About NFT and usual money

Started by troll22, Jul 29, 2022, 12:34 PM

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troll22Topic starter


▍ Is NFT a scam?

Let's start with the certainly pop-up topic of fraud. The NFT itself cannot be a bubble, a pyramid scheme or a scam. Trying to prove that "NFT is a scam" is just as pointless as trying to confirm the opposite. NFT is an abstract storage tool. A particular project built on NFT may or may not be a scam in the first place.



NFT is only a part of the crypto universe, which is a complete analogue of the Wild West, where everybody is responsible for himself, people come to this world for the sake of profit and adventure. There is only one fact that can be said with certainty: all schemes whose profitability is based on virality are bound to disappear.
There are many ways to lose money using NFT, you don't even need knowledge for this, the creators of numerous "NFT projects" will tell you everything. It is extremely hard to make significant funds on speculation with pictures without a long immersion in the topic and the skills of a trader. With commercial talent, it is much easier to attract other people's money into some kind of collective activity, which has led to the rapid growth of the so-called NFT projects. The vast majority of them repeat the pump & dump fraud scheme, that is, promotion and drain at the peak of growth.
You can earn funds by participating in such an event if you guess in advance which project will grow and when the drain process will begin. Alas, this scheme works for 95% of such stories, the difference is only in the duration of the peak.

Psychologist Robert Cialdini, who has studied the phenomenon of persuasion, found that the magic of borrowing is based on six principles: mutual benefit, keeping promises, social acceptance, personal liking, scarcity, and persuasiveness. In the early 19th century, adventurer Gregor MacGregor used such tricks on a whim to create a deception of impressive proportions.
If you skip the enchanting media organization, then it all came down to the selling of land and banknotes to the resource-strapped colony of Poyais, which was supposed to be in the Central American region. When the first ships of the "owners" of unprecedented treasures reached the area indicated on the fake map, instead of rivers of liquid gold, they found impenetrable jungle.
 By the time the surviving "investors" returned, McGregor had raised an amount that conditionally corresponded to modern $ 4 billion. The legislation of Europe then allowed to settle such problems by rapid movement to another country. In France, MacGregor could not resist and again successfully repeated the whole scheme, however, this time it seemed strange to the French government to gather an expedition to an unknown place.

This story is about how easy it is to use trust in the conditions of unverifiable information against the backdrop of a fever of opportunities. NFT is a roulette where bets are placed on promises. Humans are evolutionarily created for joint survival, we are programmed to cooperate and experience aggression towards traitors. The smartest people fall into the right simple traps, so attending this party can turn into a negative experience.


Piasters! Piasters!

Thirty years ago, a wealthy person was completely sure that bank accounts were not available to third parties. Even the idea that outsiders could get information about the owner of the account seemed absurd. Banking secrecy had an independent value, which became a source of significant profit for individual states. There have always been people in the world who wanted to independently manage the degree of frankness in relations with the fatherland.
In early 1989, the international organization FATF was created, which slowly began to bite off pieces of financial privacy, issuing offers "for all the good" and only in rare cases, under the guise of fulfilling these requirements, there was a real seizure of data. After the well-known event of 2001, global surveillance got the opportunity to increase its coverage unhindered, and this concerned finances in the first place, there is nothing more important than information about who is friends with whom, where and how much they trade.
To understand where people have not forgotten how to keep secrets, take a look at the latest edition of the FATF black list. Something the list is too short - Iran and North Korea. This means that almost all countries in the world took the FATF recommendations seriously and began to follow them. And what do these recommendations sound like?

Most interesting points:

    Introduction of anti-money laundering requirements for alternative funds transfer systems.
    Strengthening measures to identify customers when transferring funds.
    Reporting Suspicious Transactions Related to Terrorist Financing.
    Ensuring the impossibility of suspicious movements of cash and bearer negotiable instruments across national borders.


