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NFTs are the art of the digital world, with value tied to each piece of work. The very first released NFT collection, CryptoPunks, has several NFTs within that are actually worth millions. CryptoPunk #5822 is the most expensive NFT within the collection, sold in February 2021 for $23.7 million.
As an investor, you may be wondering, what makes certain NFTs priced higher than the rest, especially when they all come from the same collection? In an attempt to provide an objective way of defining an NFT’s worth, the industry has come up with the concepts of rarity scores, rankings, and tools. In this article, we cover everything related to this topic.
The market value of an NFT has always been difficult to estimate objectively. Similar to traditional works of art, NFTs are unique items. As such, determining a fair market value for an NFT is not among the easiest tasks. If an NFT is created by a famous artist, it may be easier to determine its value, but if you’re looking at an NFT collection such as Azuki, how exactly do you decide which Azuki NFT is rarer and hence more valuable?
This is where the concept of NFT Rarity comes in. The rarity of an NFT within a collection is typically derived based on the rarity of its components/traits.