NFT Myth Busters: Debunking Five Common Misconceptions About NFTs

The recent growth of the NFT (non-fungible token) marketplace has been incredibly exciting. With the right investments, NFT enthusiasts across the world have been able to earn millions, even billions, of dollars in revenue. And perhaps the most exciting component of this dynamic marketplace is that its growth is only just beginning.

The profit potential for the NFT marketplace is abundantly apparent—that’s why so many brands, companies, and even celebrities are eager to get involved during these early stages. However, as is the case with all speculative investments you could possibly make (stocks, cryptocurrencies, NFTs, and even bonds), you’ll want to be sure that you fully understand how NFTs work and how they substantiate value.

Because the NFT market is relatively new, there are currently a lot of misconceptions floating around. It’s easy to make assumptions about these NFTs and even easier to ignore how the market is consistently changing. In this article, however, we hope to debunk some of the most common misconceptions about this asset class—by taking the time to learn more about NFTs, you can become a successful investor.

Myth One: NFTs are a Type of Currency

Because both NFTs and cryptocurrencies exist in the same space—the digital asset space—it can be easy for someone who is new to the world of NFTs to confuse one with the other. People will often frequently describe NFTs as a “type of blockchain”, but that is also a mischaracterization—NFTs use blockchain technology in order to verify ownership, but they themselves are not a type of blockchain.

The main difference between an NFT and a cryptocurrency is fungibility. With a cryptocurrency, like Bitcoin, a single coin—for all intents in purposes—will have the same use and value as any other. But NFTs, on the other hand, are each entirely unique. With any given NFT, there is only one exactly like it, meaning that there will only be one owner and these tokens cannot be directly replaced. Non-fungibility, ultimately, is a key driver of an NFT’s value.

Myth Two: NFTs are Always Bad for the Environment

Thus far into the NFT era, one of the most common criticisms of NFTs is that they are bad for the environment. However, the actual environmental impact of any given NFT will depend on many different factors, such as the mechanisms used to establish consensus.

NFTs that establish consensus (essentially, verifying ownership) through a Proof of Work (PoW) mechanism, such as Ethereum, require quite a bit of energy, which typically results in large amounts of carbon consumption. However, there are many more environmentally friendly options available as well. By using Proof of Stake (PoS) or Proof of History (PoH) mechanisms instead, NFT users can significantly reduce the amount of energy they use.

Myth Three: You Need to be Tech-Savvy to Invest in NFTs

NFTs, Blockchains, Cryptocurrencies—to many people, these new technologies are difficult to understand and, as a result, they also seem out of reach. However, you don’t need to be tech-savvy in order to join in on the NFT marketplace. There are many different resources available to help people learn more and explore the world of NFTs, including the resources you’ll find at Sasco Digital Assets.

With an experienced team by your side, you can buy and hold NFTs, launch critical marketing campaigns, and find other ways to increase your wealth throughout the digital asset world. Even if you don’t fully understand how NFTs and blockchain technology actually work, you can still benefit from the ongoing growth of this dynamic marketplace.

Myth Four: NFTs Have Limited Uses

When NFTs were first starting to generate a lot of buzz in the tech world, around the beginning of last year, a lot of people would hear about one specific use and assume that’s all NFTs were. For example, they might have heard “CryptoPunk 4156”, an NFT that sold for an impressive $10.2 million, and assumed that NFTs were, essentially, digital art. But NFTs can be so much more.

NFTs can be used for anything that necessitates an exclusive claim to ownership. So while digital art is an important part of the NFT community, this is just one of the seemingly unlimited uses currently available. NFTs have been used to help create exclusive trading memorabilia, to allow people to own personal highlights of their favorite sports, to give people exclusive access to music and videos, to enrich online games, and more.

NFTs can also be used to tokenize physical-world assets. For example, a classic car worth $100K can easily be tokenized to represent a 1:1 value of the physical asset. In these cases, there is little room of a speculative premium on the underlying asset. This type of token could be listed on global NFT marketplaces for the equivalent of $100K in various cryptocurrencies opening this asset class up to global trading desks.

Myth Five: NFTs Are a Temporary Fad

After seeing billions of dollars get poured into the NFT space last year, many people were skeptical whether this dynamic marketplace would actually last. After all, from “Tulip Mania” in the Netherlands to Beanie Babies, we’ve seen plenty of different collectible assets fade into and out of style in a very short amount of time.

But these previous “fads” don’t directly compare—NFTs are about as much of a fad as “the internet” is a fad. We could be experiencing something similar to the dot-com bubble. NFTs that recalibrate and show their resilience, will continue to provide value—just as the companies that rose from the dot-com boom.  These digital assets are a natural consequence of an increasingly digitized world; even if all NFTs were to somehow go away overnight, an exact replica of this asset class would emerge again tomorrow. So as long as there is a digital world available for us to interact with, NFTs will continue to be useful. And as time goes on, the possible uses and accessibility of NFTs will continue to expand. We are at the beginning of an extremely exciting era.