Publication Date
6-1-2022
Abstract
One of the new forms of investment is investing in so-called non-fungible tokens -- unique software objects associated with different real-life objects like songs, painting, photos, videos, characters in computer games, etc. Since these tokens are a form of financial investment, investors would like to estimate the fair price of such tokens. For tokens corresponding to objects that have their own price -- such as a song or a painting -- a reasonable estimate is proportional to the price of the corresponding object. However, for tokens corresponding to computer game characters, we cannot estimate their price this way. Based on the market price of such tokens, an empirical expression -- named rarity score -- has been developed. This expression takes into account the rarity of different features of the corresponding character. In this paper, we provide a theoretical explanation for the use of rarity score to estimate the prices of non-fungible tokens.
Comments
Technical Report: UTEP-CS-22-73