Are fungible tokens and NFTs just a scam?

They're this generation's beanie babies.

Unofficially, ya, pretty much. They're real things but their usefulness is debatable. It seems like people get caught up in the hype and the potential but no one has ever really found anything to actually *do* with them. They get created and then..... what? No one really knows what the next step is. But all scammers need is the hype to be able to sell it so they're all-in on it. That's why crypto and the like are just beacons for scams.

I think you might enjoy Dan Olson’s video Line Goes Up

The point of NFT's is the next buyer pays more for it than the last buyer.

It's an investment. A bad one, usually. Technically it's not a scam in itself, since you get what you paid for.

NFTs are a scam to get people to buy crypto, which is also a scam.

Yes. NFTs and cryptocurrencies have zero use cases except to facilitate crime.

Yes

If NFTs meant you owned the IP rights, it might make sense.

But you don't. It's simply a link to the image. That link could go away.

It makes no sense. Beanie Babies actually makes more sense, LOL.

NFT's had the potential to not all be scams several years ago, but nothing useful ever happened with them and now it's all scams.

The tl;dr idea of NFT's is "I can prove that I have ownership of this digital thing because the blockchain can prove it with my unique identity where I have a receipt". There could have been some places where that was useful (e.g. event tickets, owning copyright for an image that can be resold, some government documents) but instead it all focused on crappy monkey jpegs instead.

Even during their heyday 2 years ago it was ~88 - 92% wash trading (creating fake volume by "selling" an NFT to yourself to make a collection look valuable, as well as harvesting crappy crypto rewards in the process). It's pretty much always relied on the "greater fool" idea where the greatest fool will be the last one holding the bags when it all crashes.

There are a few people who still trade NFT's, but the vast majority are just hemorrhaging money and/or from starved nations where a single sale of something will feed their families for a month and they're just trying to pretend this whole thing never crashed. Ironically, reddit collectible avatars are apparently still being traded, though they're not generally worth much.

The "muse" scam is alive and well in this world, though: people will offer to buy artist's art with crypto if they post it on a scam site which will fool them into thinking they're being paid thousands of dollars in Ethereum, but none of it is real (aside from the "fees" paid to the marketplace to release funds). I try to warn marks about that often in r/NFT (it's asked about daily in there) because I personally don't believe anybody deserves to be scammed.

Short answer: Yes.

Long answer: Fucking, yessssssssssssssssssssssssss.

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Longer, less-flippant answer: Despite what the people who develop and release NFTs (and, well, any cryptocurrency for that matter) promise, there is no real situation in which these things aren't at-best, a holding-the-bag scheme.

Pyramid Schemes are a type of this, where it's structurally-inevitable. At some point, it's just going to be mathematically-impossible (and long before that, mathematically-improbable) that each new level of the pyramid will be able to recruit more members than their current level, thus, there will be a point where the money coming in from new investors is not enough to replace the money previous investors themselves sunk into the scheme. (MLMs technically, theoretically avoid being 1:1 this, because theoretically new members can possibly sell merchandise and recoup their investment through that at any point - But the way most money is made by individual members is by selling starter-kits and replacement supplies to new recruits, and taking a cut of sales from everyone down your recruitment chain)

But pyramid schemes aren't the only type of bagholder scams. They have a set expiration date - Some scams are more expressly rug-pulls (a term you frequently hear with regards to crypto schemes that are even more outright scammy than usual). The creator/perpetrator knows it's all bullshit, promises a bunch of things, gets a bunch of money, then fucks off with it [ie: Pulling the rug out from under their investors/marks], never to be seen again, leaving their marks with pretty much no recourse.

Even in the case of more-honest crypto-stuff - Ones that truly believe in their product and its usefulness, it boils down to this: NFT/Crypto, as non-fiat currencies, never have any guarantee of any value. They're only ever going to be worth what someone is willing to give you for them - Most commonly, in a different, mostly likely fiat, currency, or perhaps in exchange for some other goods/services (if you're trading NFTs for cryptocurrency of some sort, for instance). The problem is that, by definition, investment strategy is to acquire something for a lower amount of money/resources/what-have-you, and then sell it to somebody else for a higher amount of money/etc. This is all well and fine as long as you're able to find someone else to sell it to, and at least get your "actually-useful-in-normal-situations" currency-value back out.

But, as with any market, values will fluctuate based on demand - And unlike say, stocks controlled by a corporation or a fiat-currency from another country or something, there's not really a coordinated group officially setting policy in order to increase the value. There's no streamlining a cryptocurrency's corporate structure to cut overhead costs, or such, right? Cryptocurrencies (including NFTs) are purely market-driven. They'll never have a new product line that'll revive the price. They'll never be tied to a nation-state's new discovery of a rare-earth metal mine or such to make it more likely that people will want to buy some of their currency to spend on their products. At best, you might have some people create a new line of NFTs that they'll only accept that type of crypto for, hoping to attract speculators - But again, that will only last as long as people believe that currency is useful to possess. Either as a means for some other exchange, or as something they'll be able to flip for more money back after a certain point.

