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The Hilarious Scam of NFTs
4 years ago
WARNING: NFTs (Non-Fungible Tokens) are one of those topics where the more you learn about it, the dumber it gets. I am classifying NFTs as a cognitohazard.
DISCLAIMER: I am intentionally bypassing most of the technical jargon associated with NFTs, as the scam and scammers depend on the "Well, technically..." to convince people to put real money into this digital cryptocurrency scam.
1) Echoen / Balros, what is an NFT?
A Non-Fungible Token is a single bitcoin (a bitcoin is the title of ownership to the value of the Bitcoin) associated with an image, supposedly existing on a blockchain. Because of that association, that bitcoin is unique and can be identified - and because of the 'blockchain' it supposedly sits on, anyone can see who owns that token. Bitcoins are normally fungible because you can trade one bitcoin for one bitcoin and they are both the same thing. But because of that image association, that bitcoin is now unique.
However, there is no regulation nor controls over what that image is. Anyone can take any picture, or screenshot of a picture, or screenshot of a photograph of a tweet of a screenshot of a picture of a photograph of a tweet, and then associate a bitcoin with that image. No copyright protection, no quality control, complete Libertarian crypto-dream. No way to punish anyone, either.
2) What was the scam?
Art has a perceived 'value'. After all, art is bought and sold. Money changes hand. Scammers want money and now there was a way to sell someone else's art by associating it with a bitcoin. Cryptocurrency speculators began to slap screenshots of artwork onto their bitcoins and claiming it was the artwork itself being sold. This was paired with a marketing campaign to try to convince artists themselves to do this and thus give the whole operation an air of legitimacy.
"But bat/squirrel, NFTs use Block Chains! It's impossible to scam and everything can be traced."
Except, part of the scam was that blockchain was not actually used or implemented. The crypto-scam websites and marketplaces said they used blockchain and were open source, but when people actually dug into the systems, they found it was lies all the way down. Closed source systems. Closed source contracts. No way to determine what was actually happening. No blockchain to look at. No way to verify authenticity. These "100% verifiable" marketplaces were actually 100% trust-based.
3) Who was getting scammed?
Here comes the hilarity. The crypto-scammers themselves are being scammed. For every action on the marketplace, there was a fee. Place a transaction? Pay a fee. Cancel a transaction? Pay a fee. Cancel a cancellation of a transaction? Pay a fee.
In addition, No-one actually owned anything. Anyone who thinks they have an NFT was just sold a bill of goods. It's just like buying something off Ebay and receiving a photograph of that thing you thought you bought.
In addition, and laugh with me now, NFT 'owners' are waking up to their NFTs being emptied out of their accounts. Tens of thousands of dollars 'worth' of NFTs transferred to other accounts. Fees for these transactions were paid from their wallets and often their credit cards because they also chose to give their credit card information to these marketplaces. They're screaming "MY NFTS ARE BEING STOLED!" and yet there was never any actual physical anything being taken or lost - it's still all digital bits and currency.
This is the libertarian world working as intended. Feel free to purchase whatever justice you can afford.
DISCLAIMER: I am intentionally bypassing most of the technical jargon associated with NFTs, as the scam and scammers depend on the "Well, technically..." to convince people to put real money into this digital cryptocurrency scam.
1) Echoen / Balros, what is an NFT?
A Non-Fungible Token is a single bitcoin (a bitcoin is the title of ownership to the value of the Bitcoin) associated with an image, supposedly existing on a blockchain. Because of that association, that bitcoin is unique and can be identified - and because of the 'blockchain' it supposedly sits on, anyone can see who owns that token. Bitcoins are normally fungible because you can trade one bitcoin for one bitcoin and they are both the same thing. But because of that image association, that bitcoin is now unique.
However, there is no regulation nor controls over what that image is. Anyone can take any picture, or screenshot of a picture, or screenshot of a photograph of a tweet of a screenshot of a picture of a photograph of a tweet, and then associate a bitcoin with that image. No copyright protection, no quality control, complete Libertarian crypto-dream. No way to punish anyone, either.
