Introduction
In recent years, the world has witnessed the rise of a new digital asset class, Non-Fungible Tokens (NFTs). NFTs have taken the art, collectibles, and digital asset markets by storm, with multi-million-dollar sales making headlines. While many people are familiar with NFTs, the factors contributing to their market cap and valuation may remain a mystery to some. This article will explore key elements that can help an NFT increase its market cap and gain significant value.
Rarity and Scarcity
One of the most crucial factors influencing an NFT’s market cap is its rarity and scarcity. NFTs derive value from being unique and indivisible, setting them apart from fungible cryptocurrencies like Bitcoin or Ethereum. The scarcer an NFT is, the more desirable it becomes, leading to increased demand and higher prices. Factors contributing to rarity include limited editions, unique attributes, and exclusivity. Regarding Kanazawa, each NFT is always one-of-a-kind, except for occasional promotions. Our standard NFTs are only issued as one token per piece of art.
Artist or Creator Reputation
The market cap of an NFT can be significantly influenced by the artist’s or creator’s reputation and recognition. Established individuals with a solid following tend to attract a larger audience and command higher prices for their creations. The artist’s credibility, skill, and creativity are often associated with the value of their NFTs, making them more desirable in the market.
Our company has a unique approach called “Artist House.” We hire various artists on a rotating basis to create illustrations for our novels that will be turned into NFTs. This means that our NFTs are not associated with any particular artist, resulting in various styles and techniques in our illustrations. When you purchase a Kanazawa NFT, you acquire an art piece signed by our entertainment company, which will handle the marketing and administration of your token.
Concept and Quality
The concept and quality of an NFT play a pivotal role in determining its market cap. The NFT should have a compelling and engaging narrative, visually appealing artwork, or a unique value proposition. A well-executed idea that resonates with the audience can increase demand, raising the NFT’s market cap. Moreover, high-resolution artwork, interactive elements, or dynamic features can enhance the overall quality and desirability of an NFT. For these reasons, when looking for a new artist to illustrate our novels, we seek technically qualified artists with a style and philosophy aligned with the brand.
Utility and Functionality
NFTs with added features beyond being a static digital assets can attract a wider audience and increase their market value. These features may include access to exclusive content, virtual experiences, in-game items, or participation in decentralized finance (DeFi) protocols. Incorporating real-world applications or use cases makes NFTs more valuable and attractive to collectors and investors.
At Kanazawa, we constantly seek ways to enhance our NFTs and provide real-world benefits. One of our unique offerings is the “Earning Program,” an exclusive Ethereum distribution program that periodically distributes Ethereum to individuals who hold our works in their cryptocurrency wallets.
Cryptocurrency value fluctuation
When trading NFTs, you are also trading cryptocurrency. Besides, it’s important to note the fluctuation of the cryptocurrency’s value. Our NFTs are issued on the Ethereum blockchain, meaning trades made on marketplaces will be in ETH (Ethereum). Any sales you make will be paid in Ethereum, and you may need to exchange for some fiat as Pounds or Dollars. For example, between October 2023 and June 2023, the conversion value of Ethereum to US Dollars rose from $1328.00 to $1862.00. So, even if you bought an NFT for 1 Ethereum in October and sold it for the same amount in June, you would still have earned a profit of $534.00. And this doesn’t even consider any extra Ethereum earned through our “Earning Program“.
NFTs can be exchanged in traditional currencies like US dollars and pounds between persons (called P2P). However, in secure marketplaces, they are predominantly traded in cryptocurrency, making them high-risk investments. As such, NFTs are recommended for investors with an aggressive risk profile.
Market Demand and Hype
Market demand and hype can significantly influence an NFT’s market cap. Media attention, celebrity endorsements, or influential figures entering the NFT space can surge interest and drive up prices. A vibrant and active community around an NFT project, combined with effective marketing and promotion, can generate buzz, attract investors, and boost the market cap of the NFT. Our unique feature is building a community of readers who engage with our NFTs through captivating stories and characters. This directly impacts the demand in the secondary market and boosts the brand’s visibility.
Conclusion
While there is no guaranteed formula for increasing the market cap of an NFT, understanding the key factors contributing to its value is essential. Rarity, artist reputation, concept, quality, scarcity, utility, and market demand all play crucial roles in determining the market cap of an NFT. By considering these elements and leveraging effective marketing strategies, NFT creators and collectors can strive to maximize the value of their digital assets in this exciting and rapidly evolving ecosystem.
So far, you’ve learned what an NFT is, some terms related to the market for this technology, the fees involved in the process, and where to find them. Now that you’ve unraveled how the market valuation of NFTs works, how about create your Ethereum wallet to start investing in this technology?