Published: 29.03.2022
Article reading time:
2 minutes.
NFT valuators believe that the value of a non-fungible token depends on the value of the blockchain cryptocurrency on which it is issued.
Appraisalbureau founder Caroline Taylor said in an interview with The Block that collectible tokens should be judged on more criteria than conventional, physical art.
“NFT is a completely different beast compared to traditional art. So many thoughts about the possibilities of using NFT arise because you feel that tokens have useful functionality. It’s not just a collectible.”
Taylor explained that when evaluating a traditional work of art, the first question any practitioner has is, “What is the purpose of an appraisal?” If it is done for an insurance policy, it will be a high price, if the assessment is for tax write-off, the price will be lower. The expert added that traditional works of art are valued by beauty, collectible rarity and provenance, while NFT valuation brings a number of new factors into the analysis.
Some NFTs have a built-in utility to, for example, defeat a video game boss or grant access to a country club in the real world. And others grant ownership of underlying assets, such as the copyright to a work of art.
To complicate matters further, NFTs are traded on blockchain networks that exhibit volatility. The price of the Ethereum cryptocurrency, on the basis of which most NFTs are based, has fluctuated greatly over the past year.
“Therefore, evaluators track more than 10 data parameters every day. Since the tokens are based on blockchains, they depend on the value of the digital currency,” explains Taylor.
Appraisalbureau’s founder says appraisers are compiling a detailed report showing how much collectors have paid for similar NFTs in recent years. Some unscrupulous practices from the art world are spilling over into the NFT sector, which is why the market for collectible tokens is becoming less and less transparent. As a result, more and more cases of money laundering occur in this market. Not surprisingly, the authorities are concerned about the growth of this trend, said Taylor.
In February, the US Treasury called for regulation of high-value art in the NFT market. The supervisor believes that privacy and simplification of logistics through tokenization will lead to an increase in the number of cases of money laundering through NFTs.
Source: Bits
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