Why Would Anyone Spend Real Money to Collect NFTs? (10 Reasons to Collect)

AI-generated image of two small children, dressed as wizards, strolling through an Autumn forest while holding hands
Lauren McDonagh-Pereira

Lauren McDonagh-Pereira

Lauren McDonagh-Pereira is a photographer from Massachusetts, USA. She captures the beauty of the world around her, favoring Nikon cameras and lenses. She is drawn to shooting landscapes, wildlife, flowers, and people enjoying time together.

Why Would Anyone Spend Real Money to Collect NFTs? (10 Reasons to Collect)

Introduction

 NFT collecting is emerging as a popular way to buy and trade art. Artists and art collectors from all over the world are minting art, deploying cryptocurrency wallets, and trading art pieces as non-fungible tokens.

I’m Lauren McDonagh-Pereira. I am a photographer, NFT artist, NFT collector, and web3 blogger. I have spent the last year immersing myself in the NFT art community, learning as much as I can about the intersection of blockchain technology and the modern art market. I started this blog to explore the topics that have me so excited about NFTs and their future applications.

photo of a woman holding a camera, surrounded by sunflowers
Lauren McDonagh-Pereira

In this post I will explain 10 reasons that people collect NFTs. This topic is especially relevant in 2023, as the NFT community continues to rapidly evolve. 

Disclaimer: This post is not financial advice. It is for entertainment and informational purposes only. Always do your own research before making financial decisions. 

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Table of Contents

Do NFTs Have a Bad Reputation?

NFTs, or non-fungible tokens, have been in the public consciousness since 2020. Often, people have a negative view of NFTs, and the people who spend real money to collect them. Late night comedians, such as Stephen Colbert, make derisive jokes about NFTs, believing that they are any easy target for ridicule. After all, why would someone pay real money to own a JPEG in a digital wallet?

AI-generated image of two small children, dressed as wizards, strolling through an Autumn forest while holding hands
ⓒ Lauren McDonagh-Pereira Photography 2022
The negative public discussion is drawn from a misconception that all NFT sales are just rich people with too much money throwing away tens of thousands of dollars to own a JPEG of a monkey. This perception misses the many talented artists and community-driven collectors who are working everyday to create a renaissance of digital art. 

1) Collecting NFTs is FUN

Humans love to collect. We collect action figures, baseball cards, stamps, Beanie Babies, troll dolls, pet rocks, Pop figures, Magic cards, souvenir magnets, concert tickets, sports cars, and much more. We get a little rush of dopamine when we find a coveted item to add to our collection of choice, and we enjoy showing off our collections to others who appreciate the same collectible niche. NFTs are simply digital collectibles. 

Woman holding up phone screen to show off a level 40 achievement in Pokemon Go
ⓒ Lauren McDonagh-Pereira Photography 2022

Many NFT creators and collectors are hobbyists. They are not trying to make a living off of NFTs, they have no plans to quit their day jobs, and they don’t wander around the internet posting “wen lambo?” at every slight dip in the market. These people simply enjoy curating a collection of amazing digital art, and are thrilled at the opportunity to directly support the artists who created that art. 

Personally, I enjoy browsing Twitter for new NFT art pieces to add to my own collection. I find myself picking up a few pieces here and there, simply because it is fun to shop for cutting age art. You can check out the TEZOS pieces that I have collected here. You can find my ETHEREUM collection here

2.) NFTs are a New Way to Think about Digital Ownership

Most of us are already very familiar with the idea of digital ownership. We have purchased songs through ITunes, ebooks through Amazon, or movies and tv shows through a streaming service. What many do not realize, is that we usually do not actually own these digital assets. We pay money to possess them, often at the same cost as a physical edition of the asset, but if the platform stops hosting your asset, you can lose access to that song, book, or movie. In a sense, the tech company still owns the digital asset that you purchased and you are merely renting it from them indefinitely. 

A Porg stuffed animal, laying in bed, wearing glasses, reading a book on a Kindle
ⓒ Lauren McDonagh-Pereira Photography 2022

NFTs are different. Each NFT that you collect is securely minted on a blockchain. When you purchase the NFT, the asset is transferred to your personal NFT wallet. As long as you have access to your digital wallet, you have access to your NFT. If you no longer want to own your NFT, you can try to sell it to someone else.

