5 Misconceptions about NFTs

2/5/2022

Non-fungible tokens (NFTs) are having a moment right now within the blockchain space, and they driving the growth of this novel technology.

Tons of sales have been made (and continue to be made) on NFTs platforms. NFTs are opening the world for anything unique in many industries, including arts & music, content creation, real estate, sports, etc.

But do you really understand NFTs and all the fundamentals behind their value and growing popularity?

For those who could be wondering or questioning the authenticity of NFTs, just know that NFTs is neither a scam nor are they synonymous with art and weird collectibles for the ultra-rich.

To get started, let’s explore the top most common myths about NFTs, and why you need to take these digital collectibles seriously.

Myth 1: NFTs are complicated

Many people believe that NFTs are complicated.

Far from it, NFTs are simply a type of cryptographic token that signifies or represents true ownership of a digital asset, as such a piece original drawing in a digital form.

One of the most important features of NFTs is that it signifies provenance, which is simply a record of ownership of a digital asset. If you’re a collector, this feature will ensure your digital items are protected because the original one can only be traced back to your collections.

Other features include scarcity-presenting the idea that it’s only one.

Myth 2: There can only be one copy of the underlying asset represented in an NFT

An NFT is a type of digital asset that uses blockchain technology to create a unique unit of data.

This information represents an irreplaceable item because it’s unique. An NFT can be anything, from a video recording, music, artwork, unique baseball cards, or even a Twitter post. NFTs could be non-fungible, but there could be more than one token for digital artwork.

For example, 50 identical baseball cards can be issued with a different ID for each, and this limited number becomes the collectible.

Myth 3: NFTs are available for everyone with access to the internet

While anyone can access NFTs, there’s a need to note that different blockchains have their own NFTs standards with compatible wallets and marketplace.

It means the platform you use to mint your NFTs matters.

For example, if you mint an NFT on Tron, you could only sell it on a platform that supports Tron assets. Ethereum is currently the most popular blockchain to mint NFTs. Others include Tron, EOS, Polkadot, Cosmos, Cardano, Tezos, and WAX.

However, emerging projects such as ForkChain are promising to change this trend by integrating various blockchains to ensure you’re able to enjoy cross-chain services from multiple blockchains as you mint and sell NFTs.

Myth 4: NFTs are bad investments

NFTs market is mainly driven by speculation, which makes people think that they are bad investments.

However, like every investment vehicle, there are dos and don’ts when it comes to investment.

For example, when you choose to purchase an NFT, ensure you choose an original copy with clear provenance. The idea is to manage risks well because not every NFT you buy will appreciate.

Myth 5: NFTs are bad for the environment

There has been raging debate about digital NFT artworks being environmentally taxed due to many NFTs transactions on the Ethereum blockchain.

The latter is known for consuming a high amount of power. However, this is not true as the number of NFTs minted has nothing to do with the amount of energy a blockchain consumes.