But if the people who have been buying and selling it decide that they will not value it that highly anymore - Well, then... Sucks for everyone who bought in at the higher prices and can't offload it!

Plus, with crypto and NFTs, they're wholly-digital items, you can't even strip them for parts/materials to partially-recoup your loss, like you could if you'd bought a car that turned out to be a complete lemon, or if you had bought physical metal coins that you theoretically could melt down. and sell for value of the metal at least.

So, those people, yeah, they're just left holding a bag of something completely worthless. And hopefully, they didn't spend more than they could afford to gamble on that bag.

The people who hyped up the currencies and NFTs early? They flipped it for more than they bought in for, and have no legal responsibility to help those who bought from them. Hence why you get a lot of those kind of assholes that loudly proclaim "You gotta buy now!", creating a demand, and making their own holdings more valuable when they flip them.

Now, a lot of these kinds of problems can arise in traditional investments as well - But there are regulatory agencies and legal penalties put in place to punish those who knowingly scam people out of their money or use unfair advantages in trading.

But who is there to hold accountable when the customer/investor knowingly buys something that doesn't have any guarantee of value, and has no central corporation directing the way the currency will theoretically generate new value?

Like, under the best of circumstances with crypto/NFT, the goal is to pawn it off on to someone else and hope you're not the one who gets stuck with it when the time's up and the value falls. There is no way to win at this game that will not result in someone else losing.

And honestly, for me personally, I really would not feel comfortable profiting knowing that it comes at the cost of someone else's money in this way that purports to be a legitimate business investment. I'd rather just gamble or play poker against them something like that, y'know? At least that scenario is honest about what it is.

For a longer, way better said and presented examination of what the whole deal with NFTs (and crypto) is/are, I heartily recommend Dan Olsen's Line Goes Up

Here's a bit more of a comprehensive history:

In theory, NFTs can have some value. Using them to trade concert tickets to get away from aggressively greedy companies like Ticketmaster is a commonly cited idea, but I have yet to see that done in practice because those companies fight tooth and nail to maintain their control over the market.

However, almost immediately people stopped caring about the actual value behind the NFT and instead treated the NFT as an abstract tradable investment where the thing behind the NFT can be some worthless ugly monkey picture and the actual value comes from how much profit they can make selling it.

At some point in the beginning, initial hype over something new and exciting led to some people making a lot of money of them (quite often the people originally making them instead of the ones buying and reselling them). Stories of other people getting rich off of crypto currencies helped.

Those success stories were used to lure in new suckers to buy them. "You wouldn't wanna miss out on a chance to get rich without any effort." People buy it because they think they can get rich selling them. And if they managed to sell it for a profit, their success story just reaffirmed the worth of the NFT, helping the next person to sell it for more yet again.

Obviously that can't go on forever, eventually you don't find anyone who has the money to spare to buy one anymore. The NFT bubble popped fairly quickly, but since the people making, holding and/or selling them depend on other people thinking that their NFTs are valuable, they kept trying to gaslight people into thinking they are valuable.

At that point the only way to make any decent amount of money off of NFTs was to create and launch some new collection and then sell it as the next hot thing and that people should buy it now while it's cheap. And people did/do buy these, just on the off chance that they take off and become stupidly popular. However, the market is flooded with these, so none of them do.

As a recap, the NFTs actually in circulation were only worth as much as you could profit off of them, and you could no longer profit off of them (in like 99.99% of the cases at least). However, anywhere you go on social media you would hear success stories and other bullshit on how valuable they are, because some people were desperate to make a profit after they stupidly invested in them.

At that point many companies and social media managers for celebrities were like "Look at how much NFTs are talked about, we can't miss out on this" and joined in on the whole thing, launching their own line of NFTs or at least otherwise promoting them. That's the reason why many of the famous people you see talk about NFTs talk about them: It's a publicity stunt because they were trending, not because they have any value.

Sometimes, these companies/social media managers are a little behind the times. The NFT hype died, they've steadily lost value for months, and anyone still talking about them is someone who hasn't got the memo yet and is trying to cash in on the popularity they had, either because they still try to sell or just as a publicity stunt to get attention.

YES. For all intents and purposes, yes.

The entire NFT scheme was created to scam people in every turn, from start to way past the end.

Anything involving NFT is a scam.

https://en.m.wikipedia.org/wiki/There%27s_a_sucker_born_every_minute

Not a scam persay but just a really bad deal that carries a lot of risk.

