Why you spend so much money on NFT

NFTs are having a record year.

From a multitude of record-breaking sales to celebrity interest, non-fungible tokens – unique pieces of data stored on blockchain ledgers, often in the form of digital artwork – have taken 2021 by storm. Transaction volume for NFTs jumped more than 700% to $ 10.7 billion in the third quarter of this year alone, according to a report by blockchain analytics firm DappRadar.

Crypto enthusiast and seven-time Super Bowl champion Tom Brady is one of those NFT-friendly celebrities. In April, the soccer star co-founded Autograph, a Los Angeles-based NFT market start-up. The company quickly signed exclusive deals with athletes like Tiger Woods, Wayne Gretzky, Derek Jeter, Simone Biles, and Tony Hawk.

Since then, Autograph has sold more than 100,000 NFTs, according to a company spokesperson, with prices ranging from $ 12 to $ 1,500 each. The digital assets can then be sold on Autograph’s secondary market for thousands – if not millions – of dollars. A signed Brady NFT is currently on the market for $ 4 million. A signed Biles NFT is on sale for $ 100,000.

Brady’s co-founder, Autograph CEO Dillon Rosenblatt, explains that there are two main reasons people spend so much money on NFTs.

“First, it’s about collecting,” Rosenblatt, 23, told CNBC Make It. “Then it comes down to the community. “

The psychology behind the NFT craze

Collecting, says Rosenblatt, is human nature: over the years humans have collected everything from postage stamps and coins to baseball cards.

“There has been a love for the collection throughout the history of mankind,” he says.

NFTs could be “the next frontier,” says Rosenblatt. This is because NFTs are not reproducible: their ownership and validity can be tracked and verified from the moment their data is uploaded to a blockchain ledger. Rarity is a valuable trait in any collector’s world, and each NFT is guaranteed to be unique.

As for the community, psychologists say the fundraising is so popular in part because it comes with a deep social motivation. Dr Shirley Mueller, a neuroscientist who studies the human urge to collect, wrote in Psychology Today last year that a primary motivator for many collectors – whether consciously or unconsciously – is to improve their network. friends.

Some people, Rosenblatt says, buy digital assets specifically so they can be a part of the NFT community.

“When someone makes one of these iconic purchases, all space knows it. It’s the same as someone buying a car that’s truly unique in the automotive world,” says Rosenblatt. “In a way, this can be a ‘flex article’ for people who appreciate it.”

Autograph fosters this sense of community by giving users access to a discussion group on Discord, where buyers can speak directly with influencers who offer branded NFTs on the company’s platform. Brady, for example, made an appearance in the focus group last week.

Other leading NFT marketplaces, like OpenSea, Larva Labs, or NBA Top Shot, offer their users similar access to private Discord chats. Simply put, says Rosenblatt, buying an NFT at any price can make you feel included in the latest craze.

“It’s a gateway to this world,” he says.

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