3 stages of NFT value (+10 detailed examples)
“NFTs are just marketing’s latest idiot magnet”
This is the title of a popular article published on MarketingWeek, and it’s an interesting insight into the global perception of NFTs right now.
And while there is great reason to be skeptical about buying jpegs for millions of dollars, the truth is that this doesn’t properly showcase why NFTs are so valuable.
The REAL value of NFTs is about other crucial aspects such as access, royalties, utilities, digital ownership, smart contracts, and so much more.
These are the real reasons NFTs have so much potential – and they are largely underreported on. Even the writer of the MarketingWeek article failed to mention any of these aspects – even once!
So, now that we are here, let’s set the record straight. In this article, I’ll show you exactly why NFTs are valuable – and I’ll break it down into 3 distinct stages.
Each stage will build upon the last, so you can see exactly how NFTs are in fact revolutionizing the way we look at ownership and community – not only in the digital world, but the physical world as well.
Stage 1 of NFT Value – Status & ownership
Stage 1 is what 99% of people think NFTs actually are – some sort of digital art that rich people buy.
And truth be told, they aren’t completely wrong!
Most NFTs that have been bought or sold are some form of digital art that offer no real utility or function – many of which are art or something culturally significant.
Here are some examples…
Example #1 – Beeple
On March 11th 2021, digital-artist Beeple sold his NFT ‘Everydays: The First 5000 Days’ for a jaw-dropping 69 million USD.
This was an unprecedented amount of money for a work of digital art, and it helped catapult NFTs into the mainstream across the world.
Example #2 – Crypto Punks
Launched in 2017, Crypto Punks is one of the OGs of the NFT world. There are 10,000 pieces in the collection – each of which is a computer-generated, 24 x 24 pixel, profile picture.
They were originally offered at prices ranging from $1 to $34 USD.
Now? The collection has exploded.
There have been over 2.6 billion USD in trading volume, and the most expensive Punk was auctioned off for over $24 million USD in February of this year. They are now considered to be one of the most important (digital) collector’s items in the world.
Example #3 – The First Tweet
Jack Dorsey, former CEO of Twitter, published the first tweet in March of 2006.
Because of Blockchain technology, Dorsey was able to ‘mint’ the tweet as an NFT and put it up for auction.
It sold a few days later for 2.9 million USD.
Stage 1 explained
So why would someone pay so much money for an NFTs that is basically the equivalent of a line of code? Something that could easily be copied on every computer around the world with a simple right-click?
This is a fundamental aspect to understand not only about NFTs, but humans as a whole. We are driven by the crafting of our own self-image, and we make purchases to elevate our status in the eyes of others.
It’s the same reason people spend tens of thousands of dollars on Chanel purses, or Rolex watches, or millions of dollars on sports cars and works of art.
Blockchain technology creates a transparent ledger for a digital asset. This means that its entire purchase history is stored on the blockchain, meaning that we can verify exactly who owns what.
So regardless of the fact that anyone can right-click the digital asset, only one person in the world actually owns the digital asset.
This transparency also makes it easier for the original buyer to sell or trade the asset later down the line, as there is less likelihood of fraud.
Stage 2 of NFT value – Access & community
So while all NFTs give you a sense of status/self-expression as well as verified digital ownership, more and more NFTs are creating epic communities – both in the digital world and the real world.
In fact, it’s become the rule of thumb for any new NFT project – community is EVERYTHING.
For example, most NFTs also come with access to a private Discord server – there will be a public channel in the server, and a private one, only accessible to NFT holders.
But many NFTs go much further than that…
Example #1 – Bored Apes Yacht Club (BAYC)
Bored Apes changed the NFT game with their next-level commitment to their community.
All BAYC holders get a lifetime membership to the Apes-only club which includes exclusive access to club events and yacht parties that have been held across Miami, New York, Hong Kong and more. They are also opening a lounge in Miami that only NFT holders will be able to enter.
The community also has exclusive access to future-NFT drops, a puzzle with a grand prize of 5 Ethereum ($15,000 USD), and much more.
This focus on their community is why they have attracted so many celebrities including Eminem, Snoop Dogg, and Steph Curry.
Example #2 – Unusual Whales
I don’t just want to highlight the biggest projects – it’s also important to evaluate NFT projects that aren’t as well-known.
Unusual Whales is an NFT collection that is tied to a premium community of stock investors. The community offers a range of tools that help people invest better. An annual subscription to the community typically costs $384 USD per year.
