did you know that nfts are actually part of a massive pyramid scheme spanning around the whole
world weird right well we thought that this sounded strange too which is why we spent the
last few days looking into some of their weird and wonderful claims that people make about
non-funchable tokens and what we found was that there is a lot of misinformation floating around
the web about nfts right now so much so that we decided to put together a video debunking eight
of the most common myths around nfts but first my name is trev and here at coin market cap we
are on a mission to make crypto accessible all around the world and that's why we love making
videos for you that are easy to understand and simple to share with your friends and family so
if you want something more than just hype and to actually learn about crypto then make sure
to hit the subscribe button right now and to turn on notifications so you're not going to miss out
on our new videos and let's learn together so nfts or non-fungible tokens are one-of-a-kind
digital items like unique artworks with proof of ownership stored on a blockchain like ethereum
keep in mind that while most nfts are stored on the ethereum blockchain ethereum is by no means
the only blockchain that supports nfts zelika flow tezo solana and cardano and the just renamed bnb
chain are all supporting minting and trading nfts as well number one nfts are all digital art for
now at least nft artworks are the nft sales that dominate the conversation in the mainstream media
mostly because of people once people's everyday nft sold through christie's auction house for 69
million dollars the world woke up to nftr works and naturally most folks assume that because of
beeples nft is an artwork that all nfts must be artworks but the truth is that nfts can
digitally represent basically anything not just artworks for example in-game assets like skins
and weapons are increasingly being minted as nfts and traded on the global markets keep in
mind though that whatever the nft represents it isn't stored on the blockchain it's the nft in
the case of ethereum the erc721 token that is stored on the blockchain for instance should we
decide one day to store our identity data like passport information as nfts on the blockchain
the passport data itself wouldn't be stored on the blockchain as an nft instead the nft would
act as a proof of your passport details and would point to wherever your passport details
are stored off-chain and for the next years most of the nft sales you're going to read about
will mostly be about digital artworks but in the future we could see copyright intellectual
property or even housing deeds stored on the blockchain as nfts and that brings us
to number two which is that nfts are just the fad plenty of people said that the internet
wouldn't catch on or else was destined to end up as a tool only to be used by criminals in fact a
look at this article shows all of the absurd predictions made about the internet 25 years
ago they also said that nobody wanted to spend all evenings staring at a box with moving pictures on
it as well now i don't know about you guys but most of the people i know own at least the tv
god the more i resist the more intriguing they become and now they're back this time
but this time they're saying that nfts offer nothing more than minor technical novelty and
they'll be gone or worthless in just a few years given the hundreds if not thousands of possible
use cases for nfts it's just not plausible to say that nfts are going to disappear overnight
also nfts grew into a 41 billion dollar market in 2021 and are fast catching up to the total
size of the global fine art market it's fair to say that nfts aren't going anywhere anytime
soon we also have to account for the rising levels of corporate interest in nfts as well
nike for example has patented a way to verify your trainer's authenticity using a bespoke
nft system called crypto kicks however that's not to say that even some or let's just say
all you know nft digital artwork won't lose some value over the years because some of it definitely
will so we can say with 100 certainty that nfts aren't a fad of course not but are they going away
anytime soon of course not and number three nfts are a get-rich-quick scheme despite all evidence
to the contrary some people are determined to keep harping about nfts being a get-rich scheme or some
new complicated cyber scheme this idea is based on the notion that demand for nfts will suddenly
dry up and when it does there'll be a few big winners and a lot of losers in other words nfts
are just one enormous rug pool and this is an odd complaint to have about nfts mostly because the
majority of artists who sell nft artworks and the collectors who buy them aren't getting rich a few
certainly are and more probably will be but for nfts to be one giant rug pool the vast majority
of nft collectors would need to be getting rich which just isn't happening as said previously it's
certainly possible that nfts will be worth a lot less tomorrow than they are today but that doesn't
mean they're a scam to put it another way think about nfts as if they were diamonds or emeralds
if we wake up tomorrow and agree that diamonds and emeralds are worthless they're worthless people
make the same complaint about gold and have been for a long time in fact the legendary wall street
investor warren buffett is famously critical of gold saying it doesn't do anything but sit
there and look at you well nfts do a lot more than sit there and look at you and as said previously
nfts have thousands of real world use cases on a related note we've seen a few people on social
media claiming that nfts are part of a specific type of scam called a pyramid scheme to be clear
a pyramid scheme involves recruiting members by promising to pay them if they recruit more members
into the scheme of the various complaints people have about nfts this is probably the strangest
because there's no centralized company producing and selling nfts nor is anybody trying to
conscript other people to sell nfts on behalf of a company in exchange for a slice of revenue so
could nfts be a part of a pyramid scheme however while the concept of nfts are legit as with any
emerging technologies there are many people out there trying to make a quick buck off you the
ease of creating a new pfp collection promising to be the next crypto punk or board ape is exactly
the reason one must do proper due diligence before buying an nft project and that brings us
to number four which is that nfts are bad for the environment this complaint worries a lot of people
and is the cause of a lot of vitriol and outrage online and to be fair climate change is the
biggest threat our species faces today and there's simply no excuse for buying something you don't
need if it's bad for the environment that said the narrative that each and every nft trade or minting
is always bad for the environment is simply not true it's important to understand that the
minting and trading of nfts doesn't necessarily use a lot of energy that said blockchains using
proof-of-work consensus mechanisms like ethereum do use a lot of energy when minting or trading
nfts but not all blockchains use proof-of-work and many other blockchains like cardano and tezos use
proof-of-stake to process transactions which use considerably less energy of course ethereum is
where a lot of nft action happens and is therefore the main culprit for nft's poor reputation
for harming the environment but all this will change sometime this year after the beacon chain
