While NFTs have only been around for less than a decade, it’s already boomed in popularity and sales, especially in recent years. Earth Web reports NFT sales in 2020 to be at around $250 million in total, with an average of $10-20 million worth of NFTs sold every week.
Because it’s relatively new, the NFT market may be a little complicated to newcomers, and myths are often spread around. In this article, we’re debunking some common misconceptions about NFTs.
What are NFTs?
The term NFT stands for “non-fungible token”, and essentially means that it’s unique and irreplaceable. Wealthsimple’s brief explainer on cryptocurrencies highlights that bitcoin is fungible; it can be traded for another bitcoin, which is of the same object.
The same can’t be said for NFTs, as they act more like a one-of-a-kind collector’s item. These unique assets are sold at online marketplaces and digital auction houses, and can even include everything from music to website domains.
The current trend is really centered around digital artwork, similar to fine art collecting. Unfortunately, most of the buzz surrounding NFTs is quickly turned into myths and misinformation.
“NFTs are just a fad”
Because it’s now garnered mainstream attention, it’s been observed to challenge traditional notions of the value of art. Many people see NFTs solely as a novelty — this cannot be more false. Digital art has long been an established medium of creative expression, and digital exhibitions are often held around different areas around the world.
In fact, NFTs helped develop a way to monetize this genre of art and provide revenue for artists. For instance, contemporary artist Harif Guzman was able to transform some of his traditional works into NFTs and earn through the Blockparty platform. Guzman and lesser-known artists have been able to use this to expand their mediums and assets.
“NFTs are a get-rich-quick scheme”
Some people are dead set on labeling all NFTs as scams, while others are proclaiming it as the future of all forms of art. In truth, NFTs are neither of the two, as the concept of owning and selling limited edition copies of work has existed for centuries.
NFTs are often limited and unique creations, which explains why they are valuable and well sought-after. Investors have had their fair share of investment successes and failures, as well as experiences of fraud. Criminals can hack into an account and resell under someone else’s name.
This method is called “sleepminting” and was used to sell a fake copy of Beeple’s $69-million piece. Still, this incident is only one among thousands of successful transactions and the NFT market has been a reliable space for all art creators, dealers, and investors alike.
“NFTs are bad for the environment“
If you’re an avid crypto enthusiast, you’re probably already familiar with the various environmental implications the technology inflicts. Ethereum blockchain burns a considerable amount of power, so many are worried that crypto art will also be environmentally taxing.
But according to research, NFTs represent only 2% of the gas fees consumption on Ethereum, and some NFTs are supported by other blockchains such as FLOW, WAX, and TEZOS, which are less environmentally taxing. Additionally, Ethereum is already in the process of moving from a proof-of-work model to a proof-of-stake model to significantly reduce the energy consumption.
As we move forward into the future of art and technology, it’s certain that NFTs will continue to play a central role. To learn more about NFTs, read our article on “Who framed the NFT market?” Here, we delve into why NFTs get their bad rep and how the ecosystem is still able to thrive in spite of it.
Otherwise, you can check out our latest Q3 NFT report for more insights about the NFT market.