NFTs have grabbed the wheel of success and are currently the talk of the town, creating a revolution in blockchain technology. These non-fungible tokens are digital assets recorded on a blockchain. Each of the NFTs has a unique token code, providing secure and absolute private ownership. Because of their unique value, NFTs cannot be exchanged or traded like-for-like. This feature makes them non-fungible.
You can buy or sell NFTs using cryptocurrencies like Ethereum or fiat money like British Pound Sterling (GBP) or the United States Dollar (USD). NFTs are limitless; they can take any form: 3D animation, memes, virtual real estate, trading cards, text, avatars, audio tracks, and more. Although NFT is a rising star in the virtual space, there are some lingering myths that can be very misleading for folks investing in NFTs. And that’s what we are going to talk about in this article. Keep reading to know more.
Myth #1: NFTs are not environment-friendly.
Ethereum blockchain consumes a considerable amount of energy. Many have theorized that NFT transactions on the blockchain will also be environmentally taxing. However, this assumption is not entirely accurate.
Truth: Research says that NFTs represent only 2% of the gas fees consumption on Ethereum. Moreover, some NFTs are supported by other blockchains such as WAX, FLOW, and TEZOS – these blockchains are comparatively less environmentally taxing. That being said, Ethereum is already working on processes that can significantly reduce energy consumption.
Myth #2. NFTs are worthless and pointless investments.
Many misunderstand NFTs and treat them as worthless and useless investments, more specifically because of their digital avatars, artwork, and collectibles. Many think that they are aesthetically strange digital avatars that are usually used as profile photos on social networks or a meme.
Truth: NFT art and avatars are potentially valuable to a market that collectively perceives them to be valuable. NFT’s true utility is in its provenance. And its true utility comes from the fact that it guarantees private ownership, security, and transparency of digital assets through blockchain transparency.
Myth #3. NFTs promote misattribution and forgery.
This myth erupts because of the common issue many investors face about validating the rarity and authenticity of digital collectibles, more so because the issue of trading counterfeit and pirated goods is ever-increasing in the digital world.
Truth: Blockchain ensures that each cryptocurrency transaction is 100% authentic and cannot be faked. By creating a clear chain of title, the blockchain ensures that the collector is in possession of one digital file that is the only original file.
Myth #4. NFTs are expensive.
Yes, NFTs can be expensive because by purchasing an NFT, you take ownership of a digital asset that nobody has. The rarity and uniqueness can make them costly.
Truth: All NFTs are not necessarily expensive. That said, the value of the NFT depends on how much the buyer is willing to pay. NFTs have different levels and costs, and they primarily depend on three factors: when you buy, what you buy, and where you buy from. To make NFTs affordable, digital space innovators have introduced fractional NFTs. The concept of fractionalizing NFTs allows anyone to own a high-value asset at a low cost.
Myth #5. NFTs are like stocks/cryptocurrency.
One of the biggest NFT myths is that NFT is a kind of cryptocurrency. Although both cryptocurrency and NFTs are developed on blockchain, there is a difference in their fungibility. The same goes with stocks – they are fungible and can be mutually interchangeable. For example, an Ethereum token is equal to another, and an Apple stock is similar to another Apple stock.
Truth: Cryptocurrency and stocks are fungible – they can be exchanged for the same thing of the same value. On the other hand, NFTs are non-fungible tokens; they have their own value and hence cannot be replaced by another.
Myth #6. NFTs are scams.
NFTs, like any other crypto assets, are vulnerable to scams such as Ponzi schemes and phishing. Yes, NFTs can be used to scam people, but this is true for any technology. There are scams prevalent on emails, phones, and the internet as well, even before NFT and blockchain came into existence.
Truth: NFTs themselves are not scams. Just like with any other technology, NFTs are also vulnerable to many crooks luring in and scamming people. So, before investing in NFTs, do your due diligence as you would with your other investments.
Myth #7. The NFT purchaser automatically assumes ownership of the NFT asset.
With an NFT purchase, the buyer doesn’t automatically take ownership of the underlying asset, the copyright, and other intelligent property rights (IPR). Usually, the ownership of the IPR of the asset remains with the IPR seller, unless agreed otherwise.
Truth: The NFT buyer takes NFT ownership in the form of an unalterable link to the digital asset. The NFT purchase may include other associated rights in terms of sale and more, depending on the contract terms.
Myth #8. Once purchased, NFTs can be exploited.
NFT platforms adopt the traditional art world approach. For example, when a buyer purchases a physical painting, the owners get the rights to display the painting in their homes, but they do not have the right to make copies and sell them or print the image on a T-shirt. The copyright of the original work remains with the copyright owner. It’s the same with NFTs.
Truth: The rights granted to an NFT buyer entirely depend on the contract governing the terms of NFT sale.
Myth #9. NFTs can be easily copied.
Due to the nature of NFTs as digital assets, many think that they can be easily copied.
Truth: Anyone can make a copy or view the NFT online. But the ownership of NFT is recorded on NFT in the form of unalterable codes. This makes NFT more secure than a physical asset.
Myth #10. NFTs help in money laundering.
It’s a common misconception that NFTs help money launderers and that blockchain-based cryptocurrencies are for defaulters and criminals.
Truth: Every transaction on the blockchain is so transparent that even the slightest amount of scams can be easily traced. Moreover, in case of misdoings, the addresses on the wallet can be easily tracked, and the stolen funds can be easily recovered. In fact, most often than not, cash is more criminal-driven than cryptocurrency or NFT.
That’s our top 10 NFT myths busted. But there are more that you’ll come across as you research more on NFTs. That being said, don’t let these common NFT myths keep you from exploring this new technology. The future of the NFT market is bright. It will be exciting to see how this industry unfolds but even more exciting will be to invest in NFTs. Think NFT investments are worth exploring? Mesha makes the process simpler for you. Contact us to know more.