As of November 2022, most NFTs on the market are static digital art files such as JPEGs or PNGs. However, short animated videos and music files are on the rise. Over the next few years, the technology will continue to develop, file size limits will expand, and artists will have the opportunity to mint a wide variety of art as NFTs. In the future, you may be purchasing your favorite band’s new album as a set of NFTs. This time, you will actually own a certified copy of that MP3 file, and you will be able to list it for resale later.

3.) NFTs are a Way To Join a Club or Community

Many NFT projects function as private social clubs for their collectors. Some NFT projects host events that require ownership of one of their assets to attend. Others run thriving Discord servers with private collectors-only channels. There are even NFT projects that promise to promote your art to art collectors if you buy one of their NFTs.

Digital illustration of a woman with green hair and dreadlocks, wearing overalls and a handkerchief, and holding a retro cup.
90sBabeNFT Babe #2407

This is how many of the PFP (profile picture) NFT projects operate. The Bored Ape Yacht Club (@BoredApeYC) hosts holders-only events a few times each year, the 90sBabes project (@90sbabesnft) has a thriving Discord community where people can connect over their shared love of 90s nostalgia, and the Nabu Lines (@nabulines) project hosts Twitter spaces for members to share and try to sell their own artwork. In these examples, the purchase of an NFT acts as a communities’ membership dues to participate.

4.) NFTs Are a New Way to Directly Support the Artists You Love

You know that artist whose work you’ve been drooling over on Instagram for the past decade? You followed them years ago, and they have brightened many of your lunch breaks with a gorgeous sunset shot, a beautiful acrylic painting, or a fun new animation. Wouldn’t you like to support that artist with more than likes and comments, and perhaps help them create a career out of their art? 

A close cropped view of a total solar eclipse
ⓒ Lauren McDonagh-Pereira Photography 2022

NFTs offer an exciting new way to support artists. When an artist mints their work of art as an NFT you can show your support by collecting it! 

On the TEZOS blockchain, artists mint multiple copies of their art (known as editions) for a few TEZOS at a time. This means that you can collect one (or more) pieces of their verified digital art for a few dollars to show your appreciation for their work, and to help them pay for the time and materials it costs to continue creating. 

The best part is that you can grow with your favorite artists. As they become more popular, and start selling their work for increasing prices, you might be able to resell that NFT you purchased from them when they were just getting started for a much higher price! You can buy art that you like today, just because you like it, and you might be able to make a profit later.

NFTs are great for artists. Most NFT platforms only charge a 1-3% commission when artists make a sale. This is a bargain compared to web2 platforms such as Etsy or Getty Images which take a much larger cut. NFTs also allow artists to collect royalties on their work in perpetuity. When an artist mints an NFT, they set a royalty price that they think is fair for their work. If you buy an NFT, and then sell it in the future, the original artist will get a percentage of the profit. This allows artists who are just starting out to set lower prices for their work now because as they grow their brand, they can still benefit from the increased value of their work years from now. Royalties encourage artists to continue promoting older work even after it is sold, so that the value of older pieces increases for their collectors.  

5.) NFTs are a Potential Investment

NFTs might be an investment. They also might be worthless 5 years from now. No one knows what is going to happen. Always do your own research, and never spend money you cannot afford to lose.

A street performer standing above a crowd, people cast in silhouette in an orange sunset
ⓒ Lauren McDonagh-Pereira Photography 2022

Throughout 2021, people made a lot of money flipping (buying and selling) NFTs. NFTs have value because they are limited editions by design. Enthusiasts are eager to own an official digital art piece by their favorite artist or to hold a limited digital pass to a club with both online and in-person events. 

NFTs are seen as potential short-term and long-term investments. In the short-term, NFT traders make money in much the same way that ticket resellers make a profit; they quickly buy up sought-after NFTs as soon as they are released and then immediately relist them at a higher price for the people who were unable to to collect one on the primary market. NFT traders with a long-term view, collect pieces that they believe will have cultural relevance in the future and plan to hold on to that NFT for months or even years while they wait for the NFT to be in higher demand. 

