I know people that spend gazillions on vintage sneakers. They will literally go and buy some rare designer second hand pair of Nikes or whatever with some scarce design that they only produced a few off. Personally, I wouldn't be that eager to stick my feet into somebody's well worn sneakers. But apparently that's beside the point. Nike actually on purpose feeds that market by coming up with new limited edition designs. These people have enough shoes. They don't buy them because they need another pair of shoes.
The value of money used to be based on gold. Gold has very limited practical value. It actually kind of sucks as a metal because it's not that hard compared to e.g. iron. The main value proposition is that it's pretty and shiny. But people that buy gold don't tend to even look at it. They just store it in a vault. Or worse, they get a digital receipt that proves they own the gold without ever seeing or handling it. The main value of that is that, if you wanted, you could make pretty and shiny things out of the gold bars. And because those pretty and shiny things are valuable, gold is valuable. And therefore people invest in gold. Not to make those things but to be able to sell it to others that might do those things. Of course the vast majority of people buying and selling gold has zero interest in doing that. Most gold ever mined is locked in a vault in bar form and will never be used for anything else than as an intrinsic token of value.
There are a lot of things that have no value beyond subjective esthetics and the group thinking around that. My home country the Netherlands produced a lot of fancy paintings in the seventeenth century. Those are worth a lot now. They are extremely nice according to some. People visit museums to go see them. They are worth tens/hundreds of millions in some cases.
Objectively, most people that visit museums wouldn't be able to tell apart the original from a good replica. And reproducing these things with high fidelity digitally isn't all that hard either. You can find high quality scans of almost any painting for free on the internet. And you would get most of the appreciation/emotion looking at those as you would get by looking at the originals. Of course, most people aren't that into this stuff in any case. But we appreciate these things because other people tell us they are valuable and we take their word for it. The original paintings keep their value mainly because such people keep reassuring us how rare and amazing these things are. That tends to get embarrassing/awkward with forgeries in museums where experts literally have failed to tell the difference.
The value of things whether digital or real is based on social mechanisms for appreciating things. Some things simply are valuable because people agree for whatever irrational reasons that they have value. And then some people buy these things at the market rate because they enjoy having them. Whether that's original art on the wall, some rare sneakers, or a cool skin for a game character that you engage with for many hours while playing the game. The dynamic between the willingness of people to separate with their cash and scarcity is what creates the value.
NFTs are weird mainly because they are digital receipts for something (anything) that has value. They are no different than a paper certificate of authenticity for a painting. It all boils down to the trust people have in the impressive looking stamps/signatures on the paper, or the blockchain shenanigans used to ensure authenticity for the NFT. Of course a lot of NFTs are silly. But in game worlds, ownership of skin is kind of limited as you can't really resell them easily or prove authenticity. Which is something that NFTs addresses. Which is why NFTs became popular in games.
The value of game skins is as irrational as second hand sneakers are or the appreciation for shiny metals. Or gems. Or paintings. But as long as people buy those, they have value.
The value of money used to be based on gold. Gold has very limited practical value. It actually kind of sucks as a metal because it's not that hard compared to e.g. iron. The main value proposition is that it's pretty and shiny. But people that buy gold don't tend to even look at it. They just store it in a vault. Or worse, they get a digital receipt that proves they own the gold without ever seeing or handling it. The main value of that is that, if you wanted, you could make pretty and shiny things out of the gold bars. And because those pretty and shiny things are valuable, gold is valuable. And therefore people invest in gold. Not to make those things but to be able to sell it to others that might do those things. Of course the vast majority of people buying and selling gold has zero interest in doing that. Most gold ever mined is locked in a vault in bar form and will never be used for anything else than as an intrinsic token of value.
There are a lot of things that have no value beyond subjective esthetics and the group thinking around that. My home country the Netherlands produced a lot of fancy paintings in the seventeenth century. Those are worth a lot now. They are extremely nice according to some. People visit museums to go see them. They are worth tens/hundreds of millions in some cases.
Objectively, most people that visit museums wouldn't be able to tell apart the original from a good replica. And reproducing these things with high fidelity digitally isn't all that hard either. You can find high quality scans of almost any painting for free on the internet. And you would get most of the appreciation/emotion looking at those as you would get by looking at the originals. Of course, most people aren't that into this stuff in any case. But we appreciate these things because other people tell us they are valuable and we take their word for it. The original paintings keep their value mainly because such people keep reassuring us how rare and amazing these things are. That tends to get embarrassing/awkward with forgeries in museums where experts literally have failed to tell the difference.
The value of things whether digital or real is based on social mechanisms for appreciating things. Some things simply are valuable because people agree for whatever irrational reasons that they have value. And then some people buy these things at the market rate because they enjoy having them. Whether that's original art on the wall, some rare sneakers, or a cool skin for a game character that you engage with for many hours while playing the game. The dynamic between the willingness of people to separate with their cash and scarcity is what creates the value.
NFTs are weird mainly because they are digital receipts for something (anything) that has value. They are no different than a paper certificate of authenticity for a painting. It all boils down to the trust people have in the impressive looking stamps/signatures on the paper, or the blockchain shenanigans used to ensure authenticity for the NFT. Of course a lot of NFTs are silly. But in game worlds, ownership of skin is kind of limited as you can't really resell them easily or prove authenticity. Which is something that NFTs addresses. Which is why NFTs became popular in games.
The value of game skins is as irrational as second hand sneakers are or the appreciation for shiny metals. Or gems. Or paintings. But as long as people buy those, they have value.