Lots of People Think NFTs Are Cryptocurrency (and They're Wrong)
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Between Dogecoin, Mooncoin, Garlicoin, BaconCoin and so many more... there are a lot of cryptos to keep straight. But "NFT" isn't one of them.
That's right, an NFT, or non-fungible token, is not a cryptocurrency. But if you didn't know that, you're not alone: More than 1 in 10 people (12%) think NFTs are a form of cryptocurrency, according to a new poll from Money and decision intelligence company Morning Consult.
The 2,210 respondents of the survey were given a lineup of potential definitions for NFTs, and only 26% chose correctly.
In addition to the misunderstanding that NFTs are a kind of cryptocurrency, 7% incorrectly thought NFTs were a physical asset traded online using blockchain technology, and 12% wrongly identified them as digital assets that can be bought, sold or traded with U.S. dollars. (This survey took place before reports that NFT marketplace OpenSea is rolling out direct card payments.) The rest of those surveyed (43%) said they didn't know or had no opinion on what an NFT is.
NFTs are a new innovation, and the technology is definitely confusing, so don't beat yourself up if the question of what an NFT is leaves you stumped. Plus, while they aren't actually a kind of cryptocurrency like bitcoin, they're in the same ballpark.
Are NFTs a form of cryptocurrency?
First, let's nail down the definition: NFTs are unique digital assets with ownership data that can be stored on a blockchain and bought, sold or traded online.
"Non-fungible" refers to something that can't be replaced in the same way that, say, a dollar bill can. That means that if you buy an NFT of the Nyan cat with a Pop-Tart for a body, or Twitter CEO Jack Dorsey's first tweet, you and you alone own that digital asset.
While you likely can't actually get your hands on those NFTs — they sold for nearly $600,000 and $2.9 million respectively — you can buy other NFTs on marketplaces like OpenSea.
That's where cryptocurrency comes in.
Typically, you haven't been able to just fork over U.S. dollars for these digital assets. Most NFTs are part of the Ethereum blockchain, and are bought with the native token of the blockchain, ether. In short: ether is a cryptocurrency, and an NFT is not.
"The biggest barrier to understanding NFTs is that they are based on the complicated technologies of blockchain and cryptocurrency," Charlotte Principato, a Morning Consult financial services analyst, wrote in an email to Money.
An earlier Morning Consult survey found that people who own crypto are much more likely to be aware of NFTs than those who don't. The same goes for their awareness of terms like blockchain and Web3.
We see hints of that in the Money and Morning Consult study, too. For example, millennials and men, who are most likely to own cryptocurrency, report better understanding of NFTs than other demographics, Principato said.
Roughly one-third of male respondents (32%) identified the correct definition of NFTs, versus 20% of female respondents. Meanwhile, 31% of millennials chose the actual definition compared to 26% of Gen Z-ers, 22% of Gen X-ers and 25% of Baby Boomers.
"It is very likely that the respondents who reported higher understanding of NFTs are cryptocurrency owners," Principato added.
Julia Glum contributed to this reporting.