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Valuation of NFT Art Flashcards

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  1. Which blockchain network hosts the majority of high-value fine art NFTs, partly due to its established collector base?

    Answer: Ethereum

    Ethereum dominates high-value NFT fine art sales due to its first-mover advantage, large collector community, and trust in its security model.

  2. How does 'utility' attached to an NFT artwork (e.g., event access, physical prints) affect its valuation?

    Answer: Utility can increase value by providing tangible benefits beyond digital ownership

    Additional utility such as physical prints, event access, or community membership can increase collector demand and therefore the NFT's market value.

  3. What is the significance of an NFT being listed on a 'curated' marketplace versus an open marketplace for its valuation?

    Answer: Curated marketplace listings can signal quality and increase perceived prestige and value

    Curated platforms vet artists and works, which can confer a quality signal that boosts collector confidence and willingness to pay higher prices.

  4. A collector purchases an NFT artwork for $50,000. Six months later the artist is featured in a major museum exhibition. What is the most likely effect on valuation?

    Answer: The NFT's value would likely increase due to heightened artist credibility and demand

    Museum recognition elevates an artist's prestige in traditional and digital art markets alike, typically driving increased demand and higher prices for their NFTs.

  5. What does 'total volume traded' on a secondary market indicate about an NFT collection's valuation health?

    Answer: High volume suggests strong market interest and liquidity for the collection

    High secondary market volume signals active collector interest, robust liquidity, and sustained demand, all of which support healthy valuations.

  6. Which best explains why NFTs by pseudonymous artists can still achieve high valuations?

    Answer: On-chain wallet history and artwork quality can establish credibility independent of real identity

    An artist's verifiable on-chain activity, consistent quality, and community reputation can build collector trust and value without revealing their real identity.

  7. What is 'royalty percentage' in an NFT smart contract and why does it matter for long-term artist valuation?

    Answer: A percentage of each secondary sale automatically paid to the original creator

    Royalties are programmed into the NFT's smart contract so creators earn a percentage of every resale, aligning artist incentive with long-term market appreciation.