emerges with the existing proof of work chain ethereum will use 99.95 percent less energy per
transaction and this was previously referred to as ethereum 2.0 but is now just being called the
merge so once ethereum's merge happens most of the claims about nfts being bad for the environment
will start to dry up for now we can at least take some solace from the news that crypto mining has
become much greener in the past year in fact the bitcoin mining council estimates that between 56
and 67 percent of all crypto mining energy comes from sustainable sources meaning that a higher
proportion of the energy used for crypto mining comes from renewable resources when compared to
the proportion of germany or the uk's energy and number five nfts are worthless and useless
so if a buyer believes that an nft is value just as whether a buyer believes in artwork has value
then the nft or artwork has value yes it's very subjective but then again
beauty is in the eye of the beholder so when most people talk about how nfts are worthless
they really mean that one particular nftr work won't hold its value which might be true here
you have to remember that the difference between the value of the concept of nfts and the value of
an individual nftr work is not the same whether nft digital artworks will hold their value is
certainly debatable but the market for nfts is already so massive that saying nfts are worthless
really doesn't make much sense as for the nfts are useless complaint let's just say that for the next
few years nfts will mostly be used for creative works like art and music still going forward nfts
have thousands of possibilities and use cases in basically every industry for example hospitals
could store and share patient medical records or identity verification as nfts making it easier for
medical centers around the world to collaborate or we might be able to store proofs of our academic
credentials or identity documents as nfts as well making moving across borders faster and easier
entertainers could soon be selling tickets to their events as nfts which could also eradicate
ticket scalping in the end even if nfts were only used in the creative industries nft still wouldn't
be useless and that brings us to number six which is that nfts are easily copied which leads to art
forgery and theft digital art had held its place in the art world for a while now but it's always
faced the right-click save as problem in other words it's really easy to duplicate and re-upload
elsewhere and while nfts certainly go a long way to solving the problem of proving ownership of a
digital artwork people can still easily re-upload artworks as nfts and pass them off as originals
so how do you know that the nft that you already own or the one that you plan on buying is legit
for now you need to do your homework before you hand over any money regardless of which
exchange you're buying your nfts from the only way that you can get duped when buying an nft from a
legitimate exchange is by not bothering to check that what you're buying is actually the real deal
but to understand why you can't steal nftr you need to understand what a blockchain is and how
it works a blockchain is a distributed ledger on which you can store basically any information you
want but unlike other shared databases information stored on a blockchain is immutable meaning that
it can't be changed or rewritten so whenever an nft artwork is minted and stored on a blockchain
an accurate and permanent record exists of when it was created and by whom so while you can go
in mint in nft which is seemingly identical to a popular or valuable nft it's child play
to identify the fake one and this is one of the main advantages of nft artworks have over
oil paintings and other classical art mediums in fact fake paintings and artworks are a big
problem for museums and galleries as identifying fakes is no easy task as a matter of fact back
in 2010 the independent reported that 20 of all paintings held in major museums are fake
so while it is much easier to duplicate a digital artwork stored as an nft than it is to say create
a perfect copy of one of goya's paintings it's also much easier to tell when an nft is a copy
in the nft art space just like in the art world there will always be bad actors hoping to scam
any unwary or well-intentioned buyers you really just have to be careful and number seven nfts are
helping criminals to launder money unfortunately crypto is stuck with a shady reputation from being
the currency of choice on the silk road which was the dark web marketplace where you could
anonymously buy basically anything like guns or drugs regrettably crypto's criminal reputation
is bled over into nfts and people are claiming that criminals like tax dodgers and cartels are
using nfts to transfer stolen money across the world but is this true money laundering costs
the world economy between two and five percent of gdp every year or between 800 billion to two
trillion dollars annually while offshore banking is technically legal and there are legitimate
reasons for using it it's mainly used to dodge taxes and gain wealth through criminal activity
for obvious reasons offshore banks don't share their records and there are very few accounts
showing how and when money was laundered however financial leaks like panama papers and paradise
papers have given us a lot of insight into how companies and individuals hide their wealth
into offshore in tax havens so how much of the trillions of dollars in laundered wealth do you
think came from nfts in crypto well according to chain analysis it's about 8.6 billion dollars or
less than one percent of laundered money globally the truth of the matter is that criminals and the
corrupt actors have had no problem whatsoever hiding their wealth from governments and
regulators long before bitcoin even came along and with the help from the traditional banking sector
they still don't struggle now for instance hsbc was fined nearly 2 billion dollars not long
ago for its part in a money laundering scandal involving mexican and colombian drug cartels and
hsbc is hardly the only offender goldman sachs and standard chartered have also paid billions
in fines in their parts in money laundering so as you can see crypto's role in helping
criminal masterminds move their money around the world is pretty much none and that brings us to
number eight which is binding nft means that you own the underlying asset so this one's more of a
technical misunderstanding when you buy an nft you don't automatically take ownership of the
underlying asset or copyright or intellectual property rights in fact unless otherwise agreed
ownership of the intellectual property stays with whoever made the nft for instance if you bought a
crypto punk you don't have the right to create and sell a range of crypto punks much in the same way
that buying a special edition cd or record from a band or owning an nft of a song doesn't give
you the right to sell the band's music online or use their branding to sell your own music
however buying an nft sometimes does include other rights as per the terms of sale including
the intellectual property rights but this works by a case-by-case basis in other words do your own
research hey did you like that video yeah well make sure to check out these other videos here
because if you like this video you're probably going to like these videos so what are you doing
go check out those videos and like and subscribe while you're at it so yeah check them out