Five things they didn’t tell you about NFTs and you need to know Bitcoin and virtual currencies

NFTs are becoming more and more popular on the Internet, but they are still a recent phenomenon, so it is a “mystery” for many people. Acronym for “non-fungible token”, this technology has opened up a market for the exchange of high-risk digital assets, which could expose users’ privacy and lead to millions of fraudulent applications. In addition to discussions about investment security and reliability, NFTs also raise discussions about the environmental impact of cryptocurrency production. In the list below, TechTudo It addresses these and other aspects related to the NFT market.

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NFT: List contains five weird facts about non-fungal tokens – Photo: Picture Alliance / Getty Images

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1. It is easy to fall victim to fraud

With the proliferation of NFTs, digital asset fraud is becoming more common. Some were also responsible for millions of losses. In August 2021, for example, criminals allegedly used the name of the artist Banky to sell an original piece for £ 244,000, the equivalent of R $ 1.7 million at the time. In the end, the material did not belong to the artist, and the buyer was lost.

Alleged artist sells fake NFT piece and disappears with investor money – Photo: Reproduction / Twitter @IconicsSol

In September of the same year, a swindler pretended to be a digital artist and presented an art collection on NFT to investors. He also showed some 8,000 pieces on his Discord channel and pre-ordered NFT 2,000, which was sold in 0.5 solanas, the cryptocurrency used in these negotiations. However, instead of receiving the artwork, buyers were randomly given an emoji collection. The scammer is believed to have collected the equivalent of US $ 138,000 (or R $ 649,000). After the coup, the young man disappeared with the money he had invested.

Similar cases have been reported, and there is one thing in common: the combination of anonymity and the lack of means to verify the authenticity of the material. In general, the lack of a mechanism to confirm the originality of the content of the unsuspecting user, or the identity of the person selling them, ends up making the NFT market an attractive option for scammers.

2. NFTs affect the environment

NFTs are traded through cryptocurrency exchange, and this process of electronic mining is very expensive from an energy point of view. Mining consumes a lot of electricity, which ends up having a negative effect on atmospheric carbon emissions and can significantly hamper the growth of the planet’s greenhouse effect and the cycle of climate change.

A 2021 study from Cambridge University in England indicates that abandoning virtual currencies like Bitcoin and Ethereum for a year could result in higher energy consumption than a country like Argentina spends in that time period.

Cryptocurrency Markets and NFTs Can Help Accelerate Climate Change Processes – Photo: Disclosure / Pexels

On a smaller scale, an NFT purchase transaction can be compared to the daily consumption of an electric shower. Ethereum is one of the most widely used currencies in the token purchase process and can represent 48 kilowatt-hours per transaction. This is equivalent to 30 minutes of monthly consumption of a shower with a power of about 3,500 watts.

3. The notion of ownership of an NFT is questioned

When you purchase an NFT, you are purchasing a digital certificate registered in the blockchain that gives you ownership of a digital file, be it a .JPG image, an animation, a video, a song, and more. What not everyone knows is that the copyright of the piece remains the property of the author. Without permission to browse the work, the buyer, in theory, could not even display the material in a gallery or on a website.

Buying an NFT is not the same as getting copyright for a work – Photo: Picture Alliance / Getty Images

It’s also worth asking how much it makes sense to spend money on owning an original version of something that is perfectly reproducible. After all, do you need to own an original .JPG file for a meme or digital art, for example, to enjoy them? The answer, of course, is no. This helps explain why NFTs have become increasingly speculative, in which investors are looking for profits, and not necessarily the appreciation of digital art and culture.

4. NFTs may endanger the security and privacy of users

Cryptocurrency transactions operate in a weak context of anonymity. You may not know who is behind a wallet, but you can clearly map your transactions to the blockchain. NFT, on the other hand, allows easy identification of user identification data.

For example, if you buy an NFT of a particular image and start using that image as an avatar on a social network, it will be easy to identify the transaction associated with the purchase. As a result, it reveals your entire cryptocurrency portfolio and transaction history.

Something similar happened to US TV presenter Jimmy Fallon. He bought an NFT from the Bored Ape Yacht Club collection and showed it on TV: within minutes, the network members were able to identify the transaction, the wallet used by Fallon, and the entire transaction history associated with it.

5. NFTs are not a good investment

If you see NFTs as a form of investment, it’s important to know that tokens are high-risk resources. NFT’s market moods change a lot and, unlike government bonds or corporate shares, there is no way to verify the intrinsic value of the asset purchased. Today, for example, the NFTs in the Bored Ape Yacht Club collection, which feature images of bored monkeys, are valued at thousands of dollars because there are buyers who agree with that value.

With no significant intrinsic value, NFTs can vary in value from one hour to the next – Photo: Pixabay

The problem is that when this type of content goes out of fashion or the masses change their minds – and this happens quickly and often – NFT can quickly lose value. Thus, what is bought for a few thousand reals becomes a quoted image for a few cents.

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

CRYPTOSHIPS: NEW CRYPTOCARS STYLE NFT GAME WITH “LOW” INVESTMENT

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