None of these requirements can be met for crypto assets. A simple task: in the context of tightening legislation, is it worth using an uncontrolled system of guaranteed exchange of virtual values?
By itself, NFT does not add anything new, it can be only one of the intermediate elements in a multi-step combination, or it can play an independent role. While even a cursory analysis of NFT sales reveals millions of dollars constantly scurrying back and forth, which doesn't sound like the furious pursuit of the arts or the entertainment of billionaires, it looks even less like a conscious investment.


By the way, is it really that hard to build a primitive game project like Axie Infinity with a mountain of unnecessary money? Is it a coincidence that the majority of Axie Infinity players live in the Philippines and there is also a wide network of underground banks that help Chinese criminals legalize their income?

They say that all the old shops for cleaning the dough have been extinguished, offshore and art trade are no longer the same as before. If it has gone somewhere, then it must arrive somewhere, because the fight against funds laundering does not stop the mechanism for creating profit.


There are a few more reasons that make it difficult to compile a clear NFT sales top. In addition to the selling of individual tokens, there is the sale of collections, which in terms of profit is one product. There is a sale in pieces, when one NFT allows splitting into small parts that are sold separately, can this be considered one selling? Let's use a fresh list that looks revealing.

    The Merge - $91.8 million, December 6, 2021, sold in pieces to 28_983 buyers
    The First 5000 Days - $69M, February 21, 2021 [Christie's Auction]
    Human One — $29.98 million, December 9, 2021
    Picture No. 7523 from the CryptoPunk collection — $11.75 million, June 2021 [Sotheby's auction]
    Picture #3100 from the CryptoPunk collection — $7.58 million, June 2021
    Right-Click and Save As Guy - $7.09 million, December 10, 2021
    Picture No. 109 from the Art Blocks collection — $6.93 million, October 2021
    Crossroad — $6.6 million, February 2021
    This Changed Everything - $5.4 million, June 30, 2021 (not a picture, the "source" of the first web browser concept)
    Save Thousands of Lives - $4.5 million, June 30, 2021


That's interesting, why do we have such conservative sellers as auctions, climb into the muddy market? They say that it's the new owner of Sotheby's, who wants to pull Ebay templates on the old organization, or maybe there are still difficulties with sales in the traditional market? Laundry in Europe is not the same.
It is also interesting that auctions now accept cryptocurrency for payment. You will not envy the employees who select copies for bidding from tens of thousands of digital pictures, although what is hard in a random number generator. You can sell any crap at any price, because you can't overpay in a market with a wild range of prices without uniform rules.


How does the traditional art market work? There is a large international community that has developed rules for ranking paintings by value. Although the rules are not direct instructions, the market for experienced participants does not look like chaos, and this system has been working successfully for more than a century.
The price is set by a community of experts, in other words, there is a separate market for the services of reputable specialists who are trusted to determine the value of works of art. An outsider may not understand why this or that price is set, but within the community, on average, agreement remains.

NFT well compensates for the loss of traditional wash trading, there are several advantages at once, these are the anonymity of auctions and the absence of a tax on the selling of works of art.
Money laundering through the resale of virtual items is not new, gone are the days when people were surprised to buy a virtual gun for tens of thousands of buks.

On the move, you can come up with two main money laundering schemes:

First option. Buy cryptocurrency with legal funds, buy any cheap NFT among those that have begun to grow steadily, put it up for selling at an increasingly bad price, buy from yourself with black money.
Withdraw money through a legal exchanger. For any questions "Where does the funds come from?" answer "It's art." It is very good if the seller is a talented artist or an artistic institution.

Second option. Convert black-black money through a black-black exchanger into a crypt, grind it into crypto-dust, generate thousands of NFTs, buy a lot of NFTs from yourself with dust, sell a lot of NFTs to yourself, then act according to the circumstances: either collect in one wallet and legally withdraw, or again use underground exchanges.


