The NFT market has grown considerably in recent years and NFTs are increasing in popularity amongst a variety of industries, such as gaming, art, and finance. The increasing acceptance of blockchain technology and the growth of the crypto market are also contributing to the growth of the NFT market. Before buying your first NFT, it is important to understand what factors contribute to the quality or value of an NFT.
In the next section, we will dive into what it means to buy an NFT, and what are some of the key factors to consider when deciding which NFT to purchase.
What does it mean to buy and own an NFT?
When buying an NFT, you are not buying an image but the ownership of a token on the blockchain. This token is stored on the blockchain, which is a secure immutable digital ledger, which is used to track and verify the ownership of said NFT. The token itself digitally represents a unique asset, such as a piece of art, music, or a tweet. “But can’t someone just screenshot my NFT?” If they do that, they may have a copy of the image of your NFT, but they do not truly own the NFT itself, do not have the ability to sell your NFT, and will be unable to access the utilities that come along with it.
This leads us into our next segment about the key factors that contribute to the quality or value of an NFT:
1. Utility
Utility refers to functions or benefits that come along with your ownership of an NFT. This may take on various forms and can look like access to your favourite band’s VIP section at their next concert, discounts and early access to exclusive drops at your favourite sneaker store or entry to your favourite brands’ exclusive events! Overall, NFT projects can offer a wide range of utility beyond the ownership of the NFT itself, providing additional value to users and creating new opportunities for creators and collectors alike.
2. Metadata
Metadata refers to the information that describes the unique characteristics of the NFT. This information can include details about the artwork, such as the title, artist name, and date of creation, as well as technical information like the file format, resolution, and hash value of the file. This metadata is typically stored in a transparent and immutable way, which means that it cannot be altered once it is added, and exists on the blockchain along with the NFT itself. The metadata can be important in determining the value of an NFT, as it provides context and details about the underlying artwork or digital asset being sold as an NFT. For example, you might learn from the metadata that an NFT was created by a well-known artist, or that it is a one-of-a-kind piece.
3. Visual Quality
In the context of NFTs, there are several factors that affect the visual quality of an NFT. These factors include the resolution (how detailed the image is), compression (how much data is removed to reduce the file size), color accuracy (how closely the colors match the original artwork), and file format (which affects the quality and preservation of the image). Overall, the visual quality of an NFT can have a significant impact on its value and desirability. Collectors and investors are typically interested in NFTs that have high-quality visuals and accurately represent the original artwork or source material.
4. Rarity & Traits
Not all NFTs are made equal. Rarity refers to the uniqueness of an NFT. This can be determined by a number of factors, such as the artist who created it, the rarity of the underlying asset, or the scarcity of the specific NFT within a series (usually determined by its traits).
Traits refer to unique characteristics or features that distinguish one NFT from another. These traits can be visual (like color, pattern, or design) or abstract (like backstory or rarity). NFT projects may use algorithms to generate unique traits for each NFT, or they may have predefined sets of traits that are distributed randomly among NFTs. The rarest or most unique NFTs within a series, based on their traits, may command higher prices and be more highly sought-after by collectors. Understanding the rarity of an NFT can help you make more informed decisions when buying or selling, and it’s always a good idea to check the rarity of an NFT before buying or selling it, as this can help you better understand its potential value and marketability.
Now that you have a better understanding of what comprises an NFT, you may be interested in exploring different NFT projects to invest in. However, with so many different factors to consider, it can be difficult to know where to start. We recommend looking through our catalog of verified collections here which have been rated against Authentickator’s comprehensive scorecard system.
Read more about our scorecard here
Want to find out more about the different types of NFTs? Click here!
Written Ryan Soh, Head of Community for Authentickator
About Authentickator
Authentickator seeks to simplify the digital collectibles purchase process by providing a user-friendly platform that allows buyers to easily browse and purchase verified products in the safest and most seamless way.
🌐 Authentickator Official Social Profiles:
Website | Shop NFTs | Twitter | Tiktok | Medium | Youtube | Instagram | Discord
