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Here are 3 factors that help determine the value of NFT fine art

There is no rule book on how to assess the value of an NFT. Over time, the value of NFT fine art has been driven by a perception over which both buyers and sellers may lack any control. In many cases the payment rolled out by the last buyer gives some indication of the value. However, for NFTs it’s hard to guess what the next buyer might pay. Investors and curators find that determining what an NFT is worth can be hard. But there are some factors like ownership, utility, and social proof that help with the valuation matrix. Let’s dive into them.

1. Utility

The utility of an NFT is one key parameter for figuring out how to evaluate it. This is so because an NFT needs to have utility in a real application to carry value.  For example, using it for tokenizing real estate or to represent virtual land or game assets. As the NFT world continues to grow and mature, new innovative uses are sure to emerge.

2. Social proof

The social proof associated with the project behind an NFT is another decisive factor to determine the value of NFT fine art. Social proof indicates what people, in general, think about a piece and helps in making a decision. When encountering any person or project for the first time, it’s a good idea to check their profiles on social media platforms to see if they have created a solid ground for themselves.

3. Liquidity

NFTs with high liquidity carry a higher value. Traders and investors prefer to put their money in NFT categories with a high trading volume as more liquidity help them take their profits with ease. Also, an NFT with high liquidity is likely to retain its value even in case the associated platform is closed. As the NFT market keeps growing, systems will come in place to support the liquidity of assets.

There are various factors that influence the value of NFT fine art and should be therefore taken into account. It can sometimes be hard to know if a piece will be valuable, especially since many times value is broadly a subjective concept. But the utility, liquidity, and social proof are great means to assess the value of an NFT piece. If you are in need of NFT valuation services, contact us today!