During the start of the global COVID-19 pandemic, a new trend of investment online came in the form of Non-Fungible Tokens (NFT) which was essentially a hyperlink that leads to a unique token that is stored on a large server called a blockchain and these tokens usually are tied in with an image, they are traded with using the cryptocurrency Ethereum. Many viewed their rise as an opportunity for investment, especially as NFTs were primarily marketed as a means for artists to monetise their own art works, additionally a majority of NFTs feature copyrightable aspects, where the owner of the NFT would also own the assets related to it, an example would be one of the most popular NFTs Bored Ape Yacht Club, which allows owners of the NFT to also own the copyright of the character in the image, however the terms and benefits to vary between NFTs.
NFTs usually go for extremely high prices, as many of the popular NFTs could easily go for tens of thousands of United States Dollars, this would often be boasted in news articles and advertisements featuring NFTs, boasting the large price tag consequently luring in potential investors into these NFT projects, as the value of NFTs were told to increase given their scarcity in the quantity of tokens and the benefits offered by the project hosts, however, as time went on, it’s clear that NFTs despite an incredible marketing campaign which made their existence known to plenty of internet users on social media sites, NFTs had great sales at the start of their campaign however as time went on, it has dwindled down to a small handful of users trading NFTs amongst one another.
NFTs serve as an example of how what would at first be presented as a chance to earn money thorough investing, can be dubious and malicious due to the practices behind it, case in point is one of the more popular NFT project, Axie Infinity, which offered players the chance to earn money though playing a video game where the NFTs purchased are used as characters, this however has led to a system where rich individuals purchase multiple NFTs and create teams where people who couldn’t afford such teams will rent those teams and cut deals with the owner of the team to split profits made in the game, consequently creating an exploitative market where the rich further their wealth by exploiting off the desperation of those in poorer circumstances.
NFTs have grown from an opportunity for investment into a market where the rich individuals who have already invested into it become richer thanks to their access to capital, whilst those who have less money are often finding themselves losing out in the investment, with many NFTs losing value below their purchasing price, to even the projects having vanished with creators running away with the money they made, these tokens act as a cautionary tale for individuals regarding not just online investments, but investments as a whole, where promises of easy money and means to get rich could very easily be a scam, a reminder to be cautious online.
Allysa Marie S. Irada
Sources for this Article:
- Howcroft, E. (2022, October 3). NFT sales plunge in Q3, down by 60% from Q2. Reuters. Retrieved October 23, 2022, from https://www.reuters.com/technology/nft-sales-plunge-q3-down-by-60-q2-2022-10-03/
- Thuo, C. (2021, October 6). Evolved apes NFT project developer disappears with $2.7 million from the project’s coffers. Invezz. Retrieved October 23, 2022, from https://invezz.com/news/2021/10/06/evolved-apes-nft-project-developer-disappears-with-2-7-million-from-the-projects-coffers/
- Mattei, S. E.-D. (2021, December 2). Top 10 percent of NFT traders perform 85 percent of all transactions, new research reveals. ARTnews.com. Retrieved October 23, 2022, from https://www.artnews.com/art-news/news/nft-market-research-1234612143/