NFT Collectibles: Let Us Answer Your NFT Questions

Hearing “NFTs” probably brings to mind nifty avatars in funky looking hats, or maybe a famous tweet. But since first booming in 2020, the world of NFT and NFT collectibles keeps evolving. Today, NFTs range from in-game purchases to real-world assets that can be tokenized and auctioned, like real estate.

Along with most cryptocurrencies, the NFT market took a serious dip in June and July of 2022. That April, the sale price of a Bored Ape Yacht Club (BAYC) NFT was 152 ETH ($429,000) or higher. After the market crash, the floor price for a BAYC NFT dropped to less than $100,000.

But the overall projection of the NFT market is promising. According to a 2022 analysis, the global NFT market is expected to have a Compound Annual Growth rate of 35% over the next five years. That’s a projected growth from $3 billion to $13.6 billion by 2027.2

This optimism is due largely to NFTs success in the online gaming industry, sports collectibles, and burgeoning real-world uses. There’s also a growing corporate interest in NFTs, like eBay purchasing NFT marketplace KnownOrigin or NBA creating Top Shot, its official digital collectibles store.

In this article, we’ll tackle some of the most common questions surrounding NFTs in a Q&A style.

Why are they called NFTs?

NFT stands for “ Non-Fungible Tokens.” Something that is “fungible” is replaceable or exchangeable. Take currencies, for example. You can swap your $100 bill for two $50 bills, or even exchange it into Euros or some other currency. The same goes for crypto. You could trade ETH for Bitcoin, and the relative purchasing power would be the same.

Something that’s “Non-Fungible” is unique and irreplaceable. One item of digital artwork can’t be deemed equal to another — they’re both unrepeatable. You can’t say that the Mona Lisa is worth four Monet’s or five Rothko’s. Each piece of art holds distinct and inherent value. In the digital space, this remains true.

What are NFT digital collectibles?

Digital collectibles are items represented on the blockchain that can be bought or sold. Whether it’s a famous meme or an iconic filmed moment in sports, items can be “minted” into NFTs. Minting gives the item a token name, symbol, a digital fingerprint (called a hash), and a link to the item on the interplanetary file storage (IPFS). All of this data, including who the current owner is and how much the item sold for in the past, is stored on the blockchain.

There are three main categories of crypto collectibles:

• Art collectibles are what most people associate with NFTs, where the crypto and digital art worlds merge to seamlessly create, mint, and trade artworks.

• Game collectibles offer sales and purchases for limited-edition skins, weapons, and properties in online gaming communities.

• Sports collectibles offer cards, video clips, kits and accessories that can be traded in NFT marketplaces.

What makes an NFT collectible valuable?

Owning an NFT collectible doesn’t mean you have exclusive rights to the content — unless the NFT includes copyright use, which is rare. You may own the collectible, but because it's a digital piece of artwork, people can access and copy it easily. Anyone can buy a copy of the Mona Lisa and hang it up, but that doesn't make it valuable. There’s little worth in people’s digital copies of NFTs. Your ownership is what’s validated on the blockchain.

That proof of ownership is one factor defining a collectibles’ value. To be able to prove you own a particular NFT, keeping anyone else from owning it, creates value. Similarly, there’s value in the transaction history of the NFT. An NFT created by someone famous, or that passed through the hands of a celebrity, accumulates worth.

Another valuable element is scarcity: people want what’s hard to come by. If there are 10,000 potential buyers but only 1,000 units of a particular NFT sports card, the cards’ value rises. Also, each of those 1,000 cards are unique items. They’ll be listed as “#628/1,000” or something similar. Instead of being considered just “one of 1,000,” that NFT is specific. It’s number 628, with its own singular appeal.

What are the most valuable NFTs?

Two of the most successful NFT projects are Bored Ape Yacht Club and Crypto Punks. They currently have floor prices of 74.88 ($125,000) and 62.95 ETH ($105,000), respectively. CryptoPunks is one of the original NFT collections, with a 2017 release of only 9,999 avatars. Bored Ape avatars, meanwhile, provide entry into the Web3 BAYC space with exclusive member benefits.

Another increasingly popular NFT is Otherdeed, with a more accessible floor price of 1.79 ETH, or roughly $3,000. Otherdeed gives entry to Otherside, a Web3-based metaverse gamespace. Currently, Otherdeed’s market cap is over 366,000 ETH — equivalent to over $600 million.

