Written By: Security.org Team | Published: June 3, 2021

NFTs are a hot topic, but many people don’t truly understand what they are: a new technology that’s verified by blockchain and can’t be forged. We asked adults in the U.S. about their familiarity with NFTs and whether or not they could define them correctly. Our key findings include:

  • Approximately two percent of U.S. adults have bought or sold NFTs, amounting to just over 4 million people.
  • In general, we believe familiarity with NFTs is lower than what previous polls suggest. Even among those who say they are familiar with NFTs, only about a third could correctly define them. More than seven out of 10 Americans either are unfamiliar with NFTs or don't know the definition.
  • The people most likely to define NFTs correctly are men between the ages of 30 and 44. Men are 46 percent more likely than women to define NFTs correctly, and people ages 30 to 44 are 12 percent more likely to know the correct definition compared to the general population.

Awareness of NFTs

Although NFTs are a relatively new technology, first launched in 2017, they have received a lot of publicity. Previous surveys suggest that 40 percent of U.S. adults are familiar with NFTs, while 81 percent are aware of them. However, the poll asked respondents these questions only after defining an NFT.

In contrast, our survey did not define NFTs to our respondents before asking about their familiarity and awareness. Accordingly, much fewer people reported familiarity with or awareness of NFTs. About two-thirds of respondents had never heard of NFTs prior to the survey, and only 18 percent knew what they were.

How familiar are you with NFTs (non-fungible tokens)? Responses
I've never heard of an NFT before this survey. 66%
I've heard of an NFT before this survey, but I'm not sure what it is. 14%
I'm somewhat familiar with NFTs. I know what they are used for but have never purchased or sold an NFT before. 18%
I'm very familiar with NFTs – I have purchased or sold an NFT in the past. 2%

Moreover, in a follow-up question to those who said they were familiar with NFTs, when asked to define them, only a third could define them correctly as digital assets that represent real-world objects. 

What is the definition of an NFT, or non-fungible token? Responses
I'm not sure 53%
A cryptocurrency, like “bitcoin.” 15%
A physical collectible, like a “baseball card” or “rare coin.” 2%
A computing language for industrial equipment. 0%
A digital asset that represents a real-world object, like music or art. 29%

Most people weren’t sure of the definition, while 15 percent believed that NFTs are a cryptocurrency like Bitcoin. However, two groups, based on age and gender, were more likely to define NFTs correctly: 

  • Age: People ages 30 to 44 are the most likely to define NFTs correctly at 38 percent. The group least likely to define NFTs correctly is those aged 60 and older at only 16 percent. Those ages 30 to 44 are 12 percent more likely than the general population to know the correct definition of NFTs. However, people ages 18 to 29 were the group most likely to claim familiarity with NFTs, although they were 13 percent less likely than 30 to 44-year-olds to know the proper definition. 
  • Gender: Moreover, men are 46 percent more likely to know the correct definition of NFTs compared to women. Concurrently, women are 36 percent more likely to be unsure of the definition of NFTs compared to men. 
What is the definition of an NFT, or non-fungible token? Male Female
I'm not sure 44% 60%
A cryptocurrency, like “Bitcoin” 17% 14%
A physical collectible, like a “baseball card” or “rare coin” 4% 1%
A digital asset that represents a real-world object, like music or art 35% 24%
A computing language for industrial equipment 0% 1%

Ownership of NFTs 

Currently, two percent of Americans have purchased or sold NFTs, or 4.1 million people. Despite the differences in familiarity and awareness, men and women are equally likely to have bought or sold NFTs. In contrast, differences in age and household income correlated with increased likelihood of past NFT ownership:

  • Age: Adults ages 18 to 44 are twice as likely as the general population to have bought and sold NFTs, at four percent compared to two percent.
  • Household income: Adults with annual household incomes between $125,000 and $149,999 are three times as likely as the general population to have purchased or sold NFTs in the past. 

What Are NFTs?

NFTs are non-fungible tokens, meaning that each asset is unique and non-replaceable. An asset verified by blockchain technology, networks of computers record transactions to give buyers proof of authenticity and ownership. This makes digital artwork unique and sellable, along with songs, videos, GIFs, and other digital assets. While these digital goods have been either cheap or free previously, NFTs link digital files to their original digital artists.

Can NFTs Be Copied Or Stolen?

Although NFTs provide unique ownership of an asset, the asset can still be copied and shared. Additionally, the creator may retain their work’s copyright. What the buyer owns, then, is a token that proves they have the “original” asset, comparable to buying an autographed photo or a baseball trading card. While the asset can be copied, NFTs can’t be forged as they’re maintained by thousands of computers globally.

How Do NFTs Work?

NFTs “tokenize” digital art to create buyable digital certificates that prove ownership, stored on open-sourced ledgers known as blockchains. Unlike cryptocurrency, NFTs are non-fungible and cannot be traded. 

Uses

Some uses of NFTs include: 

  • Art 
  • Cryptocurrencies
  • Collectibles
  • Games
  • Music
  • Sports 

John Baird, CEO, and co-founder of global identity verification company Vouched, explained the possible uses of NFTs.

“The list of items to which NFTs will be applied is vast and expanding. Certainly, the first use case is in the fine art world. In addition, a robust market has sprung up in the sport-card collectible market, showing short clips of great moments like a touchdown pass or three-point shot. The libraries of seminal moments from movies, TV shows, cartoons, etc. can become NFTs.” 

As an example, Baird says that someone could own the moment in “Scarface” when Al Pacino’s character says “Say hello to my little friend.”

NFTs: Pros And Cons

Are NFTs a fad, or are they here to stay? At this point, it’s up for debate, but it’s clear that they have their advantages and drawbacks. 

Pros

  • Verifiable: NFTs let users verify identities and trace assets back to their original creators.
  • Decentralized: Buying and selling NFTs doesn’t require a centralized third-party like a bank or government agency, lowering their costs (although there may be a third-party involved in the selling process, like auction houses). 
  • No inflation: By being decentralized, NFTs avoid market inflation.
  • Ownership is final: Once someone owns an NFT, their ownership can’t be revoked.

Cons

  • Not user-friendly: Developers build NFTs on decentralized networks that require knowledge of blockchain technology, making mass adoption difficult.
  • Can’t be traded or divided: By being non-fungible, by definition, NFTs can’t be traded or divided like other currencies, which could inflate assets’ prices. 
  • Might be a fad: NFTs can only survive into the next generation if people are willing to pay more for them than the previous generation. As it stands, it remains to be seen whether people will be willing to take the risk and invest.

Methodology

We surveyed 569 U.S. adults on May 14, 2021. Our respondents included 259 men (46 percent) and 310 women (55 percent). The respondents’ age distribution reflected that of the U.S. Census; 17 percent, or 94 respondents were ages 18 to 29; 27 percent, or 151 were ages 30 to 44; 32 percent, or 180 respondents were 45 to 59, and 25 percent, or 163 respondents were 60 or older. 

To contextualize our research, we also included information from Bit Courier, the BBC, the New York Times, the Harris Poll, Vouched and Entrepreneur.com.