Yes.

obviously. you don't actually own anything when you buy them. its just a link to an image. you don't even own the image

the people who are saying they are investments are wrong you literally don't own anything when you buy them

https://www.youtube.com/watch?v=i_VsgT5gfMc

Yes. But also yes.

There are scams that use these technologies for sure. Simply buying and selling them through legit sources might be better likened to gambling.

For sure

Yes

It's a glorious combination of greed and stupidity. Comedy godl all the way to zero.

https://www.theguardian.com/technology/2023/sep/22/nfts-worthless-price

TLDR, yes, they're worthless.

I’ve read of people spending millions on an NFT one day and then it losing all value the next. I don’t understand them at all. Like what’s the point?

The initial craze of NFTs was popularized by people who owned or were big investors in the platform that sold said NFTs. The reason they spent large amounts of money on NFTs was for the news headlines, to make people want to go to their platforms. It didn't matter to them that they paid a ton on the NFT, since they would be making money through getting more people to use the platform itself. (That's not even considering they may have "gamed" the sale, such as buying the item from someone they know, and that person buying something else from them for the same value. Two item sales for millions, but essentially no money trading hands).

The vast, vast majority of people after that bought NFTs in the hopes that someone else would want to buy their NFTs, causing the price to appreciate greatly. For some of them, that did turn out to be the case (mostly the early adopters), which makes every later purchaser think they could also make a profit. Hence, why people call it a Greater Fools scam.

I’ve often wondered about NFTs and why people would spend millions on something that isn’t real.

There's not really anything wrong that part, though. The issue with NFTs isn't that the item is digital. It's that the digital items are not unique, and NFTs are trying to make them unique but fail to actually do that. In addition, no one actually cares about that part of NFTs. They only care about the value of NFTs if it can be sold to someone else.

Yes. They're all just scams. Imagine someone trying to sell you a picture drawn on monopoly money or trying to get you to give them $100 for a dollar bill with an interesting serial number.

I don't think they were a scam, but too many people thought that they were some new kind of crypto currency.

/r/diemos09's comment about Beanie Babies is right on target.

I once heard nfts refered to as a ”pyramid scheme for virgins”,

Money laundering scheme.

Technically, no, but practically, yes.

NFTs are a real technology, the point of which is to create a digital object that is truly one-of-a-kind and can always be distinguished from any copies made. This could be useful in a few different industries and scenarios, but most people aren't going to encounter these scenarios personally.

The primary way a regular person comes into contact with NFTs is through someone trying to sell them as an investment. These investment pitches are scams. All the projections about how much your NFT will grow in value are bullshit.

I wouldn't say "just" a scam, but mostly a scam. I'm sure there are at least some people in those fields that are trying AF not to scam people, but it looks like it's a loosing battle.

If you are into books you should read "Number Go Up" by Zeke Faux and "Easy Money" by Ben McKenzie. They are really fun and although they are centered on the FTX scandal they touch a variety of topics. Also, they are not economists by trade so they use a down to earth language.

There's also Molly White's newsletter "Citation Needed" that talks about all scams related to the crypto-verse and it's free.

Yup.

I'll try and play devil's advocate here because a lot of these comments are solely focusing on what is the most popular form of NFT today, in the form of digital art. Whilst it is true the vast majority of these have meaningless value if nobody wants to buy them (exactly the same a real world art) there are really interesting use cases of digital art Nike ran an incredibly successful campaign, alongside many popular fashion houses using NFT's as collectibles to run alongside real world campaigns, these NFT's can grant early access to limited drops so most certainly serve a purpose.

However there a many use cases outside of digital art, along the lines of authentication and proof of ownership known as smart contracts. These are already being used in the event ticketing space to tackle tickets touting, with further applications in any space that legal contracts are required to be passed around signatories digitally. There are a lot of scams run in the housing market space with people 'selling' homes they do not own, which is another area NFT's would have a use case for.

But the short answer is yes there are a lot of scams currently. But to suggest the technology is a scam would be wrong

also is anyone not embarrassed to admit to buying an nft from Melania trump cuz that's comedy

it's a scam

Pyramid Schemes for men

there are a few that actually have some use. I play a card game where the cards are nfts. you can buy or sell them to use in the game

Just like crypto it’s usually a pump and dump. Usually it’s all speculation so the goal is to get in before the hype, sell at the peak. Repeat. Crypto has no real utility so far and mostly is based on speculation. Crypto especially bitcoin was supposed to be the peoples money but even that is now centralized in the hands of the rich. It’s all speculation and anything that has no real value and is based on speculation is going to either explode in value or fade into irrelevance. Play your cards right.

ALL cryptocurrencies and NFTs are scams. Period. It's the business of scamming.

Just look at NFT activity time - starting with Covid and ending right with it. It was just a replacement for usual art tax wright-off and art money laundering, because you couldn't do that with usual art galleries.

