Why are some NFTs so expensive? - The power of perceived value in digital art
The digital scarcity of NFT Art has transformed the way digital art is valued by buyers and sellers. However for some NFT art, leveraging social influence, digital communities, and branding has skyrocketed their selling price.
How much can a jpeg be worth? Well, the answer is not so simple. NFTs and blockchain technology have redefined the value of digital art, making non-tangible assets scarce and unique and limiting their supply in the marketplace.
While it's easy to think that the aesthetic quality, sophistication of design, and the artistic composition of NFT artworks are what makes them expensive, the reality is much more constructed.
What makes certain collectibles expensive and what is perceived value?
In the world of traditional art, collectors look to buy art by particular artists they love and follow for their talent or cultural relevance. They buy artwork based on their personal artistic preferences whether it’s a love of contemporary art, oil portraiture or cubist steel sculptures. Traditional art collection is greatly influenced by taste and preference and whether a piece suits the home or collection of the buyer.
For other collectibles like Pokemon cards and designer sneakers, it’s the enthusiasm, activity, and size of their communities that allow collectors to engage in a wider ecosystem of like-minded individuals. This creates the environment for collectors to show off, belong to part of a wider community, and build hype for different items. This also lends a level of intrinsic value to these assets, making them practical investments and stores of value against inflation.
How is perceived value leveraged by NFT Art?
Unlike traditional art which is largely traded privately, the social media presence of NFT artists, abundance of celebrity endorsements, and the increasing population of NFT influencers, have meant collectors are more engaged in the movement and stories that surround these artworks.
Rather than focusing on aesthetic quality and visual design, many collectors of NFT art are drawn to the attainable status and hierarchies of owning digital art.
This is a result of the ecosystems and social communities built entirely around NFT art. Projects like the Bored Ape Yacht Club (BAYC), are prominent examples of collectors finding community and the value of inclusion in a movement through NFT art.
Bored Apes and their celebrity owners.
Every feature of the Ape’s from their fur and accessories to what they’re doing with their mouth is ranked by their rarity. This determines the scarcity of each ape and the perceived value of and price of the Ape
By owning an “ape”, collectors gain access to an exclusive community or social “club”, where they can flaunt their unique “apes”, hang-out, and attend in-person events - including an infamous yacht party.
The rarity of each ape’s features and accessories contributes to its scarcity ranking and informs each collector's status in the BAYC community. Many collectors are brandishing their apes as social media avatars; a symbol of their status in this elite club. It’s no wonder so many celebrities are buying in - it’s currency for status
The impact of endorsement, social engagement, and social-ecosystems on the perceived value of NFT art illustrates the collectible nature of digital art in the marketplace. In contrast to the value of artistic standards and aesthetic quality in traditional artwork, NFTs have evolved digital art into a new brand of commodity.
As the NFT art space matures perhaps it will be the tastemakers that set the standard and start launching quality art by talented artists onto the NFT world stage.
Words by Cameron Thach