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Though non-fungible tokens have suddenly risen within the digital space, their growth has some insecurities too. More people embrace NFTs and their numerous opportunities in the virtual world. Increased focus goes on the several use and application of NFTs. While some brands use the tokens for advertisements, some use them to build and engage a strong community of users.
However, the recent reports of fraudulent activities with non-fungible tokens are increasing. Several strategies and scamming activities have been traced to the use of NFTs. Such an uprise is also drawing the attention of different governments, regulatory bodies, and financial institutions.
There are rumors and beliefs that many fake transactions occur in the NFT space. In addition, a recent report disclosed the warning from Taiwan’s Central Bank with the same opinion of fake NFT transactions.
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The Taiwan News reports that the Central Bank of the Republic of China has a skeptical view of NFT investments. The country’s apex bank based its statement on a survey of NFT collections. According to the report, profitability in NFT investments was recorded to be below 30% among the investors. In addition, lots of the artwork NFTs remained unsellable.
In its line of argument, the bank doubts the ownership authentication with the collectibles. The definition of NFTs lies in physical and virtual items.
So once an investor acquires an NFT collection, he must prove his ownership and verify the authenticity. But the bank argues that there’s a possibility of getting dubious creators around since anyone could develop NFTs to steal investors’ data.
Also, Taiwan’s Central Bank identified the considerable growth of the NFT market last year. As of 2020, the market had about 75,000 traders that hovered through NFT transactions. The number gradually grew to 2.3 million participants in 2021. But, the overall price drop in the crypto space has also affected the performance of the NFTs.
Recall the case of Logan Paul, the famous American YouTuber that came onboard the NFT space last year. Through his partnership with Bondly Finance, the firm planned on developing an NFT collection for his Pokemon Break Box.
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He later returned to the sector after some months, but some investors became suspicious of his movements. Then came the allegation of stock image photoshopping, which he used for his Cryptozoo collection. But, according to the report, unsuspected investors still bought the NFTs he sold for millions of dollars.
In a similar report, Bill Gates, the co-founder of Microsoft, has also warned NFT investors to be cautious in their deals.
According to his description, NFTs are composed of the greater fool’s theory. While being sarcastic, Gates wondered how images of monkeys solve the world’s problems. Gates referred to the Bored Ape Yacht Club, which many celebrities have acquired with millions.
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Sarah is a journalist who continues to share her passion for writing through her writing in DeFi, FinTech, and Cybersecurity.
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