Why are People Buying NFTs? 3 Powerful Reasons I Found After Research.

For a long time, I’ve been thinking why do people buy NFTs if it has no real value?

Why did Sina Estavi give 2.9M dollars to just a screenshot of a tweet? Why are people spending hundreds and thousands of dollars on just bored ape illustrations while I can take screenshots of those?

Before diving into the reasons why people are buying NFTs, let’s talk a little about “What is an NFT”

A non-fungible token is the transaction information saved on the blockchain ledger, especially on the Ethereum blockchain.

Sounds simple right?

Yeah, but when someone buys an NFT, what does he/she actually own?

The Piece of Art? No.

What he/she actually owns is the nonfungible token or in other words the unique transactional information. The artwork is just a digital representation that token that can be easily copied or downloaded.

The NFT marketplace does not provide you the protection against copyright infringement. However, the token associated with art cannot be replicated, known as non-fungible.

1. Human Nature of Collecting

We, as humans, love to collect. It is money to secure your financial future or stamp collection as a hobby. Every 1 of 3 in us loves to collect something to pleasure the novelty part of his brain. We love something new and connecting with like-minded people. Dr. Sherley M. Mueller explains in his research that;

The anticipation of the reward is more exciting to our pleasure center than possessing it.

We get more excited when we expect something that is going to be ours. And this excitement goes eventually down when we gain control over it. So we start to look for another one.

What this feeling feeds the brain? Dopamine.

The human nature of collecting correlates with NFT buying. Nevertheless, NFT is valuable or not, the famous NFT collectors like Eric Young and Whaleshark are more fascinated by its uniqueness and rarity side. Whaleshark is an anonymous British collector of up to 210,000 NFTs in the collection.

The thing that most encourages an NFT collector to collect is to build conformity with the people who own NFTs. But there could be other factors like;

• Showoff
• Gain control
• Secure possession
• Desire to build a comfort zone
• Being seen as a valuable

2. Signaling and Social Image

Signaling is the most prominent factor that influences people to buy NFTs. We all give signals all the time.

But what is signaling?

Signaling is a way of showing and communicating, which maybe expensive, to improve your social image.

Think of it this way. Why do we buy expensive clothes? Why do we work out to build huge muscles? Why do we give gifts even if we can save money?

The answer to these questions is simple with Gary Vaynerchuk saying;

People want to communicate with people.

Not verbally, but in a way that they can be seen as valuable, attractive, intelligent, or even rich.

Cost is a big factor that is associated with signaling. Without cost, no one is going to believe us. The majority of us give attention to those people who are financially good.

NFTs are another way of human signaling in digital form. Even NFTs have no intrinsic value, but it is directly linked with money and power. It is one of the ways to show the world how valuable and special you are.

3. Investment

Buy low, sell high. The same rule applies here in the NFT world. People invest in NFTs that have some potential to rise in the future. Then they sell them either by minting on NFTs marketplaces or by marketing them on the social platform.

But as the NFTs have no such intrinsic value. How much profit an NFT will give? It is unpredictable. For example, Crypto entrepreneur Sina Estavi bought the first-ever tweet NFT of Jack Dorsey, the founder of Twitter, for 2.9M dollars. Last year he minted the tweet NFT for sale at 48M. Guess how much the maximum bid went?

Just 280$.

It is hard to predict which NFT is going to be popular in the future. NFT investors buy new NFTs at a low cost, which has some potential to give some profit in the long term.