Non-fungible tokens (NFTs) -- a one-of-a-kind digital asset stored on the blockchain -- are one of the buzziest media in the past two years.
Since a single digital collage sold for 69 million -- the year NFT sales skyrocketed from $94 million to $25 billion -- it seems everyone has gotten involved.But why are people actually buying them?
A new study run by CenturyLink asked 1,000 people to explain what an NFT is, and found only 645 respondents were able to do so. Thirty percent of these respondents had already purchased at least one NFT.
When they were further questioned about their beliefs, motivations and behaviors around purchasing NFTs, only 22% said they would never buy one. Thirty-two percent bought an NFT to raise their social status in cyberspace, saying that it felt comparable to “owning an expensive home or designer clothes in real life.”
Thirty-six percent of those surveyed said they bought to resell for a profit.
However, it is difficult to tell whether or not the NFT market will continue to be profitable. Sales are at a 12-month low after the recent cryptocurrency crash, but new crypto markets, like GameStop's, are doing surprisingly well.
Over half (53%) of respondents said they would dip into their savings or take out a loan to purchase an NFT.
About a third (33%) of respondents said they would be willing to spend up to $500 per NFT, while 21% said they would spend between $500 and $1,500.
Gen Z was the most likely generation to spend $100,000 on a single NFT, with 14% of that age group willing to pay even more.
While NFT purchases are most popular among Gen Z and Millennials (33% and 30%), and less so with Gen X (18%) and Boomers (13%), they all have different reasons for buying.
Almost half of respondents (41%) also said they plan to purchase between 2 and 5 NFTs, while 14% said they plan to purchase 11 or more (Millennials and Boomers).
The breakdown by demographic of those who are looking to make a profit is as follows: Gen Z (40%), Millennials (36%), and Boomers (29%). Gen X seems to be more concerned with buying NFTs for the social status (42%).
Buying methods differ between generations as well, with Boomers more likely to use disposable income to purchase an NFT (60%), Millennials most likely to use savings (33%), and Gen Z most likely to take out a loan (29%).
But which generation thinks of NFTs as a legitimate form of art? All of them: Gen Z (83%), Millennials (80%), Gen X (76%), Boomers (72%).
Overall, 81% of respondents said they believe their NFT was a good investment, as it allowed them to flex their wealth (55%), while 26% said they have made a profit by selling one.