If you’re in any way attached to the online discourse right now, all you’ll be hearing about is NFTs. NFTs, which stands for Non Fungible Tokens, are digital collectibles that are one of a kind. These are powered by the blockchain and are fast becoming the hot new investment to make.
As they’ve seen such a huge rise in popularity since 2020, there are certainly a lot of misconceptions about NFTs and what they are. Here are some of the biggest myths you’ll have heard about NFTs, and the truth behind them.
The 6 Biggest NFT Myths & Misconceptions
- It’s Too Difficult To Invest In NFTs
As NFTs need the blockchain, they’re seen as highly complicated. The blockchain is difficult to understand for those not in the know, and so the idea of NFTs seems to be very much out of their reach. Is that really true?
If you want to become an investor, you don’t suddenly have to be an expert in the blockchain and how it works. To make it easier, think of an NFT like a canvas, holding the original version of an art piece. Prints can be made of that canvas, but only one person can own the original.
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The same applies to NFTs. Take the Nyan Cat gif as an example. Creator Chris Torres created the gif years ago, and many people have enjoyed and shared it around since. However, he recently created a unique NFT version of the gif, which was then auctioned off for around $580,000. That collector who bought the NFT owns the only original version of the gif, just as an art collector only owns that one canvas.
With this in mind, collecting NFTs does make a lot more sense. You can also see why more people are looking into collecting them, as the scarcity of each one means that you can be the only one who owns them.
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- NFTs Are Worthless
This is an accusation that’s been made a lot online in recent months, and so it’s easy to believe. It’s hard to imagine collecting a selection of digital pieces, as of course, you can’t hold them in your hands. If so, is there really any point in collecting them yourself?
You need to look at the time in which NFTs have really taken off, to understand their value. “Before 2020, it was simple to hold events and buy physical art,” says Daniel Jenner, a tech writer at Do my assignment. “Thanks to the pandemic, NFTs have become popular as they allow you to engage with art online.”
Digital art has had a place in the art scene for a long time, but as people were suddenly unable to attend events and buy physical art, the scene began to embrace NFTs. They’ve offered a new avenue for artists to explore and sell their art in. Harif Guzman, for example, brought his style of contemporary art to NFTs and so was able to bring in earnings, even when he couldn’t sell art in person.
As such, NFTs really do have worth, just like their physical counterparts. They’ve created a way for artists to monetize their digital art, allowing them to make a living on their work. As in-person events are still not as feasible as they used to be, it gives creators another way to connect with their fans and foster those relationships.
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- NFTs Are Involved In Art Forgery And Theft
Here’s another myth that you’ll have heard online as of late. There have been reports of art being stolen to be used as NFTs, people’s images being used without their permission, and more. As such, it feels as though NFTs are a wild west of the art world, where anything goes. If someone can even duplicate an NFT and sell it on the blockchain, can you even be sure what you’re getting is unique?
It’s smart to think about this when thinking about making an investment, and there have been some issues with art being stolen and sold as NFTs. However, it’s not true that there are no repercussions for doing this. One of the advantages of NFTs is that the blockchain checks its authenticity. It essentially works as a transaction ledger, marking every time an NFT is minted and sold. Nothing happens with an NFT without a record being made of it.
Of course, someone can make a duplicate of an NFT, or take someone’s art and make it an NFT, and hope that no one bothers to check when they buy it. This is the digital equivalent of art forgers in the real world, creating copies of a piece and selling them before they get caught.
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When buying an NFT, you have to do your due diligence, and ensure that the art you’re buying is truly unique. You will need to learn how to read blockchain data, so you can read those ledgers and ensure that the NFT is truly unique. As such, there will always be some bad actors hoping to scam collectors into buying their NFTs, but if you’re making your checks before buying, you shouldn’t be caught out. Only buying NFTs on well known and established platforms will also help protect you.
- NFTs Are Hurting The Environment
This is something that worries a lot of would-be investors, as they don’t want to buy into something that’s causing damage to the planet. As each transaction on the blockchain multiplies, that translates to additional power used by the computers and servers that are powering it. As such, they’re using more fuel and contributing to climate change.
That’s popular thinking, but the situation isn’t quite like that. It’s true that there are computers working all day to execute proof of work mining, but they aren’t going to be using more power just because more people are buying NFTs. They will use the same amount of power no matter how many are being exchanged on the blockchain.
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“Of course, these computers are using energy and that will contribute to climate change over time” says Leanne Simmons, a business writer with Custom essay. “However, many companies are looking into ways to decrease their energy consumption and make the process more efficient.”
Also, it’s worth remembering that there are multiple blockchains, and some of them have been made to be less environmentally taxing. For example, FLOW, WAX and EOS are all types of blockchain that are working to lessen their impact.
- NFTs Are Not A Good Investment
These days, there are so many things that you can invest in. If you have some money you want to invest, why would you do it with NFTs? They’re still very new, and there isn’t enough evidence yet that you’ll be able to make a profit on the art you acquire. Wouldn’t your money be better off invested elsewhere?
Many may wonder this, but it’s the same all across the art industry. Art is often called a bad investment as it’s highly speculative, and that piece you bought isn’t guaranteed to turn a profit for you. This is all part of making investments, though. You just need to be aware of how the market works.
Many have jumped into the NFT space as they’ve seen the prices on some of those high profile pieces. When you see one going for millions of dollars, wouldn’t you want to get involved too? However, that’s only a small portion though, and over time the price may only decrease.
The price of some NFTs has been dictated by the fact that they were available for only a small window of time. If an NFT is made available for a limited period, speculators are going to snap them up and then resell them for higher prices.
Over time, the prices of NFTs have begun to stabilize as buyers are seeing that the market is speculative. An NFT can be a good investment if you look into pieces that have high quality and sound provenance. Not every piece you buy will dramatically jump in value, but that’s ok. Typically, a collection should have some pieces that maintain value, while some may appreciate over time.
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- NFTs Are Used For Money Laundering
This is a myth that’s going around, most likely to discredit NFTs as a whole. These myths say that NFTs are used by criminals to launder money and avoid taxes. Is that true?
In fact, most criminals are going to use cash rather than Bitcoin when making transactions. They’re over 800 times more likely to do so, in fact. As such, there may be a tiny percentage of criminals who are using NFTs to launder money, but the vast majority of investors are on the level.
Also, remember that on the blockchain, everything is traceable. As everything is transparent, it would be a bad place to launder money.
These are some of the common myths around NFTs, and why they’re just not true. You can see that NFTs can be a good investment if you do your research, and have realistic expectations of what you’ll get from them.
These are some of the common myths around NFTs, and why they’re just not true. You can see that NFTs can be a good investment if you do your research, and have realistic expectations of what you’ll get from them.
3 More Myths and Misconceptions of NFTs
- NFTs are just a fad
- NFTs are a get-rich-quick scheme
- NFTs are bad for the environment
5 Recent Myths About NFTs
- The first myth of NFT is NFTs have no value.
- The second myth of nft is NFTs destroy the environment.
- The third myth of nft is NFTs are used for money laundering.
- The fourth myth of nft is NFTs are too complex to get involved.
- The fifth myth of nft is NFTs are for educated societies.
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