Not All NFTs Are Worthy Investments

Non-Fungible Tokens (NFT) are increasingly popular items among crypto enthusiasts. Many investors use this crypto craze as an “exit strategy” for their crypto investment gains.

Some have made a tremendous amount of money with cryptocurrency, so when they moved some or all of their money out, they created or bought NFTs. These digital ledgers have allowed some folks to strike it rich with seemingly, little actual work on their part. But looks can be deceiving.

This phenomenon is partially due to the accessibility of platforms like OpenSea, “the world's first and largest NFT marketplace.” There are hundreds more, such as Axie Infinity, Rarible, Nifty Gateway, Decentraland, SuperRare, and others. NFTs seem to be sold and traded at rates far higher than other types of artwork. But are they really?

Have you purchased a Rembrandt or a Picasso? I’m certainly not saying these are comparable to the masters, but as they say, “beauty is in the eyes of the beholder” or HODLer. Scarcity and the possibility of reselling these for a colossal profits make them a popular commodity amongst art lovers and those invested or interested in cryptocurrency.

Can you strike it rich with NFTs?

Artists and traders have made millions of dollars by creating, selling, and trading NFT properties on OpenSea. Digital illustrations can command tens of thousands of dollars on their first sale, and they are known to appreciate in value after trades—many making millions for their sellers. Artists receive a portion of the sale every time an NFT is traded, allowing them to rake in commendable revenue.

If you look at some groups buying and selling on OpenSea, you will quickly see the Clone X - X Takashi Murakami, whose collection is up 138%, Killer GF, up 117.52%, the Bored Ape Yacht Club (BAYC) up 62%, and others.

Many NFT enthusiasts see people young and old making massive profits from buying, selling, and trading NFTs and crypto, but you typically only hear the success stories. You never hear about the guys and gals who created hundreds of NFTs, paid the fees to get them listed, and made nothing.

Remember when CryptoPunk #7804, an alien wearing a hat, small shades, and smoking a pipe, sold for $7.5 million? Those are the stories you will always hear about in the NFT world.

Just today, Mega Mutant Ape #6942 sold for $17.73 million.

The drawbacks & difficulties many experience in the NFT world

However, the growth of NFTs over the past several months has made the form of digital ledger susceptible to scammers. Pump-and-dumb schemes, like what many thought occurred around the "Gamestonk" phenomenon, are common in the NFT world.

If you’re not familiar with what happened with Game Stop, the company was having financial difficulties and many large stockholders started “shorting” the stock.

“Shorting a stock means opening a position by borrowing shares that you don't own and then selling them to another investor. Shorting, or selling short, is a bearish stock position -- in other words, you might short a stock if you feel strongly that its share price was going to decline.” —The Motley Fool.

The issue here was many faithful “gamers” on Reddit, r/WallStreetBets subreddit, a group with more than 2.4 million members, “pumped” the Game Stop stock, and it rose 1000%, only to falter and fall back.

Many thought this was a “dump and dumps scheme,” but most of these players were loyal to Game Stop because that’s where they had been getting games for years and didn’t want “short sellers” to bankrupt it. It soon became a challenge to prop up Game Stop. I don’t want to go too far down this rabbit hole, so you can just read the other links for more info.

Scams are abundant in the crypto market, so it is vital to stay alert when purchasing. In these scams, a group of people (or profiles) artificially manufacture high prices by purchasing several NFTs on OpenSea or other trading exchanges. Then, once the price is high, the group cashes out, and those left often lose most of their investment value.

Additionally, plagiarized and counterfeit NFTs are becoming increasingly common. OpenSea has made it quick and easy to mint any photo or image as an NFT – regardless of whether that person owns the intellectual property. That means scammers steal artwork en masse, generating wealth from someone else’s talent. Once intellectual property law catches up to this criminal activity, this could mean that counterfeit and plagiarized NFTs are seized and returned to the owner. However, that rarely happens.

Phishing is another common and debilitating NFT scam. Accidentally clicking on a suspicious pop-up in your crypto wallet or hosting platform could result in draining your digital wallet, accessing personal information, and, in corporate environments, hacking into essential databases, like payroll and accounting data.

Are NFTs Worth Your Money? | The Daily Show

This is an excerpt from The Daily Show with Trevor Noah. Although he’s quite comical, he makes some excellent points.

Should you take an NFT creation class?

I’m not sure how this would work, but I have seen this ad for an NFT worldbuilding class from IGN online. However, I have heard some complain that they created NFTs, paid the ledger fees, and their work just sits there online with no interest.

At least, after spending $29.99, you will have a better understanding of what you are getting into with NFTs.

It might also depend on your talent level. If someone paints a nice picture and puts it in an art gallery, it might not draw interest there either if they have no talent. But who knows what will draw interest.

Like Langlois, the 18-year-old who has reportedly made $18 million in less than a year told Raisa Bruner of Time, “We just grew up messing around on social media, watching YouTube videos, or playing video games. So, we understand, since growing up, trading digital assets in a video game and, like, working to get [things like] armor and leveling up. It just translates naturally to NFTs, because it’s like trading collectibles, or trading your art.”

Final thoughts about trading NFTs

Although some have been very successful, and there is big money to be made in this blockchain, cryptocurrency craze, not everyone will be able to create and sell a masterpiece.

Many experts recommend that you tamper your expectations and tread lightly. You should not gamble your future on something that might be a “flash-in-the-pan” fantasy. That being said, you will never steal second by keeping your foot on first.

Take some small risks, take a class, and put yourself out there.

You have to start somewhere if you want to be successful. Just be careful and do your research.

DISCLAIMER: This article is for entertainment and informational purposes only. It should not be considered financial or legal advice. Not all information will be accurate. I am not a financial adviser and anything I propose should be considered friendly banter to show you what is possible if you invest your money in these vehicles. However, there are no guarantees. Consult a financial professional before making any significant financial decisions.

Stephen Dalton is a retired US Army First Sergeant with a degree in journalism from the University of Maryland and a Certified US English Chicago Manual of Style Editor. Also, a Top Writer in Nutrition, Travel, Fiction, Transportation, VR, NFL, Design, Creativity, and Short Story.

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