Four Important Facts About NFTs That Buyers Should Know
The manic fervor around NFTs is reaching a fever pitch. People are searching for the term "NFT" in droves, more often even than "Ethereum". The draw of NFTs is bringing people to cryptocurrency who otherwise never would have been interested, which is positive. But that's also a lot of people buying NFTs who don't know much about crypto, and NFT buyers are frequently misinformed about what they're actually buying and what rights it grants them.
The article linked below discusses in detail the following four facts about NFTs that all buyers should understand (but please read the whole article before forming an opinion about these points):
- There is nothing about NFTs that inherently prevents creators from minting and selling an infinite number of the exact same piece of digital art.
- Most NFTs are simply URLs that host a piece of art or bits of code that give the owner the ability to interact with a digital item while using a specific platform or app. This URL, platform, or app may go down permanently, potentially leaving the buyer with nothing. The right an NFT grants you is only access to that URL, or to interact with that digital item on that particular platform or app. You don't have any direct right to the underlying artwork.
- A creator or seller of an NFT must have the IP rights to the underlying artwork to be able to legally sell it to you. But the seller of an NFT is nothing more than an ETH address (unless they choose to provide more info), so it is not always straightforward to confirm that the person selling the art is who they say they are. If someone sells you art to which they don't have the rights, it is a violation of IP law and also they can't sell something they don't own, which could leave the buyer high and dry.
- The process of creating, minting, and bidding and selling an NFT typically consumes a large amount of energy and Ethereum fees.
Note: The point is not that people shouldn't buy NFTs. The point is only that buyers should be educated about NFTs before buying them, especially if they are buying them for speculative purposes. It is probably a poor idea to purchase an NFT for purely speculative reasons because the NFT market currently feels very similar to the ICO craze of 2017, and a lot of people got severely burned by that. Buy an NFT to support an artist you love or collect a piece of art you love – but caveat emptor if you buy one only for the purpose of selling it to someone else at a higher price.