NFTs are experiencing an unprecedented boom and strangely enough, everyone wants to be a part of the revolution. On social media platforms, this form of digital art is getting a lot of clicks and the public in general is curious to get involved.
Many influencers and subject experts are sharing their views and the inflow of funds is also huge, to say the least. Undeniably, the way this niche is set up, it is bound to collapse and the only uncertainty in this equation is the time.
The world of NFTs contains a lot of scams and retail investors are getting conned almost daily. Lack of understanding and awareness are the main pitfalls and it goes without mentioning that the scammers are the ones that are making the money at the end of the day.
While many people are still debating the merits and demerits of Non-Fungible Tokens, the future for the most part is still bleak at best.
Too Many Fake Stores
NFTs have been around for roughly a year now and still, there is no solid way to address the fake store problem. The most common type of NFTs Scam involves a fake store and scammers are selling jpeg images for thousands of dollars.
As the majority of investors aren’t educated about this niche, they fall for the trap quite easily. There are a handful of legitimate options present. However, fake stores are growing rapidly and criminals are making a fortune by selling right-clicked images of random artists.
So, be careful when purchasing digital art, and do understand that exclusivity is lacking in this sector. Also, do not forget to check the ratings and user feedback of platforms that have caught your attention. Though few parameters can be faked, the internet has made it almost impossible for scammers to cover up the truth.
Lack of Exclusivity
Art, copyright, and exclusivity share a lot of similar things. NFTs on the other hand are all about scarcity. A lot of investors are currently flooding this sector and are doing their best to make money via flipping. Thanks to the bull market, the majority of the crowd can make money.
However, that does not mean that they are smart. NFTs are truly unique, but it does not grant much exclusivity and copyright ownership to the buyer. Of course, in token form the buyer holds the right, but it may not amount to much in the future and the volatility is through the roof.
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The value of a token is driven by speculation and it can go down very quickly too. Moreover, there aren’t many instruments you can utilize to mitigate the risk. In other words, this market is not mature enough and you should not invest significant money unless you have a clear edge.
Lack of Regulation in NFTs
Centralized systems have a bunch of disadvantages, but they do have merits and the big one is the regulation aspect. Traditional instruments are heavily regulated and it gives the utmost level of security to the investors.
On the other hand, NFTs are not something that can be under the radar of authorities yet. The loopholes are plenty and the fair value is almost impossible to predict precisely. For the average investor or dabbler, this instrument is not the perfect fit.
While it is perfectly natural to feel enticed by the inflow of money, do not make any hasty decisions. Remember, any sector that helps you make quick money can also cause you immense pain.
Are NFTs a scam?
Non-Fungible Tokens by themselves are not a scam. However, given the way these assets are sold and the lack of transparency present, it is not a sustainable trend. Blockchain aspect applied to the world of art and memorabilia brings a lot of merits to the table.
Nonetheless, just because something is practical and innovative, it does not necessarily mean that you will make money from it, right? Always be sensible and never get involved heavily in NFTs at least for the time being.
Gambling a few bucks is acceptable to a certain degree, but investing thousands of dollars without a clear edge will certainly backfire.
What does the future look like?
Many influencers and celebrities are supporting and riding the present trend. People in the tech sector themselves have conflicting opinions. After analyzing this sector from every angle, one thing is clear, there is no such thing as a sure shot. Also, it is too early to predict the way things will unfold.
We advise people not to dabble too much unless they have some spare cash to throw around and see what happens. If you want to enter mainly as a flipper, then there are a lot of things like gas fees, exchange fees, and royalties that you need to work with. All in all, it is not an easy cash grab.
Blockchain technology has so much to offer, but the infrastructure is not fully ready yet. Of course, if you have an edge, it makes sense to indulge in it. However, do keep in mind that things are tricky and rug pulls can happen at any time.
Let us know your opinion on NFTs by commenting below.
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