7 myths about NFTs and how to deal with them
We have noticed a lot of myths associated with NFTs (Non Fungible Tokens). So we decided to clear the air and address some questions about these myths directly. Let's take a look at seven of the most common ones.
1. Can an NFT make you rich?
Let´s get back in time. If you wanted to get rich by investing in traditional art you had to do your research. In the 1960s that was done by reading the newspaper and by talking to trusted friends. Those who had the best information were able to get rich fast. And we all remember this one friend of our grandparents who had no job but always money…
How to do research in the twenty-first century? Choose your Twitter channels wisely to get information in time. Read the whitepapers. Often the chances for success are planned out in the details. And don´t believe the hype. Invest in projects with a utility and a roadmap you like.
2. Can an NFT be copied?
NFT is short for Non Fungible Token. Each NFT does only exist once. And therefore it can´t be copied.
But what about if someone uses the same image for another NFT? Each NFT collection is minted under a unique policy ID. This is your single source of truth.
Imagine Banksy is launching an NFT collection. He or she will launch it under his or her policy ID. Of course, people can take the images and create NFTs as well - but they will never be never able to mint the NFT under Banksy's policy ID.
The newest technology advancement are Decentralized Identifiers DIDs that allow creators to connect their social media channels or their KYC to an NFT project in a decentralized way.
3. Can an NFT have multiple owners?
An NFT is always stored in a wallet. The owner of the wallet is the owner of the NFT and can decide if the NFT stays in the wallet, is listed on a marketplace for sale or is sent to a friend.
There are uncountable DAOs out there who are fractionalizing the ownership of NFTs in a specific way. But this is definitely not recommended for beginners.
4. Can an NFT be stolen?
An NFT is stored 100% in a wallet. Only the owner of the wallet has access to the NFT.
If you grant access to the wallet to another person, this person can send the NFT to another wallet and therefore “steal it”. Same goes for if someone gets access to your wallet password and your computer or to the seed phrase of your wallet.
With the seed phrase, the thief can create a copy of your wallet and has access to your wallet. So keep your password and your seed phrase secure at all times!
5. Can an NFT be converted to cash?
You can sell your NFT on an NFT marketplace of your choice. You will get paid in the cryptocurrency ADA. You can send the ADA amount to an Exchange of your choice and there you can swap ADA to a FIAT currency of your choice.
6. Can the metadata of an NFT be changed?
As long as the policy ID of a project is open, the project owner can update and change the metadata of the NFT project.
As soon as the policy ID is closed, the metadata is locked forever on the blockchain.
7. Can an NFT be hacked?
If the policy ID of an NFT project is closed, the NFT can´t be hacked. Every time it is moved or traded, it will get validated by the blockchain. A thief would have to hack 51% of the computers in the blockchain to change the destination of the NFT. With the current status of technology, this is not possible.
Thank you for reading this article. We hope that it has helped to clear up some myths about NFTs. If you have any further questions, please do not hesitate to contact us.