Let's evaluate the idea of cryptoinvesting according to the criteria of Robert Cialdini:

    Mutual benefit. Each new member adds value to the community.
    Fulfillment of promises. There is no human factor, only formulas that are in the open.
    social recognition. Membership in an elite group, being a cryptoman is fashionable.
    Sympathy. Members of the progressive community become accomplices in the confrontation with the old world.
    Deficit. You need to have time to take it cheaper, to smell new topics in time.
    Persuasiveness. Cryptotechnologies are approved even by girls on Instagram.


Why have so many people seized on the idea that something becomes valuable if it is talked about a lot? Because that's how it works. Increasing demand raises the price, which attracts new buyers. It is required to separate the utilitarian use of cryptocurrencies for momentary transactions (money->crypto->[product->crypto]->money) and investment.
In utilitarian use, it doesn't matter how much bitcoin costs, its function is to be a pipe for teleporting funds. Therefore, no exchange rate fluctuations, no market panic reduces the demand for bitcoin, but someday it will go into the shadows against the backdrop of a more technically convenient alternative. As for investments, this is a phenomenon of faith, universal faith, what if you personally succeed?


Like moths, participants flock to the light and, burning in a flame, feed the fire. If the economics of the project does not imply the production of some useful product or service, then this is either a pump & dump scheme or a pyramid scheme (the income of participants is taken from the funds of newcomers). Attention is finite in scope, which means that the stable existence of such constructions is impossible.

▍ How to determine whether it is worth investing in an NFT project?

If you still want to play around with this market, here's what you should pay attention to:

1. What interaction is expected with the participants after the purchase of NFT? What will potentially increase the value? Examples: play-to-earn game, access to unique features.

2. Who is behind the NFT release? Is there any detailed information about the creators? What do they say about themselves? A team with a clear online history, an established community, and resonant ideas is more likely to succeed than an anonymous creation.

3. Community around a specific project. The presence of social activity with a positive sign creates faith in the future of the project, faith in the future creates confidence in the price growth, this is a key indicator for investors and collectors.

How to evaluate the quality of a community:

    The presence of means of notification about what is happening on the project: Discord, twitter, telegram, TikTok, whatever, the main fact is that it should be a communication channel with feedback from the audience, and not SMM-schizophasia.
    Tracked participation of the creators in the life of the project, they should appear before the audience with pains and joys, their personal posts should confirm their involvement in the process.
    The existence of a discussion around the direction of the project, an open plan (roadmap) in the form of a document should be more hard for any project than selling pictures.
    The life of the NFT is unstable and requires a constant response to the departure-arrival of participants, the actions of internal and external forces, if there are no fights and disputes, then this is some kind of garbage.
    Regular progress reports.


▍ What rights does the NFT give?

The most misunderstood concept is the concept of object ownership through NFT, in order to figure out what's what, you have to start from afar. For a person there are two types of law: internal and external.
The internal is a projection of the subjective understanding "I want this, this is mine, I have been here for a long time", we will agree to call this a natural right, as a result of the need of any organism to receive energy from the environment.
External law comes with voluntary or forced social ties, its guardians are the family, collectives (all options for coexistence), the state, and media communities.

Internal law works organically in relation to personal things, there is no need to prove to outsiders that your cup is really yours. When it comes to something more, a clash of two desires of different people is inevitable. Without an authoritative mediator, the conflict will be resolved by force (mind, words, fists, camaraderie).
External law can exist informally in the form of traditions that have a mandatory status of implementation for a specific group, or in a formalized standard that acts uniformly with reference to a certain territory. Formalized law for its functioning requires the work of a coordinated system, consisting of different mechanisms that provide: the design of standards, implementation, verification of performance, response to violations, enforcement of compliance, response to non-compliance. The coordinated work of all elements creates the phenomenon of the rule of law, which gives citizens rights, including the right to own property.

The law determines the types of ownership and determines the procedure for fixing the right of holder . Possession of something in the legal sense arises if a procedure is performed that secures this right.
Fixing the property right is not required to demonstrate to others, the formalized right is the basis for resolving disputes through a formalized verification, which can only be carried out by a special mechanism. An arbitrator with broad powers (including violence) is needed to bring chaos to a single standard. Without an arbiter, natural law will constantly be in conflict with other kinds of informal rights.