6. Smart Contracts and Secure Ownership

One of the key reasons to collect NFTs lies in the power of smart contracts on platforms like the Ethereum blockchain. These contracts ensure secure and indisputable ownership of digital assets. Unlike physical goods, NFTs’ ownership and authenticity are verifiable and immutable, thanks to blockchain technology. This aspect is particularly appealing in today’s digital art collectors’ community, where the provenance and originality of artworks are paramount.

7. Access to Exclusive Real Estate and Virtual Worlds

NFTs are not just about owning digital artwork; they’re expanding into realms like virtual real estate and unique digital items in virtual worlds. Platforms like NBA Top Shot have shown how NFTs can represent ownership of unique moments in sports, while others are exploring NFTs as a means to own and trade virtual real estate. This expansion shows the versatility of NFTs and their ability to bridge the digital world with the real world.

8. Social Status and Community Involvement

Collecting NFTs can be a status symbol, offering social prestige within certain communities. Being an NFT holder, especially of high-profile collections or pieces by renowned digital artists like Beeple or Pak, can elevate one’s social status in both the art world and the burgeoning NFT space. Additionally, NFT ownership often grants early access to new market offerings and inclusion in exclusive communities, fostering a sense of belonging and engagement in the digital world.

9. Financial Potential and Long-Term Investment

NFTs have shown significant potential as a long-term investment. The uniqueness of these digital tokens, coupled with the growing interest in crypto art and NFT marketplaces, suggests that certain NFTs could appreciate in value over time. While the market is still young and volatile, early adopters and collectors of unique tokens or first NFT editions by new artists may find their collections becoming valuable assets, akin to traditional luxury goods or trading cards.

10. Global Reach and Creative Expression

Finally, one of the top reasons to collect NFTs is their global reach and the opportunity they provide for creative expression. The NFT industry allows artists to share their work with a worldwide audience, transcending the limitations of physical galleries or auction houses. Collectors can access and own unique digital artwork from artists around the globe, enjoying a diverse range of styles and narratives. This global platform not only enhances the monetary value of NFTs but also enriches the cultural and creative landscape of the art world.

The Common Thread – NFT Collectors are Focused on the Future

Real people collect NFTs with real money for lots of valid reasons every day. Some collect because it’s a fun hobby, some collect to claim digital ownership, some collect to join clubs, some collect to support artists, and some collect as an investment. The main theme that ties all NFT collectors together is a focus on the future and a belief in the continued development of the blockchain technology. 

A sailboat on the ocean, clouds and ray of the setting sun in the background.
ⓒ Lauren McDonagh-Pereira Photography 2022

When video games came out in the 1970s, they were seen as a distraction for children. In the 1980s, the internet was dismissed as an obsession for fringe tech nerds. In the early 2000s, social media was mocked as an echo chamber for narcissists who thought everyone needed to be constantly updated on their lunch order. All of these technologies grew over time and integrated themselves into mainstream culture. The people who are buying and trading NFTs in 2022 believe that the technology behind NFTs will be the next big tech advancement. They are happy to be pioneering adopters of this promising new digital evolution. 

Are you an NFT collector? Why do you like to collect? Let me know in the comments!

More to explore

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MEET Lauren McDonagh-Pereira

Lauren McDonagh-Pereira is a photographer from Massachusetts, USA. She captures the beauty of the world around her, favoring Nikon cameras and lenses. She is drawn to shooting landscapes, wildlife, nature, and people authentically enjoying life. 

12 thoughts on “Why Would Anyone Spend Real Money to Collect NFTs? (10 Reasons to Collect)”

    1. Lauren McDonagh-Pereira Photography

      Thank you for your feedback! I feel so strongly about the NFT art word, and its fun to get some of my thoughts out in writing.

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12 thoughts on “Why Would Anyone Spend Real Money to Collect NFTs? (10 Reasons to Collect)”

    1. Lauren McDonagh-Pereira Photography

      Thank you for your feedback! I feel so strongly about the NFT art word, and its fun to get some of my thoughts out in writing.

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Comments are closed.