Five Things They Didn’t Tell You About NFTs You Need to Know | Bitcoin and Virtual Currencies

Five Things They Didn’t Tell You About NFTs You Need to Know | Bitcoin and Virtual Currencies

NFTs are growing in popularity on the internet, but they are still a relatively recent phenomenon and thus a “mystery” to many. An acronym for “non-fungible token” (“non-fungible token”, free translation), this technology opens up the trading market for high-risk digital assets, which can expose user privacy and facilitate the application of millionaire scams. In addition to debates about the safety and reliability of investments, NFTs have also sparked discussions about the environmental impact of cryptocurrency production. In the list below, TechTudo Address these and other aspects related to the NFT marketplace.

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NFTs: The list brings up five strange facts about non-fungible tokens — Photo: Picture Alliance/Getty Images

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1. It is easy to fall victim to a scam

With the popularity of NFTs, scams involving digital assets have become more common. Some are even responsible for millions of dollars in losses. For example, in August 2021, criminals sold an allegedly original work for £244,000, equivalent to R$1.7 million at the time, in the name of the artist Bunky. Ultimately, the material is not the artist’s, and the buyer loses money.

Presumed artist sells fake NFT works and disappears from investors — Photo: Reproduction / Twitter @IconicsSol

In September of the same year, an embezzler posed as a digital artist and presented an NFT art collection to investors. He even showed some of the purported 8,000 pieces on his Discord channel and pre-ordered 2,000 NFTs to sell at 0.5 solanas (the cryptocurrency used in these negotiations). However, instead of receiving the artwork, the buyer received a random set of emojis. The scammer is believed to have raised the equivalent of $138,000 (or R$649,000). After the coup, young people disappeared with the money they put in.

Similar cases have been reported, and they have one thing in common: anonymity combined with a lack of means of verifying the authenticity of material. In general, unwary users may not have a mechanism to confirm the originality of the content, nor the identity of the trader, and the NFT market ends up being an attractive option for scammers.

2. The impact of NFTs on the environment

NFTs are traded through cryptocurrency exchanges, and this electronic mining process is extremely costly from an energy perspective. Because mining consumes a lot of electricity, it will ultimately negatively affect the rate of carbon emissions in the atmosphere and could significantly interfere with the cycle of increasing greenhouse effects and climate change on Earth.

A 2021 study by the University of Cambridge in the United Kingdom suggests that mining virtual currencies such as bitcoin and ethereum may consume more energy for a year than countries such as Argentina consume during the same period.

Cryptocurrency markets and NFTs help accelerate the process of climate change — Photo: Disclosure / Pexels

On a smaller scale, NFT purchase transactions can be compared to the daily consumption of an electric shower. Ethereum currency is one of the most used currencies in the token purchase process, with consumption of up to 48 kW/h per transaction. This equates to a 30-minute shower per month with approximately 3,500 watts of power.

3. The concept of NFT ownership is questionable

When you buy an NFT, you’re buying a digital certificate registered on the blockchain that gives you ownership of the digital file – whether it’s a .JPG image, animation, video, song, etc. What not everyone knows is that the copyright to the work remains the property of the author. Unauthorized exploration of works, theoretically buyers can’t even display the material on galleries or websites.

Buying an NFT is not the same as acquiring the copyright to the work — Photo: Picture Alliance / Getty Images

Also, it’s worth asking to what extent it makes sense to pay for the right to have a fully reproducible original. After all, do you need to have the original .JPG files of your memes or digital art to enjoy them? The answer is of course no. This helps explain why NFTs are increasingly becoming a speculative medium for investors seeking profit, not necessarily an appreciation of digital art and culture.

4. NFTs compromise user security and privacy

Cryptocurrency transactions operate in a fragile environment of anonymity. You may not even know who is behind the wallet, but you can clearly map your transactions to the blockchain. On the other hand, NFTs ultimately allow user identification data to be intercepted easily.

For example: if you buy an NFT of an image and start using that image as an avatar on a social network, it’s easy to identify transactions related to the purchase. So this shows your cryptocurrency wallet and your entire transaction history.

A similar thing happened to American TV presenter Jimmy Fallon. He bought an NFT from the Bored Ape Yacht Club collection and showed it on TV: within minutes, netizens were able to identify the purchase, the wallet Fallon was using, and the entire transaction history associated with it.

5. NFTs are not a good investment

If you view NFTs as a form of investment, it’s important to know that tokens are a high-risk resource. Sentiment in the NFT market is highly volatile, and unlike government bonds or corporate stocks, there is no way to prove the intrinsic value of the asset being purchased. For example, today the Bored Ape Yacht Club collection of NFTs featuring images of boring monkeys is worth thousands of dollars because some buyers agree on that value.

With no apparent intrinsic value, the value of NFTs can fluctuate wildly from one hour to the next. — Photo: Pixabay

The problem is that once this type of content becomes outdated or the masses change their minds – which happens quickly and frequently – NFTs lose their value very quickly. So what was bought for a few thousand reais becomes an image offered for just a few cents.

See also: Cryptoships: New Cryptocars-style NFT game with “low” investment

CRYPTOSHIPS: NEW GAME NFT STYLE CRYPTOCARS

CRYPTOSHIPS: New CRYPTOCARS style NFT game with “low” investment

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