The Rare Breed: Decoding the elements of NFT scarcity

In this article, we’ll explore what makes NFTs rare, but first, let’s think about the question:

“Why is rarity so significant?”

For ages, scarcity has played a vital role in assessing asset value. When you wonder why certain materials come with a hefty price tag, one reason is often their rarity. This principle has stood the test of time, from ancient civilizations to our modern era and beyond. When demand outweighs supply, something becomes scarce, which, in turn, drives up its price. Just think about how food becomes pricier during a famine or how medicine costs more during a health crisis; it’s a natural outcome. Similarly, in any market facing high demand and limited supply, we can anticipate price increases or inflation. 

Just like other digital assets, NFTs can gain value from their scarcity, but what exactly makes an NFT rare? Several factors come into play, and when people recognize the rarity of NFTs, it can lead to a significant surge in their value.

Understanding the rarity of NFTs

The fact that we call NFTs unique digital assets doesn’t mean that they are all rare. Some NFTs have special traits in their own collection, and some others have innovations that help them stand out in the vast world of the NFT market. There are many factors that help an NFT to stand out. Here are some of these factors:

1. Limited supply  

Unlike open collections, most created by PAK have no cap and can sell any amount within a fixed period, but some collections impose a limit. Typically, limited collections are capped at around 10,000 pieces (which, honestly, is quite a lot). This constrained number of artworks enhances the rarity of these NFTs. In essence, when a collection features fewer pieces, it naturally becomes rarer.

Within a collection, some NFTs possess traits that make them more special. Take the Crypto Punks collection; for example, it includes only nine alien punks, each with a feature shared by no other piece in the collection. So, among 10,000 punks, possessing one of those nine sounds pretty rare, right? Certain pieces have unique traits that convince collectors of their rarity, which drives their value upward.

2. One of one

Did you ever think that why some paintings are so valuable? Why is Mona Lisa estimated to worth around $860 million? Because there is only one original copy.  There is only one Mona Lisa in the whole world, rarity of NFTs can be driven from creating one of one edition too. Many artists like PAK, Beeple, Fewocious and XCopy create one of one editions which are considered as rare NFTs.

3. Utilities

Some utilities can improve the rarity of NFTs. In one of the PAK collections, the fungible, there were some privileges for investors. The first 100 investors who bought the most NFTs from the open edition of this collection (cubes) would receive a unique NFT called “Complexity” as a gift. Other tasks, like solving a puzzle, predicting the total sale of the collection, promoting the collection on social media through influencers, etc., would result in receiving more unique pieces of the collection. Mad Dog Jones created the Replicated, an NFT that creates a unique NFT every 28 days, and its owner will own the created NFTs.

4. Creativity and innovation

The rarity of NFTs depends on the innovation and the idea behind them, too. Avatar NFTs are still popular, but honestly, they aren’t rare anymore. The idea has already been used in many collections: Bored Apes, Crypto Punks, CloneX, Cool Cats, Azuki, Nouns, Moon Birds, and so many others. The NFT market is filled with Avatar NFTs, so how is it a rare concept? Instead, there are so many collections with new concepts. Many artists find inspiration to create new art day after day.

5. Historical significance

NFTs can be rare monuments of historical events. Being associated with an event or movement contributes to the rarity of NFTs. Artists can share their comments on daily matters with their art, and that art becomes a rare NFT that resembles something important for the society.

6. Hidden gems

Some NFTs like human one from Beeple contain hidden gems. People can solve riddles or look for clues to find them and win an NFT. This is a utility that contributes to the value of the NFT, and the following NFTs that should be found within the NFT feel like rare gems.

Identifying rare NFTs

We discussed the properties that result in the rarity of NFTs. Knowing these factors is beneficial, but sometimes, identifying rare NFTs for investment can be challenging. There are many Rarity scoring tools and ways to help you overcome the confusion when you try to evaluate rarity in NFTs.

Rarity ranking

Some websites like OpenSea or the exclusive websites of some collections show you the rarity ranking of NFTs. This term points to the scarcity of an NFT within the collection. You can use filter adjustments when you are looking for an NFT of a certain collection to find the rarest pieces. Also, when you search the code of that NFT, you can see how rare it is compared to other pieces in the collection. It can be among the 25% rare pieces or have 0.1% rarity, meaning that there is only one NFT with that trait in all 10000 pieces of the collection.

Rarity scoring tools

You don’t need to waste your time evaluating the rarity of NFTs by yourself. Just find the NFT or the collection that you are interested in and use the rarity scoring tools to figure out how rare they are. OpenSea Rankings is a recommended platform for you to check how rare the NFTs of your desire are.

Project information and roadmaps

NFT projects have clear roadmaps that give a clear vision of the project milestones, deadlines, and aims. They also help you see the long-term plans and value of the project. By adding the important release dates of the projects, you’ll never miss rare NFTs.

Community discussions

Engaging in NFT communities is always beneficial for investors. There are many factors and tools that can help you evaluate the rarity of NFTs, but after all, rarity is something that humans create. Check the social media and NFT communities to see the main topic and trends. What are they talking about? What do people want now? Because that’s the main reason for scarcity. When there is high demand for something, and when many people want an NFT, that’s going to be rare. The rarity of NFTs is just a concept that exists when people approve it.

Rarity vs value

While rarity can enhance the value of NFTs, it’s just one aspect influencing their worth. Not every rare NFT commands a high price. Rarity doesn’t guarantee an NFT’s success; it merely contributes to it. Rare items often feel special to people, but that unique feeling is what makes something valuable—not the concept of rarity itself. An NFT can be rare within a collection, but if no one shows interest, that won’t translate into a higher price for that piece. Rarity drives value only when it connects with an audience.

Conclusion

The notion of rarity highlights the balance between high demand and limited supply. So, if you’re asking what makes an NFT rare, we can confidently say that rarity can be measured by various factors, including limited supply, unique traits, innovation, utility, and project details. It’s a multifaceted concept influenced by numerous elements. Rarity scoring tools and rarity rankings can help you gauge an NFT’s scarcity within its collection. However, the true essence of rarity crystallizes when people view an NFT as a distinctive and valuable piece. To accurately assess rarity, consider the public perception surrounding that NFT. If the community regards it as scarce and exceptional—and if many collectors are eager to acquire it—then it’s undeniably rare. Rarity plays a role in an NFT’s value but isn’t the sole factor; it’s simply one piece of the overall value equation. Rarity contributes to an NFT’s worth only when it successfully draws interest from people.