Why are NFTs so expensive?

05 January 2022

Since non-fungible tokens (NFTs) are scarce, their prices are normally high.

NFTs are one-of-a-kind assets, which means each token is unique, rare, and scarce. Creators don’t mass produce NFTs as people do with cash and fungible tokens.  

This means that if an individual mints an NFT, they can’t create an exact replica of it.  

As a result, if many buyers demand that NFT, its price will rise accordingly, depending on the number of buyers willing to purchase it.

The NFTs which companies use for branding purposes usually command high prices.

The reason is that such NFTs are useful in brand storytelling and interaction with consumers, resulting in high demand.

They are also important in creating unique brand experience and product awareness.

Since many investors are willing to invest in NFT connected with popular brands, their prices normally increase steadily over a period of time. Some popular brands using NFTs for branding purposes are Gucci, RTFKT, Adidas and Louis Vutton.

In addition, some of the NFTs have utility as they enable the functioning of some protocols such as gaming platforms.

Yet, other NFTs have unique functions like generating revenue and are exchanged for other assets, either physical or digital which is why they become expensive.  

In some cases, when people buy NFTs they are obtaining rights to certain content which they can exclusively own.

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