Why Are NFTs So Expensive?

June 6, 2024

You may already know that NFTs can get pretty expensive, but you may not realize just how much these digital collectibles can fetch on the open market.

Individual Crypto Punks have sold for half a million dollars. Beeple’s NFT sculpture sold for nearly $29 million. Even on our own Pudgy Penguins marketplace, you’ll find prices ranging from 10 ETH to as high as thousands of ETH.

This begs the question - why are NFTs so expensive? Or perhaps more importantly, are NFTs worth the price? We’ll help you find out in this guide as we unpack the factors influencing price and make the case for starting or adding to your collection today, right here at Pudgy Penguins.

But really, it comes down to the simple fact that you’re not just getting a jpeg file. You’re opening up a whole new world of possibilities where you can know with certainty you’re the sole owner of something rare and unique. NFT ownership can also offer tangible real-world benefits. Learn more below!

Overview of NFTs

First things first - what is an NFT? The term stands for “non-fungible tokens”, and represents a revolutionary shift in digital ownership and authenticity, powered by blockchain technology.

Unlike cryptocurrencies such as Bitcoin or Ethereum, which are interchangeable or “fungible”, NFTs are unique digital assets. Each one is distinct with its own specific attributes and ownership record, making it impossible to exchange on a one-to-one basis like traditional currency.

There are many different types of NFTs but they tend to fall under digital art, music, games, and other forms of creative work. Across all this variety they share a common goal: allowing creators to tokenize their products, from artwork to albums.

But why does this matter? What are the benefits of NFTs? It comes down to the blockchain ledger, which provides a transparent and secure record of each transaction associated with the NFT, ensuring the authenticity and ownership of these digital items.

This solves a massive problem with other collectible assets in that they can be duplicated, and thus, can lead to counterfeiting issues. NFTs confer exclusive ownership rights, so anyone holding one benefits from built-in authentication which serves as proof of ownership and originality.

Beyond proving your ownership of an asset, many NFTs come with exclusive benefits such as access to exclusive communities, events, or perks. 

How Much Do NFTs Typically Cost?

Now, let’s talk about the price of NFTs. It’s no secret that these can be really expensive, but just how much do NFTs cost? It all depends on the specific asset in question. 

There are extremes on both ends of the spectrum - while some cost millions, you can easily find projects for just a couple of bucks. 

These more affordable NFTs tend to include digital artwork, trading cards, or in-game items from lesser-known creators or brands. 

On the other hand, high-value NFTs from renowned artists or those that are part of highly coveted collections with significant cultural cachet can cost tens of thousands, hundreds of thousands, well into the millions.

For instance, major digital art pieces, iconic memes, or groundbreaking multimedia projects command premium prices. 

It’s also worth noting that NFTs can ebb and flow in price as a result of hype, technological advancements, and broader economic factors.

All of this is to say there is no one-size-fits-all answer regarding the cost of NFTs. But in general, these digital assets do have a reputation for being pricey. So, why are NFTs so expensive?

Why Are NFTs So Expensive?

Let’s get into what you really came here for - why do people buy NFTs if they’re so expensive? Why are NFTs valuable? It comes down to a few specific reasons - rarity and exclusivity, artist or brand reputation, along with potential real-world benefits.

Rarity and Exclusivity

You know now that NFTs are one-of-one. Even in the case of Pudgy Penguins, where we minted 8,888 unique works of art, this exclusivity means that it’s not exactly easy to get your hands on one of these assets. This scarcity makes each piece more desirable. 

To a certain extent, this comes down to a human desire to be unique. It’s incredibly common to display NFTs as your profile picture on Twitter, for example. 

But beyond just being able to say that you’re the only person who owns something, exclusivity transcends the digital realm and ventures into exclusive access to physical events, private communities, first access to subsequent releases, and more. 

Artist or Brand Reputation

The reputation of the artist or brand behind an NFT can drive up prices because of their established audiences and proven track records for creating unique works of art. 

An NFT by a famous artist not only carries the cachet of their name but is also perceived as a collectible item with some semblance of historical significance. This is similar to traditional art markets, where the artists themselves can make the difference between a nominal and astronomical sale price.

The digital art space also is unique in that you may be able to connect directly with the artist when you own their NFT. Artists with strong personal brands that actively engage with their communities can enhance the perceived value of their NFTs, commanding higher prices from buyers who feel a direct connection to the work and artist/brand persona.

Real World Benefits

NFTs can offer real-world benefits that extend beyond the digital bragging rights we referenced earlier. For instance, some NFTs are tied to physical items or real-world experiences, such as limited edition merchandise, physical copies of artwork, or tickets to an event. These tangible benefits make the NFT more than a digital token and integrate it into the physical world.

In some cases, NFTs also provide ongoing returns for those who hold the asset. Some are structured to offer royalties or a share of future revenues generated by the project they represent. 

This could include profits from a game, earnings from a music album, or revenue from a film. You’re essentially speculating on the project's success in these cases, potentially reaping financial benefits if the project thrives.

Some NFTs even grant you access to virtual worlds, games, or decentralized applications within the Web3 space. These allow you to experience your digital art in a whole new way.

