With the rise of blockchain technology, cryptocurrencies and their offshoots have spawned many variations. What was once dominated by Bitcoin has now expanded to include others.
Chief among these other cryptocurrencies is Ethereum. Ethereum is a prevalent blockchain and cryptocurrency, housing several other crypto-related items on its system- including many NFTs.
Why Do People Buy NFTs?
1. Sense Of Community
A major part of the reason that people would purchase an NFT is to become part of a community.
One of the largest NFT collections in the crypto world is the Bored Ape Yacht Club, typically shortened to ‘BAYC’ or even simply ‘Bored Ape.’
Much like a real yacht club, the Bored Ape Yacht Club overs a sense of community, with membership only attainable through ownership of a Bored Ape NFT.
More significant NFT collections, once again primarily represented by the Board Ape Yacht Club, will often even feature live events for their members.
Bored Ape Yacht Club even launched ApeFest, a three-day music festival in June of 2022 for Bored Ape holders to network and enjoy live music.
Performers at ApeFest included big-name acts LCD Soundsystem, The Roots, Snoop Dogg, and Eminem.
With cryptocurrencies and NFTs skyrocketing in popularity during the COVID crisis, it can be easy to understand why so many people would be attracted to this sense of community.
After all, it can be hard to maintain a community while locked in quarantine or self-isolation! Therefore, NFT collections provide an easy way to interact with people in a friendly manner.
2. Franchise Memorabilia
Major media companies have produced many NFT collections to tie into their existing media franchises.
For example, Sony and AMC teamed up to release an NFT collection for the premiere of the film ‘Spider-Man: No Way Home’ in 2021.
With major companies making NFT collections for some of the best-selling franchises in history, many collectors will want to get a piece of them.
3. To Make A Profit
Ultimately, NFTs are an offshoot of cryptocurrency. While cryptocurrencies were initially designed as a safe and private way to conduct transactions, they have evolved.
Modern cryptocurrencies are more investments than transactional tools, with investors more involved in making a profit than securely buying an item.
NFTs, in particular, are purchased with the belief that they will increase in value over time to be sold at a profit.
Think about the Beanie Baby craze of the 1990s- NFTs are remarkably similar as a trend!
4. Securing Digital Ownership
One reason that so many people purchase various items as NFTs is that blockchain technologies allow a token’s ownership to be evident and inarguable.
The only issue with this ownership claim is that the owner only owns the registration of the item tokenized and, unless otherwise guaranteed, does not own the rights to the item itself.
Certain NFT collections, such as the aforementioned Bored Ape Yacht Club, offer ownership rights for your NFT when it is purchased.
The NFT collections that offer full rights ownership tend to be the most popular. This popularity is likely because they follow the ideologies that drew people to NFTs in the first place.
5. Accessing Exclusive Perks
Many NFTs offer exclusive perks only available to owners- for example, ApeFest was open exclusively to Bored Ape holders and their guests.
Other NFT collections exist solely to prove membership to certain exclusive clubs, such as nightclubs or NFT-funded coffee shops.
6. Collectibles Of Limited Quantity
Quite possibly, the biggest reason NFTs are so popular is because of their collectibility! Most NFTs are part of limited collections, and often, each NFT is unique.
An NFT’s uniqueness transforms it into something of a collectible, which is often inherently more valuable.
7. Influencer And Celebrity Interest
As with any other trend in recent history, much of the NFT trend is propelled by interest from celebrities.
Big names such as Jimmy Fallon and NFT have entered the NFT market, specifically dealing with Bored Apes, while others such as Snoop Dogg and Shawn Mendes have dropped their own.
However, many of these celebrity endorsements are not necessarily benevolent.
An increasing amount of evidence implies that certain celebrities, such as Justin Bieber, are being paid large amounts in cryptocurrencies to “purchase” and promote NFTs.
Certain management agencies and record labels are known to pressure or force their clients into producing NFT collections, manufacturing celebrity interest in the market.
Either way, while much of this influencer and celebrity interest is likely manufactured by the NFT collections themselves, star power is always an effective marketing technique!
With all of the celebrity promotion, it’s no wonder that so many consumers may buy NFTs.
8. Advantages In Gaming
One market that has not quite boomed, but many NFT fanatics are saying will, is NFT gaming.
This term does not refer to games releasing NFT collections, which has happened several times already, but the integration of NFTs into video games.
Proponents of NFT-based gaming argue that the inherent provable ownership of an NFT allows a user to permanently own a video game.
However, many detractors would argue that you already own a video game by simply purchasing it, especially in terms of physical copies.
Another use envisioned by NFT gaming proponents is that of in-game items being tied to NFTs, allowing you quasi-permanent ownership of the item.
Advocates have argued that tying in-game items to NFTs can allow any item, such as a weapon skin, to be used in multiple games.
However, detractors once again argue that this is impractical, with many games running on different engines and such use requiring the cooperation of many large gaming companies.
While it has not picked up yet and may not ever pick up, many NFT enthusiasts look forward to a future with NFT gaming. It is a reason they enthusiastically push for widespread NFTs.
9. An Extension Of Cryptocurrencies
As mentioned prior, NFTs are ultimately an evolution of cryptocurrency’s underlying concept.
As such, people who are into crypto are likely to purchase NFTs for the same reason they would purchase cryptocurrencies.
10. Non-Replicable Tokens
One of the biggest reasons people are interested in NFTs is that they are non-replicable!
While whatever is tied to the token, typically images, are often easily replicable, the token itself cannot be replicated and serves as a mark of ownership
11. For Money Laundering
Nobody likes to jump to a negative conclusion, but unfortunately, it’s a genuine reason!
In February 2022, the US Department of the Treasury published a study suggesting that NFTs were susceptible to the same money-laundering risks as traditional art sales.
The Department of the Treasury’s study even suggests that much of this laundered money could be used to fund domestic or overseas terrorist activities!
The decentralized, untraceable, and currently widely unregulated nature of cryptocurrencies, including NFTs, provides a perfect way to launder ill-gained goods.
Experts estimate that, in certain NFT collections, just under one million dollars in sales per quarter may be involved in scams or money laundering.
As a whole, this is only a small part of the crypto market. However, for individual NFT collections, this can make up a large portion of their quarterly revenue!
In recent times, cryptocurrency as a whole has developed something of a bad reputation- especially NFTs. No matter what your opinion is, however, you can see why some people buy in!
Like any other investment opportunity, and especially like its related technology, cryptocurrency, NFTs are a high-risk investment. However, it’s easy to see why some people take the rest.