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5 myths about NFTs you should know

By Amy Luong
July 27, 2021

NFTs are having a moment right now with their recent trend, creating a revolution in blockchain technology. But have you really understood NFTs and all of their features? Let’s explore 5 common myths about NFTs with Tokenize Xchange in this article!

myths about NFTs

>>>Read more: What is NFTs?<<<

Myth 1: NFTs are a kind of cryptocurrency

There is a misconception that NFTs are a kind of cryptocurrency. The similarity between cryptocurrency and NFTs is that they are both based on blockchain technology. However, the key difference between these conceptions is fungibility. A fungible item can be replaced by an identical item at the same value, for example, an ETH can be exchanged with one ETH. In contrast, a non-fungible item has a unique value and cannot be replaced for another item with equal value.

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

NFT – standing for Non-fungible token is a type of digital asset that uses blockchain technology to create a unique unit of data that represents an irreplaceable item. An NFT can be anything, from music, artwork, basketball cards, or even a tweet.

Though the NFT is not fungible, there could be more than one token for digital artwork. For example, there can be 100 identical baseball cards issued with a different ID for each and the limited number turns it into a collectible.

NFT paintings

Myth 3: NFTs are accessible to everyone with the Internet 

Etherium is currently the most popular blockchain service to create NFTs, followed by a range of other blockchains that are becoming more common to NFTs creators including

  • EOS
  • Tron
  • Polkadot
  • Tezos
  • EOS
  • Cosmos
  • WAX

Each blockchain has its own NFTs standards with compatible wallets and marketplace. For example, if you mint (create) an NFT on the Polkadot blockchain, you could only sell them on a platform that supports Polkadot assets like XENO NFT Hub. That means you could not trade Polkadot-based NFTs on OpenSea since it only supports NFTs based on Ethereum, Polygon, and Klaytn. 

As such, this would make the NFT market less accessible even if the two parties want to trade. 

Mistakes about NFTs

Myth 4: NFTs are bad for environments

It has raised a considerable debate about digital NFT artworks being environmentally taxed due to many NFTs transactions on the Ethereum blockchain, which burn more power. But this assumption is not completely accurate.  

>>>Read more: Proof of stake<<<

How much energy the network of computers will consume has nothing to do with how many NFTs are created. The issue needed to be solved should be mining energy consumption associated with proof-of-work mining which is being worked on with numerous possible solutions including the Proof of Stake mechanism

Moreover, not all NFTs are built on Ethereum, some of them are based on other blockchains like Polkadot, EOS, etc which raise less environmental concerns. 

Myth 5: NFT’s are not secure nor transparent

Musician Grimes has sold numerous digital artworks built on NFT technology, earning a total of $6 million. However, the buyers who bought his NFTs do not own the artworks themselves, which means they can be seen and downloaded online. As such, NFT technology seems not to be secure nor transparent for NFT owners. 

Misconceptions of NFTs

However, each NFT is identified by a unique serial number which is generated via blockchain, hence, it cannot be exchanged. That’s why they are called non-fungible tokens. By that, saving an NFT doesn’t make you its owners, but the one who owns the token in their wallet. 

Also, by using data from the token ID, you can check the transaction history of an NFT on its marketplace, making NFT transparent. 

We hope this article is helpful for you in learning about NFTs. Keep following Tokenize Blog for more informative articles!

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