One example of this is our penguin toys here at Pudgy Penguin. Each one of our penguin figurines, penguin plushies, vinyl art toys, and other penguin collectibles comes with its own digital adoption certificate that you can use to gain access to Pudgy World, a digital landscape where you can unlock special traits and play games.

Market Dynamics

One final reason for the sky-high costs of some NFTs is speculation. While we do not consider NFTs an investment here at Pudgy Penguins, we realize that many do. 

Thus, the potential for high returns attracts buyers hoping to resell NFTs at a profit. This speculation can drive prices up, especially for NFTs seen as undervalued or possessing significant future potential. 

The decentralized, borderless, and non-stop nature of the cryptocurrency markets that NFTs are traded on means that the possibilities for pricing are virtually limitless. This is how you end up with projects selling for hundreds of thousands, if not millions, of dollars. The question is, are NFTs worth it?

Are NFTs Worth it?

Only you can determine if it’s worth buying an NFT, as it’s your money being spent. That being said, we believe that they are well worth the price for anyone interested in collecting art in a whole new way - here’s why:

  • Ownership Redefined: NFTs give you exclusive rights to digital artworks, collectibles, and more. It’s like having the deed to a digital piece of art that only you can claim - providing both bragging rights and potential financial gains should you decide to resell the art down the road.
  • Real-World Perks: Owning a specific NFT might get you into exclusive events, send limited edition merch your way, or even earn royalties. These perks bridge the gap between digital ownership and real-world enjoyment.
  • Future Potential: From gaming to virtual real estate, the ways to use and interact with NFTs are expanding right before our eyes. Those with an eye toward the future might find NFTs to be a smart bet as more of our lives and economies go digital.

So, if you decide that you want to get in on the fun yourself, learn how to find upcoming NFT projects that align with your budget below!

Tips on Choosing the Right NFT Within Your Budget

While NFTs can certainly be expensive, that isn’t always the case. You easily find affordable works of art that meet your budget if you know what to look for and where to look! Here’s some quick advice on starting your NFT collection.

Determining How Much You’re Willing to Pay 

Start by figuring out what sort of cash you’re willing to spend on this purchase. It’s not just about whether or not you can afford the piece of art, but if you’re actually comfortable spending it knowing you may not be able to resell the NFT for the same price later on.

It's similar to purchasing a piece of art for your home - you want to love looking at it, and it should make you feel good about the purchase every time you see it. You don’t want to end up with buyer’s remorse.

Knowing how much you’re willing to spend from the get-go will help you filter your options and avoid disappointment in finding a piece you love only to discover it’s out of your budget.

Finding Projects That Align With Your Budget and Preferences

Now comes the fun part - actually shopping for NFTs. This can also get pretty overwhelming given all the different options you have at your disposal, though, with thousands of artists and even more individual projects.

Our suggestion is to start by following artists or creators on social media platforms like Twitter or Instagram. Many artists share their upcoming drops and existing collections online, giving you insight into their style and the community around their NFTs.

Or, you could just get started browsing the best NFT marketplaces and seeing what catches your eye. Look beyond the visual appeal and delve into the story behind the NFT, as many represent a narrative or a cause. Knowing this can enhance your connection to the piece.

For example, Pudgy Penguins are all about inclusivity and positivity. Our brand was born with the mission of spreading this message far and wide, encouraging young and old alike to embrace good vibes.

You should also assess the community behind an NFT project. Some projects feature community platforms that you’ll gain access to with your purchase, or offer access to galleries and meetups. These are all things you should consider in your search for the perfect NFT.

Navigating NFT Marketplaces and Making a Purchase

Choosing the right marketplace is just as important as selecting the NFT itself. Each platform has its strengths, and some may cater more closely to your interests than others.

Platforms like OpenSea, Rarible, and Magic Eden are well-established and offer a wide range of NFTs. Smaller niche marketplaces might cater to specific types of digital art or collectibles.

Once you’ve found an NFT you love within your budget, it’s time to make a purchase. We have a guide on how to buy NFT on OpenSea specifically, but the most important takeaway is to always transact on the platform and be sure to follow the specific purchase process, which typically involves connecting a digital wallet and approving the transaction. 

You also need to be aware of gas fees (the cost of executing a transaction on the blockchain), which can vary widely depending on the network congestion at the time of your purchase.

Now What?

So you’ve got your NFT - now what? You can proudly display it just as you would any physical art. This is also an invitation to begin connecting with the community and access any specific benefits of your NFT - be it additional digital content, exclusive events, or physical merchandise.

Wrapping Up Our Guide to Why NFTs Are So Expensive

So, why are NFTs so expensive? We hope this guide has left you with a clear understanding of the forces influencing NFT prices and why they’re worth every penny. They offer a unique blend of digital ownership, community engagement, and potential for personal enjoyment or utility, setting them apart in the digital landscape.

You can learn more about this digital realm in our blog, including when were NFTs created, how to transfer NFT to another wallet, minting NFTs, where to sell NFTs, how do NFTs gain value, how much is my NFT worth, and more.

Whether you’re looking for the best penguin toy like a collectible plush, penguin plush keychain, blind boxes or you want to actually get started with Pudgy Penguin NFTs, our penguin shop is a great place to begin.

So, take a look around and see what catches your eye. We can’t wait to welcome you into the huddle with open arms!

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