Explained: Why do NFT collections have floor prices and price ceilings?

By Vijay Pravin Maharajan

Despite the fundamental differences between traditional fiat currencies and cryptocurrencies, much of the present cryptocurrency market has dominant similarities to financial stock trading. With the advent of new technology, cryptocurrency exchanges naturally borrowed terminologies from the traditional markets for the ease of traders and investors. 

NFT marketplaces, platforms where people can buy and sell Non-Fungible Tokens (NFTs), took a similar approach when they embraced some of the terms from commodity markets and auction houses, such as Floor Price and Price Ceiling.

However, unlike the traditional commodities market where a government or another group imposes the floor price on products, the floor price in NFTs is determined by the person who owns that particular item of a project. Presently, floor price and price ceiling have become some of the most important metrics used in determining the value of an NFT collection or project. 

In a centralized economy, the floor price is the minimum value of certain commodities or services levied by governments or certain groups, mostly in a bid to prevent prices from falling too low. However, in NFT…

Read more at www.financialexpress.com

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