2) What was the scam?
Art has a perceived 'value'. After all, art is bought and sold. Money changes hand. Scammers want money and now there was a way to sell someone else's art by associating it with a bitcoin. Cryptocurrency speculators began to slap screenshots of artwork onto their bitcoins and claiming it was the artwork itself being sold. This was paired with a marketing campaign to try to convince artists themselves to do this and thus give the whole operation an air of legitimacy.
"But bat/squirrel, NFTs use Block Chains! It's impossible to scam and everything can be traced."
Except, part of the scam was that blockchain was not actually used or implemented. The crypto-scam websites and marketplaces said they used blockchain and were open source, but when people actually dug into the systems, they found it was lies all the way down. Closed source systems. Closed source contracts. No way to determine what was actually happening. No blockchain to look at. No way to verify authenticity. These "100% verifiable" marketplaces were actually 100% trust-based.
3) Who was getting scammed?
Here comes the hilarity. The crypto-scammers themselves are being scammed. For every action on the marketplace, there was a fee. Place a transaction? Pay a fee. Cancel a transaction? Pay a fee. Cancel a cancellation of a transaction? Pay a fee.
In addition, No-one actually owned anything. Anyone who thinks they have an NFT was just sold a bill of goods. It's just like buying something off Ebay and receiving a photograph of that thing you thought you bought.
In addition, and laugh with me now, NFT 'owners' are waking up to their NFTs being emptied out of their accounts. Tens of thousands of dollars 'worth' of NFTs transferred to other accounts. Fees for these transactions were paid from their wallets and often their credit cards because they also chose to give their credit card information to these marketplaces. They're screaming "MY NFTS ARE BEING STOLED!" and yet there was never any actual physical anything being taken or lost - it's still all digital bits and currency.
This is the libertarian world working as intended. Feel free to purchase whatever justice you can afford.
Basically: yes the blockchain is theoretically very secure! It's just that everything else around it is not. If you trade blockchain tokens for cash, you're not doing that on the blockchain - you're using some app or site or service, for example. Same for minting tokens - you're relying on things outside of the blockchain to verify that those tokens genuinely represent whatever they claim to represent, which... yeah.
Also, you didn't mention how the energy and waste heat produced by this bullshit scam from running all those aftermarket GPUs (which coincidentally has opened the way for yet ANOTHER subscription model business in the form of streaming your games rather than, y'know, PLAYING THEM USING YOUR OWN DAMN HARDWARE) is having a non-negligible effect on the environment. It's a huge fucking waste in every single respect.
Such as "maybe I can release my art under NFT, and that will stop people from stealing my art or posting it for RP purposes or stop it from being spread on file-sharing websites." Three concerns that NFT does not protect from in any way:
1) Can it stop people from stealing my art? No. If it can be seen, it can be copied. If someone can view a cryptographically-protected picture, then it can be copied and saved as a regular picture and spread all the usual ways. All it takes is for one person with access to do that, and then all bets are off.
2) Can it stop people from using the art for RP purposes? No, for the same reason as #1. What it COULD be is a way to tie ownership of the original signed picture to an artist or a client in case some legal situation came up (so you could say "I OWN this character"), but this sounds like a solution in search of a problem.
3) Can it stop people from spreading the art on file sharing services / websites / telegram or discord channels? No, for the same reason as #1 again. Sure, sharing the original file might not be useful, but no one cares, they'll share the copy.
Remember five years ago businesses were all "blockchain blockchain blockchain we'll synergize our corporate procedures with blockchain! Haven't you heard of BLOCKCHAIN?" Well, I remember it, and no one is talking about the miracle of blockchain anymore. Why? Because it was a bunch of hype, and its uses were very limited in the first place.
NFT (at least in the furry art) is in the "uwu what's this?" curiosity stage. It'll die down quickly and be gone. Like in the great Gamestock Stock Scam, it's super-hyped towards people who don't really know what they're doing by the people who got in early, plan to collect a payday and scam people out of money, and then leave the later-adopters with the bill. There is no reason to get into it, at all.