Non-fungible tokens or NFTs are digital assets that are unique and not interchangeable. They are a growing market, with sales averaging between $10 million to $20 million per week.

Despite their popularity, there are still many misconceptions about NFTs. In this article, the NFT project management service experts at Synapse Research Ltd. will debunk some of the most common myths about non-fungible tokens.

Myth #5: Non-fungible tokens are only for digital assets

While non-fungible tokens are most frequently used to represent unique digital items, they can also be used to track real-world assets. You could create a non-fungible token that represents an item of value, such as shares in a company, or a physical object, such as a house.

For example, you could create a token like ERC721 to represent the deed of your home and then give it to an escrow company. In turn, the company can use that token to track the deeds of all homes that they hold for their clients. You can revoke this token and take back control of your home if you no longer wish to work with the escrow company.

Myth #4: There is no real need for non-fungible tokens

NFTs enable digital artists, musicians, and other digital creators to access new ways to get revenue streams. Because they’re purchased and traded over the internet, they also open doors to new markets and reach more potential buyers.

For example, an artist could create a new type of artwork that is stored on the blockchain and licensed to collectors. Traditionally, buyers would have to reach out to the artist personally and have the piece manually assessed to determine its history as well as its value.

NFT technology helps democratize this aspect of purchasing art. People simply log in from anywhere in the world, choose an available digital art piece, and purchase it online. Each art piece stored on the blockchain is encoded to be unique and any information needed to fully assess it is easily made available via a publicly visible ledger.

The artist can receive payments for each digitally purchased artwork either in fiat currency, cryptocurrency, or another type of NFT. Meanwhile, the person or entity that purchased the piece gets to own a unique digital collector’s item.

Myth #3: There are no actual benefits to creating non-fungible tokens

There are many benefits to creating and selling non-fungible tokens. For one thing, it’s much easier to sell NFTs than traditional digital goods. Most people are comfortable buying digital goods on the internet. Still, it can be difficult for them to actually acquire the items because of long wait times and high fees involved with security.

NFTs solve these issues by removing the middleman, thus eliminating the fees they typically charge. Since there’s no need for a third party to verify the transaction, this further speeds up the entire purchase.

Myth #2: Non-fungible tokens are difficult to use

Non-fungible tokens offer many advantages for users even beyond the blockchain. Many NFTs contain an image or media file, which makes them an excellent platform for digital art and collectibles

But a big reason they were created in the first place was the ability to transfer ownership more easily than ever before. Every NFT has constantly updated records containing information like when it was created, who purchased it, and how much it’s worth.

Traditionally, a collector would have to rely on a third party to verify an art piece’s records and authenticity. Since NFTs are part of the blockchain, that information is readily available to anyone, and those records cannot be altered.

This allows users to prove authenticity and sell or trade their items without having to deal with a single centralized entity or a third-party institution.

Myth #1: Non-fungible tokens are a bad investment

Although there is no guarantee that a token will increase in value, non-fungible tokens have the potential to be considered an investment. There are already many NFT collectibles on the blockchain that are expected to increase in value due to scarcity.

More and more companies are also starting to use NFT technology to represent their products and items. The growing popularity of NFT may positively affect demand and price.

Familiarize yourself with NFTs

While NFTs have been with us for years, they’re still a relatively new technology that will continue to improve and increase in functionality with time. By familiarizing yourself with the truth behind common NFT myths, you should be able to make an informed decision on how you can use them for your business.

If all of these insights have piqued your interest and you want help with fully utilizing NFTs, reach out to an industry expert.

Synapse Research Ltd. offers industry-leading digital assets management services and digital marketing assistance to businesses. If you are interested in learning more about NFTs and how they can serve your company, contact us today.

Our team would be happy to provide you with a consultation and answer all your questions about digital assets like NFTs.