The definative checklist to determine which NFT collectibles will have long term value.
9 key considerations when assessing the longterm value of an NFT and scarce digital assets.
The following content are my opinions only and are not intended as financial advice. Please do your own research.
1. The scarcity of the digital asset
Economies and markets are driven by supply and demand. Blockchain as a technology has ensured that the supply of a digital asset can be capped. This is important because the limited supply of the digital asset is the fundamental starting point if it is to have value. If there are only 10 of a particular digital asset verses a digital asset with 10,000 — naturally this is likely to have bearing on its market value. However, this is only half of the equation.
For the digital asset to be attributed value in the marketplace, its scarcity must also be accompanied with one or more of the attributes outlined below in order to generate demand.
The extent of this demand combined with its scarcity is ultimately what will determine the value of the digital asset.
2. The significance and popularity of the issuer (and popularity of the game if it is a gaming item).
I can mint and issue digital assets using a range of different platforms right now. But neither you nor anyone else is likely to want them. However, when Paris Hilton released her minted drawing of a cat, people were clambering all over each other to get their hands on it. The issuer can have a very signficant influence on the value and collector interest for an asset in the marketplace.
The same comparative scale of value can be applied if a simple unknown game with a low user-base issues digital gaming items. It can still have some value, but it will be much lower than if gaming items were to be issued for use in some of the most popular and well-known games with millions of users across the world.
(Important Note: Initiatives such as Enjin’s ‘Multiverse’ is a highly innovative ‘collective impact’ approach that significantly increases the value proposition of small indie games and their NFTs by…