NFT’s Economics
The value of a product or service is directly linked to the utility that demandants can attach to it. A jewel or an art, for example, can be bought for its beauty or for speculative reasons; or even any other more peculiar reason.
Non-Fungible Tokens (NFTs) have this basic economic aspect associated with them: value is subjective. Firstly, an NFT is an entirely digital product that has a uniqueness (each NFT is unique), unlike a fungible token that is equal to others of the same type (1 bitcoin is equal to another bitcoin).
In other words, NFT is a unique digital asset registered through blockchain. Each NFT is secured by a cryptographic key, turning impossible to be deleted, copied or destroyed, plus allowing decentralized verification through blockchain. To understand more about the concepts that underlies NFT’s technology, see our previous article by our CTO, Marco Failache: https://medusaprotocol.medium.com/what-is-nft-98c7f9c7b201
From the point of view of utilities, an NFT can have several accordingly to the purpose and form of its creation. Although they started with just the concept of art, NFTs can have diverse applications: travel and hotel sectors, real state, healthcare, literature, fundraising, social media, supply chain, gaming, collectibles, Decentralized Finance (DeFi), academic degrees, social identity, etc.
Another hot new concept that provides value for NFTs is the metaverse. Without going too deep, NFTs will be the enablers of transactions that will underlie the metaverse.
The application of an NFT has only creative restrictions. Where there is a need for a product that provides an aspect of something unique, NFTs can provide.
One of the common attacks on NFTs, and crypto assets in general, is the great speculative activity around them. Common mistake. Speculation is an economic necessity and it is through it that the value that the market is attributing to a certain product is discovered. Speculative “attacks” occur on products ranging from commodities to arts, and this is entirely healthy. As the crypto assets and NFTs market is something very new, speculation is essential for the discovery of value by economic agents.
An NFT is a product that can be valued through diverse aspects. So, considering all of the above, we can conclude that the value of an NFT will come through the subjectivity attributed to the concept of value, which includes utilities, scarcity and speculative processes behind the NFT.
