A Guide to NFT Rarity
When shopping for an NFT, you can rely on several basic indicators to help you gauge its potential value. Rarity rank is one of the key qualities many collectors use toward this end.
As the name suggests, NFT rarity indicates how scarce a collectible is compared to the rest of the collection.
The non-fungible token (NFT) market has seen billions of dollars worth of transactions since its mainstream breakout, and that number is predicted to grow even more in the coming years.
From celebrities launching their collections to legacy brands adopting the technology, it is no surprise that there is no shortage of projects and new collections launching each day. However, keeping up with the latest NFT releases in such a fast-growing space can become overwhelming, especially for someone new to the market.
How do you know if the NFT you have your eyes on is worth the price? To help you better evaluate the potential value of an NFT you consider for your portfolio, we've prepared a detailed guide on NFT rarity and how this indicator can guide your buying strategy.
What Is NFT Rarity?
Some NFT collections tend to be more valuable than others, but even within the same collection, not all digital collectibles are created equal. The rarity of an NFT is determined, among other things, by the attributes and traits the digital asset possesses within the collection it represents. A unique combination of such traits can translate to how difficult it is to obtain a specific NFT, directly influencing its market value.
In line with the basic economic concept of scarcity, an NFT that embodies rare traits generally sells for higher prices and is more sought-after. Collectibles with a higher rarity rank may even come with additional utilities, such as exclusive memberships and access to limited-edition merchandise.
Let's use the Bored Ape Yacht Club (BAYC) collection as an example. Within this group of 10,000 NFTs styled as apes, each token is visually unique. Each avatar has a different rarity rank depending on what the ape is wearing, doing, and its background.
Each ape avatar is made up of seven traits: background, clothes, earrings, eyes, fur, hat, and mouth. Each feature has a range of different looks and styles.
Because each look is limited to a specific number across the collection, some are statistically harder to come by – just like a Shiny Pokémon in the Pokémon universe. A BAYC NFT with a combination of rare attributes is more likely to sell for a higher price than those with more common traits.
How to Check the Rarity Of an NFT?
You can get a more detailed breakdown of an NFT’s rarity ranking by using dedicated programs or platforms that calculate and rank NFTs based on their rarity. These tools can access blockchain explorers and other data sources to estimate an NFT’s rarity by providing users with a more complete view of a given asset. Such tools also take into account factors like popularity, trading volume, and ownership history of each NFT.
How Does Rarity Factor Into the Value of an NFT?
Similar to how physical artworks are valued, the price of an NFT is determined by multiple factors. While rarity is an important component of an NFT’s market value, factors like specific use cases, aesthetic qualities, exclusive community access, and the project’s founding team or creator’s reputation can also affect the demand for the digital asset.
Furthermore, the price can be determined differently depending on what specific properties the community values. For example, in some cases, an NFT with no rare attributes that was the first in a popular collection can be more desirable to some than a statistically rare NFT.
How to Check Rarity Rankings On Binance NFT
With Binance NFT marketplace's built-in rarity ranking system, collectors and traders can easily make informed decisions when evaluating different NFTs within Mystery Boxes. When you click on a Mystery Box collection, the NFTs within can be easily filtered by rarity rank.
You can also look up specific rarity traits within each project on the Binance NFT Marketplace. Simply go to the NFT Collection page you’re interested in, and on the left side, you'll find a relevant filter.
Next, select which features you want to assess within the collection by selecting the attributes such as eyewear, hair, and eyes. The properties of the specific NFT, with each trait's occurrence probability, are also listed on the page.
Finally, when you click into each NFT Mystery Box page, you can see an overview of the rarity ranks for the Mystery Box collection listed on the detail page.
Although rarity is one of the key properties used to evaluate an NFT, you should see it as just one of several components rather than a determining factor. There is no way to quantitatively predict an NFT's value, and some collectors may prioritize an NFT's aesthetic quality over its rarity. You should always do your own research (DYOR) and make sure you're aware of all the risks before committing your funds to purchasing any digital collectibles.
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