NFT Scams In 2022

What Were The Original NFT Scams?

In order to explain what the first NFT scams were, we need to briefly explain what an NFT actually is, since most people associate it with ugly monkey avatars these days.

An NFT is a ‘non-fungible token’. It’s a way to brand a certain set of data as unique and non-interchangeable. This information is announced on a public blockchain, which is often associated with some form of cryptocurrency.

So yes, an NFT can be associated with the bits that make up a digital image. But it can just as easily be associated with a piece of digital music, an E-book, or a research archive. If it can be represented as a digital file, one could attach an NFT to its existence and publish that fact on a public blockchain.

Of course, this doesn’t prove that the person who created the NFT was the owner of the original intellectual property. And the person who is buying the property associated with that NFT has no way of knowing if this person is selling a very slightly modified version of what they just bought using a different crypto wallet. Oh, and the existence of the NFT certainly doesn’t prevent people from right-clicking the image and saving it without the token attached.

So the original NFT scams were all about selling as many of these quickly pumped-out images as possible, slapping them on a blockchain, and claiming that their uniqueness was digitally protected somehow. And sometimes stealing them back with a phishing attack. Of course, any kind of intellectual property that changed hands still needed to be defended in a normal court of law, and millions of people mocking the new ‘owners’ of these ugly NFT images (by reposting them on every message board known to man) couldn’t easily be taken to court, even if there was a valid case to prosecute.

The NFT scams were many, and the scammers made a ton of money before the majority of people caught on. One of the highest-profile scams was ‘Evolved Apes’, which involved crowdfunding, ripping off the investors and the artist, and vanishing into the ether.

Sadly, with all of the hype and outrage, one of the most interesting and valid uses of NFTs got completely steamrolled in the media blitz.

What Is A Valid Use Of NFTs?

If associated with an environmentally friendly blockchain with a low cost per use (also called ‘gas’), digital ticketing was going to be NFT’s bread and butter application.

Because they allowed for an instant split between the artist, the venue, any agents, and any rights holders, digital ticket NFTs were a fairly exciting concept. They would completely eliminate ‘Hollywood accounting’ from the process. There could be no skimming by the ticket sellers. The artists would be able to impose whatever limitations they wanted on resale or transfer, virtually eliminating the need for scalpers. If NFT ticketing caught on, it would have given TicketMaster a run for their money.

Sadly, the name of the entire technology was sullied by NFT scams. If artist-friendly, environmentally friendly NFT ticketing ever does happen, it will have to be under a different name. The vast majority of people will never trust anything with the letters ‘NFT’ attached again.

What NFT Scams Can We Expect In 2022?

We’ve already seen signs of brand new NFT scams in Q4 of 2021. Here are the ones that are likely to gain traction over the course of the next year:

NFT Digital Card Games: With the popularity of games such as Magic the Gathering and Hearthstone, it’s just a matter of time until someone makes a money grab. By artificially limiting the rarity of a digital ‘card’ and attaching it to an NFT, unscrupulous game designers will look to cash in. Of course, this doesn’t prevent them from making a slightly different ‘limited edition’ card in the future, one that’s perhaps even more powerful. This will be the very definition of ‘pay to win’.

NFT Cosmetic Skins: With rarer skins in CS:GO, PUBG, and TF2 going for hundreds or even thousands of dollars, it is just a matter of time before NFT scams enter the picture. Beware any game that offers these ‘NFT cosmetic skins’, because they can already artificially limit the availability and verify a skin’s authenticity. They have no reason to add NFTs to the mix… other than a cash grab.

NFT ‘Art Houses’: We’ve already seen it in action, and it’s only going to become more prevalent: Virtual ‘art houses’ selling limited edition runs of digital art. There are just two problems with this: Most of these people don’t own the rights to the original art, and many of them aren’t even using NFTs to secure their ‘runs’. This is one of the worst NFT scams, combining rights theft from digital artists with a blatant con job.

NFT Crowdfunding: Since the current use of NFTs is mostly hot air, getting crowdfunding for them requires nothing more than a promise. See the $2.7 million Evolved Apes crowdfund mentioned earlier. There are going to be plenty of suckers who ‘invest’ in an NFT project, only to find that the person who is supposed to be using those funds to develop a project has mysteriously disappeared.

These are the top four NFT scams that we can predict for 2022. Stay alert, and stay safe out there.