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This post is translated by ChatGPT and originally written in Mandarin, so there may be some inaccuracies or mistakes.
Photo by Fakurian Design on Unsplash
Before deciding to purchase an NFT, let's take a look at how it's described on Ethereum.
Recently, the term NFT has become a new trend, with everyone rushing to "collect" them. However, there are often misconceptions surrounding this concept. Here are some common misunderstandings:
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The essence of NFTs is not a scam, but their mechanism can be easily exploited for hype.
- Moreover, there are currently no legal avenues to address these issues.
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NFT stands for non-fungible token, which is translated as 非同質化代幣 in Chinese.
- Translating token as 代幣 feels a bit odd; I believe the word token better represents its underlying meaning.
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NFTs do not encrypt the content of your images, videos, texts, or works.
- Therefore, an NFT cannot be considered as DRM (Digital Rights Management).
- Your work's data will not be on-chain (to emphasize again, only the token and URL are on-chain).
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An NFT is not ownership of the work nor copyright; it merely proves that you own this token.
- This token will point to a specific URL, which displays the content of the work.
- Simply put, it's a pointer.
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Similarly, since it's a URL, the domain owner can control its content.
- From this perspective, NFTs are not truly decentralized.
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Likewise, the displayed content can vary depending on the marketplace.
- It might show A on OpenSea and B elsewhere.
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Once on-chain, the record is permanent; there is no chance for delisting or deletion.
- For example, if you buy an NFT that displays normally on A but shows some DeepFake pornographic video on B.
- Then, you could be implicated in distributing and spreading that pornographic video (especially if operating under a real-name system, as the transaction itself is anonymous).
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How should the income from trading NFTs be handled?
- If it follows a real-name system like in Japan, the tax authorities will have no trouble tracing it.
- How the tax system differentiates this is something to consult with lawyers or tax professionals.
However, most articles emphasize the value of "digital collectibles." But if you don't understand how NFTs fundamentally operate, you're essentially just handing money to scammers, with no regulatory oversight. Recently, a 30-year-old woman tragically took her own life after falling for a scam after believing in the dream of getting rich through cryptocurrency.
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