Coming into a new space is always scary. The unknown and unfamiliar usually is.
I wanted to go through some of the most common misconceptions newbies have when entering the NFT space. Some you may know and others you may not. We hope this provides some insight and value to those wanting to dip their toes in the ocean of NFT's.
NFT's are a blockchain or type of cryptocurrency
One of the main misconceptions amongst new players in the space is that NFT's are a kind of cryptocurrency. Both cryptocurrency and NFT's are developed on the blockchain, but the biggest difference is fungibility.
Cryptocurrencies are fungible which means they can be replaced by the same thing easily. For example, one bitcoin can be exchanged for another as they hold the same value. NFT's are non-fungible, which means each asset's value is unique and can't be replaced by another.
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NFT's are f&%king worthless and have no utility
Another common misconception for most newbies is that NFT's hold no real value or utility. When the majority of people think about NFT's they picture strange avatar profile pictures or jpegs being sold for thousands of dollars (in some cases millions) and end up scratching their heads wondering why.
The truth is that most projects look to create value through additional utility only the NFT holder has access to. Whether it's access to a person, event, private discords or community, or even a physical asset that the NFT holder can own. New utilities are being created every day in the space.
A great example of a project that is offering real utility is an NFT project by Gary Vee called Veefriends. Holders of that collection received special perks like dinner with Gary, basketball games, one-on-one phone calls with him, and even 3 years' worth of entry to his VeeCon event in the US.
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NFT's are a scam or get rich quick scheme
The truth is that NFT's themselves are not a scam or get-rich-quick scheme; however, there are definitely crooks in the space who like to take advantage of unknowing newbies with hopes of using NFT's to retire on a beach somewhere.
This is why with anything you do in this space, it's truly important to DO YOUR OWN RESEARCH and not just jump into projects with hopes it will make you rich. This applies to cryptocurrencies as well (I will go through some key things to watch out for when choosing an NFT project in another thread).
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NFT's are harmful to the environment
Now, this one isn't entirely correct. NFT's can have a negative impact when transactions and minting occur on a more energy-intensive mechanism such as Proof of Work (PoW). This is the current consensus protocol that Ethereum uses (You can have a read about PoW below) which the majority of NFT transactions and minting occur on.
https://en.wikipedia.org/wiki/Proof_of_work
Alternative methods that have been suggested are “off-chain” transactions using an additional transaction layer, renewable energy-based, or less-energy intensive blockchains like Algorand and Tezos with Proof of Stake (PoS) protocols. Using these alternatives, NFTs can significantly reduce environmental impact (You can have a read about PoS below).
https://en.wikipedia.org/wiki/Proof_of_stake
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NFT's are just a fad
NFT's have now garnered mainstream attention and it's challenged traditional notions of the value of art. Don't get me wrong, many people see NFT's solely as a novelty and unfortunately, they couldn't be more wrong.
What the mainstream hasn't taken note of is a large number of content creators, artists, musicians, gamers & many more creatives being able to finally monetize their work in a way the world has never seen before. They have been able to use NFT's to expand their mediums and assets and create connections with fans that have never been seen before, through NFT's.
The use cases continue to grow and spread across many different industries. You have major brands (such as Pepsi, Nike, Adidas to name a few) utilizing NFT's to engage more with customers and create unique experiences.
We hope these misconceptions or 'myths' provided some insight into the NFT landscape and provided confidence when looking to purchase or become involved in the space! #WAGMI.
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