What is the value of NFT? I believe this is the biggest question in the minds of many new users who have just come into contact with NFT.

From a technical perspective, NFT has the scarcity and immutability given to it by blockchain technology. Scarcity means that each NFT is unique, and even the creator himself cannot copy it; immutability guarantees the authenticity and verifiability of the NFT's copyright, allowing people to verify the authenticity of NFTs at any time based on blockchain technology.

In addition, NFT is also a digital certificate of an asset, which can guarantee the holder's ownership of the asset corresponding to the NFT.

To give a simple example, many people think that NFT is actually a small picture. I can make it my own by taking a screenshot or right-clicking to save it. This is actually wrong. For example, if I hold a BAYC, I can print this BAYC on the company's products for advertising, but if you use this BAYC for commercial activities without my authorization, you may face the risk of infringement. This is the value of NFT as a digital certificate.

However, these are not very obvious to ordinary users, which means it is difficult to explain why a "small picture" of NFT can be sold at such a high price despite its uniqueness, transparency and immutability. So we try to explain the value of NFT from another perspective.

consensus

If you are an ordinary person and you carefully create a painting, whether you put it on OpenSea in the form of NFT or on some traditional trading platforms, it is likely that no one will be interested in it; but if it is a work created by Jeff Koons, even if it is just random graffiti, it will be sold at a high price.

This is the problem of consensus. Where does consensus come from? It comes from many factors, such as the reputation of the creator, the community's group MEME, the actual rights and interests (empowerment) behind it, etc., while the beauty and design of the picture itself are not the decisive factors.

Let’s take another typical example, CryptoPunks. They are actually 10,000 randomly generated pixel images. From an artistic point of view, they are just mediocre. It is also very easy to copy or make a series of NFTs of the same type. But why can CryptoPunks reach the so-called "consensus" and sell for millions of dollars each?

The most important reason is that CryptoPunks is a veteran project in the entire NFT development process, representing an important milestone in the development of blockchain technology to NFT. Subsequent NFTs have more or less carried the shadow of Punks. As the NFT trend continues to move forward, new users tend to trace who is the founder of this industry, and eventually they naturally focus on CryptoPunks. With such a unique position, the value of Punks is naturally supported, which can be summarized in two words - consensus.

Herd mentality

There are hundreds of NFT series on the market. As an ordinary user, you may feel that most of them are ordinary, not good-looking, and nothing special during the browsing process. But when someone comes to you with an NFT and tells you that this series of NFTs is very good-looking and worth buying, and then pulls you into the "family group", you find that everyone in the group uses the picture on the NFT as their avatar, and discusses how good this NFT is in all aspects every day. Gradually, you will feel that this kind of thing seems to be really good, and you will become more and more accepting of it. Behind this is actually a kind of herd mentality.

If the price of NFT floor happens to be rising at this time, then your speed of accepting it will increase exponentially. It will no longer matter whether the picture is good or not. At this time, you begin to fear that you will miss some opportunities, and then you will try to buy it as much as possible. This is actually another kind of herd mentality, that is, the fear of missing out, which is what we often call FOMO emotion, because at this moment you have lost your independent value judgment of this thing, and you just feel that if you see others buying it, you have to buy it too.

GoblinTown is a classic example.

If you show such a picture to 100 people, 99 of them will think it is ugly. But when its value gradually rises from FreeMint (free) to 1 ETH, many people begin to change their views on it, and some people even specifically analyze the artistic value behind these pictures. So if you participate in this project throughout, you will probably go through three stages - "What an ugly thing", then you will think "It's ugly but cute and a bit interesting", and finally "This is a work of art". But if you just look at the picture, you are likely to be thinking "Someone actually wants this thing", this is the "change of mind" brought to you by the herd mentality.

Seeking recognition

Humans are social animals, so they need recognition from the outside world. This is not uncommon in the traditional collecting world. When a piece of art is sold at a high price, does it mean that the buyer knows or recognizes the art and the artist behind it? In fact, this is often not the case.

When a buyer buys a work of art, he or she often does not truly agree with the emotions or values ​​conveyed by the work of art. Instead, he or she hopes to express to others that he or she has certain aesthetic standards and has reached a certain consumer class, thereby demonstrating his or her social status and gaining recognition from the outside world. The same mentality applies to luxury cars, famous watches, and luxury bags.

If we use this mentality to reversely infer the NFT industry, we can find that with the rapid development of the crypto industry, many new users who have joined this industry will hope to demonstrate that they have become a part of this circle and show their identity as a "trendsetter" at the forefront of technology by purchasing an NFT that is highly recognized by the crypto circle. For users who buy NFTs with this mentality, whether it is CryptoPunks or BAYC, it doesn’t matter what they look like. What matters is that everyone knows that they are expensive and valuable. Holding them is equivalent to having an admission ticket to the "advanced circle", which is enough.

In general, NFT is very similar to traditional artworks in terms of the expression of value, that is, it is highly subjective. Some people will spend a lot of money on a favorite. However, if you look at it from the investment perspective of ordinary users, in addition to subjective likes and dislikes, it is more important to observe whether the project has unique features, whether it has widespread attention, and whether a healthy community has been established. Only with the above conditions can there be a chance to form a consensus, and only with a consensus can the project have the vitality for long-term development.