Unless, you own an Unusual Whale NFT.
Unusual Whale NFT holders get lifetime access to the paid community, and (of course) because they own the digital asset, they can sell, trade, or flip it at a later point in time (something they cannot do with a normal subscription).
Example #3 – Doge Pound
Doge Pound is a community of passionate gamers and dog lovers who are on a mission to help dogs across the globe. In fact, they are currently using funds from their NFTs to build the largest dog-rescue shelter in East Africa.
The community is tied together by a collection of 10,000 NFTs which also includes access to conferences, P2E games, gaming events, and more.
Example #4 – VeeFriends
In terms of the scale of utility, very few NFTs can compare to VeeFriends.
Started by entrepreneur Gary Vaynerchuk, VeeFriends is a collection of 10,255 unique NFTs. Many holders get access to Gary himself, including hangout times, dinners, Zoom meetings, and even tennis games.
But most importantly, ALL NFT holders get exclusive access to VeeCon – an annual conference for creators and entrepreneurs that features speakers such as Snoop Dogg, Charli D’Amelio, Beeple, Logan Paul, and much more.
If you don’t own a VeeFriends NFT, then you can’t go to VeeCon – simple as that.
Stage 2 explained
The proof is in the pudding. Human beings have always wanted to be a part of something, and NFTs are allowing us to do this in newer and more interesting ways.
And because NFT-holders own a piece of the action, they are more incentivized than ever to help grow, and engage with, their NFT-community.
Stage 3 – Smart Contracts
Building upon the previous 2 Stages, Stage 3 is all about one thing – utility with smart contracts.
Smart contracts exist on the Ethereum blockchain – they are embedded into the code of the NFT and are 100% self-executing, transparent, and irreversible.
Smart contracts are arguably the most important piece of value that NFTs offer – and this goes for businesses, creators, AND the fans/community.
Here are some epic examples of utility and smart contracts in NFTs.
Example #1 – CyberKongz
One of the most influential NFT projects to date, CyberKongz has a smart contract in place that benefits both the brand, and the holders, through something called ‘staking’.
Staking works like a certificate of deposit at a bank – you deposit a token and get your APY for that deposit over a period of time. For every day you hold your NFT you get 10 ‘Banana’ tokens. Banana tokens have varied in price – they have been as high as $100 USD, but are currently hovering around $15 USD.
For holders of a CyberKongz NFT, this adds up VERY fast.
This has led to the CyberKongz collection exploding – the cheapest NFT is currently $250,000 USD on OpenSea.
Example #2 – Justin Aversano
A portrait photographer, Justin Aversano sold a collection of 100 NFTs in 5 months, netting him over $130,000 USD in sales.
But before selling, Aversano did something crucial – in his smart contract, he included a 10% royalty for all future transactions.
This means that every time one of his NFTs is resold, he gets 10% of the action.
Since selling out, his collection has been traded for over 12 million USD, which has netted him an additional 1.2 million dollars in royalties.
Example #3 – Nas
In January of 2022, American hip hop artist Nas sold 50% ownership of 2 of his songs – ‘Ultra Black’ and ‘Rare’. The songs were sold as 1,870 unique NFTs, and split into different ownership percentages depending on the NFT purchased – sometimes as low as .01%.
So why would anyone want to purchase a fraction of a fraction of a song?
Because in the smart contract, owners of the collection collect royalties every time the song is streamed. And to top it off, certain NFTs in the collection give owners up to 21% royalties every time an NFT is resold.
AND, certain NFTs in the collection give owners up to 21% earned royalties for every single resell.
Stage 3 explained
No single aspect of NFTs is necessarily unique. In fact, many of these things exist in other parts of the digital or physical world.
But when you start to piece it all together, the value of NFTs, blockchain, digital ownership, and smart contracts is undeniable, and you can see where all of this is headed.
If you are still here, it hopefully means that you see the true value in NFTs for businesses, creators, communities, and fans, across the internet.
The revolution is still in its infancy, but it’s moving forward ferociously, and will soon be a part of our everyday lives.
If you are thinking about starting an NFT for your business, you should know it isn’t always easy. It requires precise planning and flawless execution. If you are interested in getting your NFT to the moon, be sure to reach out to First Page today. Our digital strategists will give you a blueprint of how we can create a next-level community for your business and brand.
Disclaimer – this article is meant to educate and entertain, but it is not financial advice. Please always be sure to do your own research.