NFT is a kind of record in some kind of blockchain. The state does not care where to store the digital register of property, even on paper, even using NFT, the choice of technology will not change the essence: property is fixed in the manner prescribed by law. If you are being sold the right to something using NFTs, you are being blatantly scammed. The only thing that is really being sold to you is the natural right to the NFT itself (a record on the blockchain).
After payment, it is tied to your wallet and only you can decide its fate. Ownership of a song or picture as a consequence of NFT ownership may arise if such a selling is made within a particular service, and the presence of NFT is required to access the purchase.
 In this case, your natural right is respected by the goodwill of the owner of the service and the situation is no different from owning a house in the game.


How to make money on NFTs?

Investing on your own is a very risky undertaking, it takes considerable time to learn to understand where the profit lives and how to catch it to a person from the street. Everything is like in the ordinary world, you can play for a long time, you can aim for quick speculation. Long-distance purchases that are not supported by reinforced concrete arguments are an extremely stupid idea; in a couple of years, cryptofantasy may turn out to be crypto garbage.

Crypto investment fund - For those who are upset by the first point, a special organization will come to the rescue, combining the knowledge of specialists and funds. It is hard to distinguish a fraud from a conscientious company, alas.

Infogypsy - Sell courses "Million on NFT!" Write the book NFT for Dummies.

Write an implementation- No need to write server logic, everything is already happening on the blockchain! What could be easier than issuing lottery tickets in the form of NFTs and holding draws with a smart contract?

Start collecting investments through the sale of an NFT collection — After selling a collection of several thousand pieces, you can declare the idea of investing in the further development of your business. Of course, you will have to really like the audience and come up with a beautiful story of using these NFTs.

Write an NFT collection generator - No one will manually draw thousands of pictures and place them on OpenSea by hand. A special application with a user-friendly interface and competitor tracking is a sought-after product. And if you also screw in a neural network to create images, woo.

▍ That's not all

Most of the NFT use cases that are flourishing now will be erased from common memory in a few years. What will be left are people using NFTs, using them to build designs that are not possible without this technology. People developing NFT projects should strive to solve real problems in specific situations. NFT is only a technical means, not a goal. It is ridiculous to invent an implementation of NFT for the sake of inventing an application of NFT.
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brandsmith

30 years ago, bank accounts seemed to be inviolable,

20 years ago, the Internet seemed like some territory of freedom,

10 years ago, crypto seemed to be free and anonymous...

As long as there are two who can sell and buy something, the market already exists. We are now seeing real transactions in the NFT market. This is still happening at the level of billions, but it is moving and moving forward.
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nikkrasn

NFT artworks are sold on trading platforms that operate like online stores. However, they often have vulnerabilities caused by insufficient security measures during the development stages. These errors are exploited by cybercriminals who can upload an illustration with malicious code, steal victims' accounts or extort money from them.
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donamiller90

An NFT, or non—interchangeable token, is a unit of account that creates a digital impression for any unique item. Among them can be: paintings, photos, videos, music, GIFs — in short, any content that claims to be at least some kind of uniqueness.
They are a great value among collectors, gamers and art lovers, and they buy and sell them through auctions.

These tokens are stored in the so—called blockchain - a huge chain of blocks, each of which contains information. Unlike, for instance, servers, where data is stored in one place, these blocks can be located on many devices in various corners of the world.
This encryption method makes the blockchain very difficult to crаck, because in the best case you will be able to crаck just one block of information, and not the entire chain as a whole.
That is why most cryptocurrencies work on the blockchain.

A token is just a record in one of the blocks, and, as a rule, there can be a lot of such similar records.
For instance, each individual bitcoin is an exact copy of another of the same bitcoin, which makes it possible to compare them with the currency.
But what should I do if I need to create a unique token that has no analogues? The answer is NFT.
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