In the first quarter of the year, NFTs saw the biggest boost in value ever as top digital artists, celebrities, athletes, and corporations launched their digital assets.

Top digital artist, Beeple, whose real name is Mike Winkelmann, sold a piece of digital artwork for nearly $70 million in March, causing a rumble in the NFT space. Less than two weeks later, Twitter founder and CEO, Jack Dorsey, completed the sale of an NFT of his first-ever tweet for $2.9 million. According to Nonfungible.com, a data tracker in the NFT space, a total of $2 billion in NFT sales were completed in Q1 2021 – showing the explosive demand for NFTs.

Principally, NFTs are coded with unique data that makes it easily verifiable and transferable between owners. In simple terms, NFTs give collectors exclusive ownership rights to a piece of digital file. Yes, every NFT can only have one owner, similar to collectible cards or oil paintings.

Furthermore, NFTs allow the creator (or artist) to store information such as signatures, price, and unique features. Herein lies the importance of NFTs by providing the ability to secure value, and buy, sell & exchange digital pieces using a digital ledger.

Why are NFTs so valuable?

Despite NFTs being digital, they cannot be replicated or copied. This is what it means by NFTs being unique. Taking a screenshot of an NFT or recording the music, does not give you the rights to the NFT piece, meaning you cannot redistribute or resell the NFT. As such, most NFT marketplaces are rushing to create DMCA processes for removing unauthorized NFTs from their platforms.

One NFT platform, Aloha DeFi, is leading the field to ensure creators reap the maximum benefits from their original projects. Providing a gateway to the NFT world, Aloha DeFi recently launched a user-friendly marketplace, token staking, and a DAO governance platform to utilize NFTs to the fullest. The platform offers near-instant transactions, transfers, and negligible transaction fees.

Notwithstanding, the London-based NFT platform allows users to sell their unused mobile data through peer-to-peer network sharing, use their NFTs in decentralized governance systems on Aloha DAO, and stake their NFTs to get exclusive opportunities in the Aloha ecosystem such as early participation in future events e.g. token sales.

Staking NFTs on Aloha DeFi also offers an opportunity to own rare NFT collectibles – available by the season. The platform includes both native and partnership NFTs in its staking program to boost users’ rewards. The current native season (4) includes rare, ultra-rare, and exclusive VIP ‘Zombie Apocalypse’ NFT collectibles.

The million-dollar question

NFT marketplaces like Aloha DeFi are on the rise, showing that the NFT ecosystem is here to stay and will rise further in volumes, value, and projects in the future. While the true potential of NFTs is yet to be fully uncovered, current demand from younger generations hints that these digital assets will revolutionize global trade.

The impact of NFTs in the first half of 2021 is undeniable hence the billions being poured into the ecosystem. However, it’s expected that certain valuations of NFTs will need to see a correction in prices to prevent a bubble in the space. Apart from art, music, sports cards, NFTs’ digital value and uniqueness can be translated to other industries and governments dealing with unique personal identities.

For more such informative and insightful articles, you can have a look at AtoZ Markets.