Why Collectors Buy NFTs?
There are many reasons why people may purchase NFTs (Non-Fungible Tokens) today. These often reflect the type of NFT in question. By way of illustration, NFTs may include, but are not limited to, the following categories: art; avatars and profile pictures (PFPs); collectibles; domain names; games/gamified; memes; Metaverse; photography; music and media; other; real world assets; sports; utility; and virtual fashion. Each of these categories may in turn feature a huge range of sub-categories.
For example, for the collectibles NFT categorisation, there may be sports-related NFT collectibles, art collectibles, games collectibles, digital collectibles (e.g., CryptoPunks), social media post collectibles, and meme collectibles, that all feature as sub-categories. Often, collectors may buy NFTs for functional-related purposes, such as games NFTs and gamified NFTs (e.g., play-to-earn (P2E) games such as Axie Infinity), or avatars and PFPs for games and/or social media purposes, or virtual fashion for use in games, in virtual worlds, or the Metaverse.
When we talk about the types of market participants that exist in NFT art markets, there are four types that have been proposed, these are: (1) artists and developers; (2) flippers; (3) investors; and (4) collectors (Allen and others 2022). Artists and developers are creators that create both NFT artworks and the infrastructure required to support the NFT ecosystem; however, they may collect NFTs themselves and are often gifted NFTs from friends and fellow artists (Allen and others 2022).
Flippers are NFT collectors who buy NFT artworks with the specific intention of selling the NFT to another buyer at a higher price within a short period of time, and they often use sophisticated strategies to exploit arbitrage opportunities, or to gain priority access to NFTs (Allen and others 2022). Investors are different to flippers, as they seek to earn a profit over the long term based on their analysis of the evolving tastes of the NFT community, and NFT art market dynamics (Allen and others 2022).
Dunescape XVII, 2021, Justin Bodnar, $37,038
You can view this NFT on the ‘SuperRare’ website here.
For example, ‘Justin Bodnar’ (jstngraphics) is an 18 year old digital artist whose work we briefly explored in a previous blog (NFT Kids Art). His NFT artworks are currently priced at between $5,000 to $40,000 (see above). However, there are some investors who might invest in his NFT artworks now in the belief that in 10 years time, these current market prices would have significantly appreciated, thereby providing a good return on a long-term NFT artwork investment.
Finally, there are collectors, which refers to individuals who acquire NFT artworks as an afficionado, these are people who are motivated by NFT artworks because they are inspired by the artworks or NFT artists themselves (Allen and others 2022). There are many NFT artwork collectors whose primary drive for engaging in the NFT art markets is the facilitation of freedom of expression and autonomy for NFT artists (Artsy 2022). These types of collectors may view collecting NFT artworks as historically preserving a crucial type of digital artwork, so future generations can take pleasure in viewing this new genre of digital creativity and innovation.