Why NFT valuation and trading can be difficult

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NFTs are individually identifiable rather than interchangeable units. Differences in contract, token ID, creator, attributes, licence terms and provenance can make direct price comparison difficult.

Many NFT markets are thin: a displayed listing is only an asking price, while a past sale may not represent the amount available in a future sale. Wash trading, copied collections, changing metadata and dependence on a marketplace or external storage can further distort valuation.

Blockchain records can verify token transfers, but they do not guarantee authenticity of an off-chain work, legal ownership rights, liquidity or future demand.

Technical references: Ethereum NFT overview and ERC-721 standard overview.

This article is educational and not investment advice.

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