What are the best NFT collections?

It depends on what sort of NFT you’d like to collect. If you want to access massively multiplayer online role playing games, dive into two successful NFT projects: Otherdeed and Decentraland.

For sports collectibles, NBA’s Top Shot is the best collectibles market to invest in trading cards or “moments,” snapshots or videos of epic moments in NBA history. This NFT that includes a video clip of a 3-pointer from Steph Curry back in 2021 was up for auction with an average sale price of about $13,000.

In the art scene, highest grossing artists include anonymous creator Pak, TylerXHobbs, and Beeple (who made "Everydays: The First 5000 Days," the NFT sale that first snagged media attention).

Can anyone make an NFT?

NFTs are mint-able by anyone using NFT marketplaces and smart contracts. Essentially, you upload the art or digital file to a marketplace to transform it into an NFT, giving it a hash and all those other tokenization characteristics that we mentioned earlier. By minting, you’re placing the file onto the blockchain, making it an immutable and purchasable digital asset.

Most marketplaces require a digital wallet, but some accept standard bank cards for the minting fees. Minting fees can be quite variable because of market volatility, up to a whopping $44,000 for a collection of 10,000 NFTs. With hopes to make minting and NFT creation accessible to any creator, Hedera offers a stable minting fee rate of $200, regardless of market fluctuations. For more information on the NFT fee schedule, visit Hedera's Expanding NFT Ecosystem: New Pricing to Meet Growing Demand. To see the full fee schedule, visit the fee estimator.

Are NFTs worth buying?

This is a subjective one — it depends on what you want to do. For those who collect for the sake of ownership, buying NFTs that they value as prized possessions might be worthwhile. Or someone may want access to the special forums or Web3 spaces that an NFT provides. There are also people looking to invest their crypto in NFTs and turn a profit. If that’s your goal, note the key features we mentioned earlier that lend NFTs underlying value.

How do I invest in collectibles?

Once you’ve settled on your investment goals you need to choose a marketplace. OpenSea is the oldest marketplace (circa 2017) and has substantial amounts of NFTs, ranging from poor-quality to highly-coveted. Rarible is very popular, offering purchase with either crypto or fiat currencies. Binance incorporated an NFT marketplace to their Binance smart chain in 2021, and offer stable and low (1%) trading fees for transactions.

The most important step in investing is doing research. Who is the creator? Who owned the NFT previously? Who else owns pieces from the collection? What’s the active community like? What are the terms of the smart contract? Answering these may take time, but it’s a worthwhile step.

Then you pull the trigger and buy NFTs, using either crypto from digital wallets or a standard bank card, depending on the marketplace. Be sure to check gas fees before buying, lest you make a bigger purchase than anticipated.

How are they used in gaming?

In Web3 gaming, NFTs and smart contracts are used to buy in-game digital assets. Properties, skins, weapons, avatar clothing, and other accessories can be designed, minted, and traded in-game. As we see with Otherside, NFTs are sometimes used as the ticket into the game space. Whatever you buy in-game can even outlive the game itself, with the items you buy remaining always under your control. Purchased memorabilia or content has inherent value outside the game and can be traded with or without the original game. Eventually, this may mean there’s a digital space in which stories and characters from favorite games can exist beyond the end of the play-through.

Can artists make money with NFTs?

Historically, artists profited from only the initial sale of their work. Once the painting was out of their hands, the money was out of their hands, too. If the painting got resold at triple its original value, the artist saw none of that newly exchanged money.

In minting and selling artwork as NFTs, artists can craft their own smart contracts. With NFTs and blockchain technology, creators can include a clause in their smart contract, which potential buyers will see and agree to, ensuring royalties from all subsequent transactions.

NFT collectibles and Hedera

NFTs are a novel tool for exploring the digital domain. As the metaverse expands and the world becomes increasingly connected by Web3, the NFT space could expand massively. From representing real-world assets to in-game collectibles, the physical and digital worlds are merging.

At Hedera, we believe this new hybrid space of real and digital should be universally accessible. Our NFT community is far from just the crypto-elite. We offer fast transactions, predictable gas fees, and stable minting costs, making NFT production and purchasing more accessible and affordable. Our energy expenditures are also only a minute fraction of the standard Ethereum energy costs, making minting and transactions as environmentally friendly as possible.