NFT is just a digital tag on a product. It is unique and non-replicable. The tag represents and authenticates a product, prevents duplicates and fakes from being created.
A Picasso, for instance, could be tagged with an NFT. Now the owner wants to sell the Picasso in the market. You do not require to carry the painting and display it in an auction house. Instead, you can digitally sell the Picasso’s representation- the NFT.
NFTs, therefore, assist in trading products of value. It is the use of a secure technology blockchain that is aiding safe trading in products digitally.
Because blockchain technology is new, people try to complicate products created using the technology. Often, it is for leverage. It has become a means to mystify something that will become commonplace in a few years.
Valuation of an NFT will therefore happen like any other product. Investors use two popular methods to value stocks, companies, and other valuable products. These are discounted cash flow or relative valuation methods.