One of the recent Spaces I attended was a discussion about Non-Fungible Tokens (NFTs) and how we define their value. There were quite a lot of opinions shared but I think at the end of the day, it depends on a person's purpose or aim in acquiring or buying one. There are certain factors to consider when talking about the "value" that the digital asset has.
The value can be both subjective and objective.
Subjective Value
What is valuable to one might not be the same for another. The value or worth of NFTs depends on the emotional attachment that buyers have for a collection. It is influenced by people's preferences, and how they see, perceive, or interpret them.
For example, I read from others that they buy art NFTs because they like unique artworks and they do not even know or care about the monetary value attached to the collectible they get. They just want to own and keep them and do not speculate about the price tags.
Some also mentioned that they buy NFTs because they want to support their friends who create the JPEGs.
Objective Value
The NFT's worth is objective in the sense that no matter the people's perspectives, opinions, or perceptions of the NFT collection, the value remains the same. The value depends on the following factors and more:
NFT's rarity
When an NFT is rare, the floor price would most likely be higher, hence it is more valuable in monetary terms. I think this is one of the reasons why some people jump into NFT collections with the thought of flipping them for profit.
Utility
Some are more drawn to the NFT's use cases or what they can do to benefit from it while holding it. For example, when buying an NFT in the GameFi industry, one may look into how often it can be used in the gameplay etcetera.
Some speakers on the discussion shared that they wouldn't mind buying an NFT if they could use it in real life like getting discounts when they buy stuff related to the NFT that they own. Some of the utilities of NFTs include staking them to earn something in return, it can also be using it as collateral for a loan etcetera.
Provenance
An NFT's ownership history can also add to its value. An NFT previously owned by Vitalik (not sure if he even owns one) for instance, may drive the price tag up.
Social Proof
Some people buy NFTs to flaunt them on their social media profiles. I did that recently when I bought one HivePunks because I intentionally wanted to use it as my profile pic, lol!
Personal Thoughts
I think the value of an NFT is not dependent on a single factor. It's both subjective and objective and the real worth lies in the individual's goal or purpose when they are buying. The reasons may differ from one collection to another too. For example, one might buy into the BYAC collection with the main purpose of making a profit from it. He can also buy one of the Pudgy Penguin items because he finds them unique and he wants to keep them for life or so.
Although I also think speculation has something to do with an NFT's price tag. We see that some NFT collections do not reflect what we think is their real value. One collection that has zero utility might have a higher floor price than another that has a real use case.
So yes, there is not a single way to assess the value of NFTs. But we can do so on a personal level.
For infotainment only.
Lead image created on Canva. 06122023/12:05ph