Unless you have been living under a rock for the past few years, you are familiar with the term non-fungible token (NFT). While you may have heard the term NFT thrown around, you might be unsure what this term actually means. In short, an NFT is a cryptographic digital asset. These assets are created using unique metadata and codes.
The non-fungible portion of this term means that these digital assets are completely unique and can’t be replaced with anything else. You should look at an NFT as a virtual representation of either tangible or digital assets. Currently, the NFT market is valued at around $7 billion. This amount is predicted to increase greatly in the coming years.
Since NFTs are a relatively new concept, there are many misconceptions about them. Read below to find out about the most common NFT misconceptions and the truth behind them.
NFTs are an Imaginary Asset
Traditional investors are so hung up on the use of tangible assets that they fail to realize how real NFTs actually are. One of the main misconceptions people have about non-fungible tokens is that they are imaginary. This misconception is based on the fact that NFTs can’t be exchanged for physical money. The usage of NFTs differs from person to person.
Some NFT owners like to store them, while others are trading them for things like cryptocurrencies. If you are thinking of investing in NFTs, you need to realize just how much scarcity affects the value. By acquiring and holding on to NFTs for a while, you will see a great return on your investment. If you are hung up on having tangible assets, you might miss out on the NFT gold rush currently unfolding around the world.
NFTs Are Another Form of Cryptocurrency
If you talk to someone who knows very little about NFTs, one of the first things they will state is that these cryptographic digital assets are the same thing as cryptocurrency. In reality, the only similarity shared by NFTs and cryptocurrencies is that they are both based on blockchain technology. The main difference between these two digital assets if the fungibility of NFTs.
A non-fungible item has a unique value and cannot be replaced with another item with an equivalent value. This is why NFTs are being sought out by some of the biggest investors in the world.
Investing In NFTS is a Get-Rich-Quick Scheme
Another common misconception about NFTs is that they are a get-rich-quick scheme. You need to realize that the idea of selling and owning limited edition assets is a concept that has been around for centuries. You need to realize that NFTs are just the modern version of this concept. Choosing the right NFTs will provide you with a lucrative asset. However, not all NFTs are created equal, so doing your homework before selecting a digital asset to purchase is important.
As you can see, there are several misconceptions about NFTs. Rather than buying into these misconceptions and missing out on great investment opportunities, it is time to educate yourself about non-fungible tokens.