The reason why so many people are confused is that they don’t understand how to use NFTs correctly. So, let’s sit back and break down the basics of why this gap in price exists?
Firstly, we need to understand what NFTs are:
Simply put, it is a unique, irreplaceable form of asset. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different.
So, why are some NFTs are valuable and others aren’t?
To answer this question, we have to dig down on how NFTs work.
NFTs are basically tokens with uniqueness baked in, or to be exact NFTs are designed to be scarce and difficult to produce. Unique is not enough to make an NFT valuable, it has to be rare.
By bearing that feature, NFTs can be used to represent real-world items like artwork and real estate in type of digital asset. Whether the original file is a JPG, MP3, GIF, or anything else, the NFT that identifies its ownership can be bought and sold just like any other type of art. By “Tokeninzing” these real-world tangible assets allow every exchange more efficiently while reducing the probability of fraud.
And, like with physical art, the price is largely set by market demand. NFTs are worth whatever someone is willing to pay for them.
NFTs’ price is quantified by the rarity and uniqueness of the digital assets linked to them. When you buy an NFT, you’re not really buying the token itself. Instead, you’re buying a right to use the asset. The more scarcity of the digital asset, the more NFT worth.