Yes

The joke was on us

I think they are a really neat concept of art but the insane values put on them are almost always absurd

When you purchase a NFT it seems like you are buying the receipt. Any one can get a free copy of the artwork, but you can say you have the original receipt.

The “legal eagle” on YouTube has a nice breakdown of how they work. But yea, it seems like a scam.

Physical gold is the only real gold, rest is all just a credit.

What it implies that anything not physical has no real value, imagine if we all servers go offline, or you cannot access it, it’s value becomes zero.

Not inherently but their nature makes it very easy to be the subject of scams. Buying them on a legit exchange is not a scam.

I haven't trusted in NFTs since I began my cryptocurrency journey. If it's not an outright cryptocurrency, I'm not interested. 

Monkey photos and dog coins, yes. But real world asset tokenisation I think is going to be very big

I think a lot of NFT is straight out scam. The other half is scammy, but legal. And neither have any utility or any real value other than speculation for super rich people who don’t know what to do with their money (and who wouldn’t be any less rich if they lost some in NFTs).

In a word, yes. They are legally dubious at best.

Famously

Two words: money laundering.

Well Fungible tokens IMO have value. Now TRUE fungible tokens that are actively used in p2p transactions are exceptionally rare in the crypto space. But yea NFTs are scams 100%.

The ridiculous prices of NFTs was a result of a market craze and the old scheme of laundering money.

Are they a scam? Well anything can be a market scam. Selling a car tire for 30000 usd could be a scam.

NFTs have a place at a fair market price. They also provide wider access to block chain technology.

Is paying millions of dollars for a picture of an ape a smart business decision?

I have an NFT that I’ve used for perks in real world situations.  It’s music based, and have used it for concert related perks.  Has benefited me multiple times, and I definitely feel it was worth the money paid (a little over $300).  I only own NFTs that give me real world perks based on my interests, I don’t see a reason to own an NFT as a financial investment.  

Yes.

Are you saying that the people that bought the Trump NFTs were scammed? 😂

Yes they are. Anyone can right click save as and remint.

NFTs (non-fungible tokens) and fungible tokens are not necessarily scams, but there are legitimate risks associated with them.

The blockchain technology itself is not a scam-– it's a legitimate way of recording and verifying digital transactions and ownership in a decentralized manner. So, when you say NFT I assume you mean pictures or art, and not NFTs in the general sense (a Non-fungible token).

NFTs as a technology do have many legitimate use cases, such as verifying ownership of digital assets like art, music, or in-game items. The technology is designed with real-world utility in mind, such as facilitating secure and efficient transactions, again decentralized. For example, NFTs can/could be used to change ownership of real world items like cars and real estate.

Overall, buying NFT artwork from reputable artists on established platforms could be viewed as a form of digitally collectible art, with value coming from a combo of aesthetics, scarcity, and having verifiable ownership recorded on the blockchain. Everything that makes a collectable, collectable and have value to collectors. The different, is the verifiable ownership lets provenance be easy to prove of an item, with the tradeoff of not being able to hold it in your hand. Can you screen capture artwork and save it to your device? sure. Can you prove to the next collector you own that artwork? Nope.

Nevertheless, the risks of speculation, legal ambiguities, and "cash grab" fraud schemes mean collectors should be very cautious about purchases and realize much of the market is still highly speculative.

Properly understanding what you are buying is key.

The best way to think of what an NFT actually is is to compare it to something in the real world.  The purpose of an NFT is to basically be a digital title or deed to an item which is then logged on a block chain where ownership is incontrovertible.

The problem with NFTs is that nobody has a really good idea on how to make any honest money with them.  We ended up with a solution looking for a problem and people came up with algorithmically generated monkey jpegs because no one knew what else to do with this technology. 

And that's what the problem is with NFTs - nobody knows what to do with them, and so you end up with all of the people watching the one somewhat successful application of Blockchain technology - cryptocurrency - and trying to figure out how to either get rich quick or grift the people who think that they can get rich quick off of an application developed from the same technology that made people rich with Bitcoin.

tl;dr - Nothing I've seen yet in the NFT space shows any sign of being more than pump & dump rug pulls and until I see something where people actually develop a use for the technology I wouldn't touch it with a ten foot pole.  Doesn't mean it can't happen, but it hasn't happened yet.

I mean.. not a scam scam. But I lost like 1k to them. It's pretty pretty close to a scam

Yes its a scam, there is no government in this world that would assume that you are the rightful owner of a piece of copyright just from ownership of an NFT alone. And the fact that NFTs can be hacked/scammed/stolen means that they are in fact more vulnerable than the regular copyright process.

It is this generations version of the moon property/star naming scam, where they sell you something that no governing body will ever recognize.