One non-fungible token (NFT) has a permanent imprint on a blockchain. You can link this transaction imprint to for example a piece of art at the time of minting the NFT. The most popular NFTs have so far been art in the form of digital pictures. NFTs of popular art collections have been sold for multi-million dollars per piece.
If you ask around right now, you will find that most people have no idea what a non-fungible token (NFT) is. If you find a person with limited knowledge, she or he will likely say it is absolutely nuts to spend millions of dollars on a pixelated image that looks like it was taken right out of a computer from the 1970s.
So exactly how can you evaluate if an NFT will become valuable? The following framework is useful as a starting point. I copied most of it from another source, but cannot remember exactly where. Will reference when I find it again.
Every project is a combination of these 3 value drivers. Some lean more heavily into Art/Community while others are more focused on Utility offering tokens. The point is, every project needs to deliver on 1 or more to be successful. The best projects hit all 3.
Art is incredibly important. It serves as an early representation of a team’s creativity, talent, and commitment.
If a collection has good original art, people know: a) it is not a derivative b) team is willing to invest time and money designing it
This is important for minting out.
The stickiest and most habit forming part of NFTs. When prices fall, a strong community can hold strong and rally interest and keep the project alive.
Community can also be a source of massive utility: a) networking both virtual and IRL b) alpha c) entertainment
Roadmap design, team experience and execution will shape the utility of the project. Utility is function of product-market fit, like any business. Utility means a different thing to every person: a) income based approach b) access to services c) IRL events & redeemables
Art is important early on to capture attention and can grow in importance over the life Community is slower to build & incredibly important, the glue that holds all other pieces together. Without utility from art, community, or a roadmap the project will fail.
Every pillar of the NFT triangle will come into the project at a different point in the life Honestly, with amazing utility & community the art looks great. Focus on driving value and deciding which elements to prioritize. Don’t make the decision in a vacuum!