Why are investors pouring billions of dollars into the NFT industry?

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The NFT space has massively grown over the last few years, and people have been pouring billions of dollars into this industry to acquire e-apes, e-punks, or other funky digital collectibles. Despite the large sum of money flowing into the space, some couldn’t wrap their heads around the exorbitant selling price of NFT that is freely accessible to anyone on the Internet.

Well, there are several reasons. The primary motive of most NFT collectors is to make profits by buying tokens at lesser prices and selling them at higher prices. Nonetheless, a few resort to purchasing to be a part of the community and flex. That said, it doesn’t mean that the space has no ardent digital art collectors or gamers.

Looking beyond NFT’s profit-making

A recent survey conducted by DEXterlab revealed that close to 64% [of the 1318 respondents] indicated that they buy NFTs to make money. However, the remaining chunk of people prioritized other aspects.

15% of the respondents buy digital art tokens to flex and be a part of communities. The fact that humans are social creatures and possess the desire to show off ain’t surprising. However, for people from this category, besides the status symbol, getting access to other significant advantages weighs almost equally. DEXterlab’s survey report revealed,

“… a strong community is one of the most significant advantages of NFT projects since active, friendly people and good engagement can set the foundation for the project’s success by building buzz and attracting new people, meaning you’re investing in something that can bring long-term value.”

Also, it should be noted that community members who HODL particular NFTs have access to other perks like getting access to other limited collections, attending exclusive meet-ups, etc.

Moving on to the next set of people, collectors comprise around 12%. Collecting digital art is not that different from collecting physical art. E-collecting comes with other handy benefits like engaging with creators and, supporting them, connecting with fellow collectors on platforms like Discord and Twitter. The same ends up strengthening the industry. Per DEXterlab, the same is a win-win.

The remaining 9% of the investors buy NFTs to gain access to games and tools. Per the surveyor,

“One of the key benefits of NFTs is the value that comes with them, often in the form of membership rights that grant you access to creators’ projects and the perks that come with them, be it a game, some tool, or anything else.”

The survey also brought to light that half of the sample size wilfully spend $50-$500 to acquire an NFT. The next one-fourth revealed they were comfortable spending more than $2000 on a single non-fungible token. The remaining respondents indicated that their investment amount revolved in the $500-$20000 range.

Gray Lining

Well, even though buying NFTs comes with additional perks, the survey revealed that not all investments tend to pay off. With every silver lining comes a gray lining, right? DEXterlab noted,

“Although the primary reason why people buy NFTs is to make money, the majority of NFT holders who participated in our poll (58.3%) said that their NFTs haven’t been that profitable so far.”

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