Valuing NFTs: Practical Methods for Accurate Appraisal
Written by  Daisie Team
Published on 6 min read


  1. What are NFTs?
  2. How to consider NFT rarity
  3. Evaluate the creator or artist
  4. Assess the NFT marketplace
  5. Analyze past sale data
  6. Consider the NFT ownership history
  7. Check for licenses and rights

Imagine you're at a digital auction, your sights set on a unique piece of digital art—an NFT. But how do you know if the price is right? That's where understanding NFT valuation methods comes in handy. With a clear approach to valuing NFTs, you can navigate the digital art world with confidence and astuteness. This guide will help you master the art of accurate NFT appraisal, giving you an edge in the exciting world of NFTs.

What are NFTs?

NFTs, or Non-Fungible Tokens, are unique digital assets stored on a blockchain, the same technology underpinning cryptocurrencies like Bitcoin and Ethereum. The 'non-fungible' part means that each NFT is unique, cannot be replaced with something else, and holds its own distinct value. In a sea of digital sameness, NFTs stand out—they break the mold.

Think of NFTs as digital collectibles. Just as you might treasure a signed baseball card or a first edition book in the physical world, in the digital realm, NFTs hold a similar appeal. They represent ownership of a unique piece of content. This content can range from digital art and music to virtual real estate in digital worlds. The key is that each NFT is unique, and its value is determined by a variety of factors—which we'll tackle in this guide on NFT valuation methods.

Here's the kicker: Unlike buying a physical painting where the value might be determined by the artist's reputation or the quality of the paint, NFT valuation methods require a different approach. The digital nature of NFTs means you'll need to consider factors like rarity, the creator's influence, past sale data, and even the particular NFT marketplace. But don't worry—once you get the hang of it, you'll be valuing NFTs like a pro.

How to consider NFT rarity

Just like in the physical world of collectibles, rarity plays a huge role in NFT valuation methods. The rarer an NFT is, the higher its value—generally speaking. But here's where it gets interesting: how do we define 'rarity' in the digital world where anything can be copied indefinitely?

It's about exclusivity. An NFT is rare if there's a limited number of them. For example, a digital artist might release only 10 editions of their artwork as NFTs, making them quite rare. Or a virtual world might only have a limited number of 'ocean-view' properties. These types of limitations create rarity.

But it's not just about quantity—it's also about attributes. Some NFTs have unique characteristics that make them standout. For instance, a digital cat NFT might have a rare color pattern or a unique accessory that other cats don't possess. These unique attributes can make an NFT more desirable and thus increase its value.

So, when you're considering NFT rarity, ask yourself: How many of these NFTs exist? What unique attributes does it have? The more exclusive and unique an NFT is, the more valuable it can be. Remember, rarity is a key component in the toolbox of NFT valuation methods.

Evaluate the creator or artist

Just like traditional art, the reputation and influence of the creator or artist can significantly impact the value of an NFT. An NFT created by a well-known artist or a prominent figure in the digital space may command a higher price than one made by an unknown individual.

Think about it this way: a signed basketball by Michael Jordan would likely fetch a higher price than one signed by a less-known player, right? The same principle applies to NFTs. So, when you're considering the value of an NFT, take a look at who's behind it.

Has the creator produced popular NFTs before? Do they have a large following on social media or within the NFT community? Has their work been widely recognized and praised? Answers to these questions can give you a sense of the artist's standing in the community and can help in the NFT valuation process.

But remember, popularity isn't everything. Sometimes, NFTs from lesser-known artists can turn out to be hidden gems. So don't discount an NFT just because the artist isn't a household name—yet. After all, every big name started somewhere, right?

Assess the NFT marketplace

Let's shift gears and talk about the NFT marketplace. Just as the location of a property can dramatically affect its price, the marketplace where an NFT is listed can have a big impact on its value.

There are many NFT marketplaces out there, each with its own unique set of characteristics. Some are general marketplaces like OpenSea, where you can find just about any type of NFT. Others, like NBA Top Shot, specialize in specific types of NFTs—in this case, NBA highlights.

Why does the choice of marketplace matter for NFT valuation? Some marketplaces attract more buyers than others. Some have stricter criteria for the NFTs they list. Some have built a reputation for quality and authenticity. The more desirable the marketplace, the higher the potential value of the NFT.

Additionally, each marketplace has its own community of buyers and sellers. Understanding this community—their preferences, their spending habits, even their quirks—can give you valuable insights into how they might value a particular NFT.

So, when you're assessing the value of an NFT, don't forget to consider the marketplace where it's listed. It might just be the difference between a slam dunk and a missed shot in your NFT valuation methods.

Analyze past sale data

Just like in the real estate and stock markets, past sale data is a goldmine of information when it comes to NFT valuation methods. This data can tell you what buyers have been willing to pay for similar NFTs in the past, which is a good indicator of what they might be willing to pay in the future.

What should you look for in past sale data? Start with the sale price. How much did the NFT sell for? Were there multiple bids? If so, how high did the bidding go? These figures can give you a ballpark estimate of the NFT's value.

But don't stop there. Also look at when the NFT sold. Was it during a boom in the NFT market, when prices were generally high? Or was it during a slump, when prices tended to be lower? The timing of the sale can affect the sale price, so take this into account when you're doing your valuation.

Finally, consider the circumstances of the sale. Did the seller have to lower the price to get it sold? Or did the buyer snap it up as soon as it was listed? These details can give you clues about the NFT's attractiveness to buyers.

Remember, past performance is not a guarantee of future results. But it can give you a useful starting point for your NFT valuation.

Consider the NFT ownership history

When exploring NFT valuation methods, you don't want to skip over the NFT's ownership history. It's like the resume of the NFT— a document that can give you some real insights on its value.

First, take a look at how many times the NFT has changed hands. If it's been passed around a lot, that could mean it's highly desirable. On the other hand, if it's mostly stayed with one owner, it could either mean that the owner values it highly, or that it's not sought-after in the market.

Next, consider who those owners were. Were they well-known in the NFT community? Did they have a knack for spotting valuable NFTs? If so, that might add to the NFT's value. But if the owners are unknown or have a history of poor choices, that might reduce the NFT's value.

Lastly, pay attention to how long each owner kept the NFT. If they held onto it for a while, that could suggest they saw long-term value in it. But if they offloaded it quickly, that might suggest they didn't see it as a good investment.

So, don't forget to take the NFT's ownership history into account when you're doing your valuation. It's a piece of the puzzle that can help you see the bigger picture.

Check for licenses and rights

Another key part of the NFT valuation methods is checking for licenses and rights. This might sound like a job for a lawyer, but don't worry, you don't need a law degree for this!

When you buy an NFT, you're buying more than just a digital asset. You're also buying certain rights to that asset. These rights can include things like the ability to display the NFT in a virtual gallery, or to use it in a video game.

Now, you might be thinking, "Why does this matter? I just want to own the NFT!" But here's the thing: the more rights you have, the more you can do with the NFT, and that can increase its value. So, it's definitely worth checking what rights come with the NFT before you buy it.

And remember, not all NFTs come with the same rights. Some might only give you ownership of the digital asset, while others might give you full commercial rights. So, make sure to read the fine print!

In conclusion, checking for licenses and rights is a crucial part of NFT valuation. It can affect what you can do with the NFT, how you can profit from it, and ultimately, how much it's worth.

If you're intrigued by the world of NFTs and want to learn more about how to approach them as an artist, check out Dennis Mabuka's workshop, 'Approaching NFTs as an Artist.' This workshop will help you navigate the opportunities and challenges of working with NFTs, ensuring you make informed decisions as you dive into this exciting new medium.