Let’s talk about how to not get scammed in the NFT world.
There’s an old saying, where there’s money to be made, trouble usually follows. Now, I’m not actually sure that’s even a saying or I’ve made it up in my head? Nonetheless, it works for this article.
2021 (and 22 from the early looks of it) was the year of the NFT art explosion.
It reminds me of the dotcom boom back in the late nineties, where everyone and their dog were trying to buy a .com domain thinking it was going to make them a billionaire. During this time, we had hundreds of thousands of companies popping up in the digital world for the first time trying to sell you everything.
People were excited, money was flowing everywhere for a short period of time and everyone thought they were going to be the next dotcom millionaire. But, the bubble burst and 99% of these companies disappeared, leaving just a handful that we know today as Google, Ebay, Yahoo (barely hanging on!) etc.
Now I’m not saying this will happen to the NFT art world, but I’m not saying it won’t. We have a similar theme here for sure. The market is hot right now and you might want to throw your life savings into a bunch of jpegs to impress your friends. Yet, it’s good to zoom out and assess the larger picture here too.
NFT’s focussed on art (remember nft’s go beyond just digital art, it’s tech not just a singular thing to do with art) have risen as an alternative investment asset in the last 12 months. So naturally, more of us want a slice of that pie.
Right now the NFT art playing field is like the wild west. Just like the dotcom surge, we have projects popping out everywhere from everyone selling just about any visual thing one could create.
If you’re diving into this field and want to help yourself not get scammed (Disclaimer here: Not financial advice and in no way a guarantee you won’t get scammed! Deploy common sense friends) these tips that we’ve put together after days of research into this growing industry could help you.
Check out this 3 step criteria to help you assess a legit project ⬇️
#1: Brand presence, social media and community
Just like not spending our cash at that e-commerce website which looks like it was built in 1998 to get our latest coffee fix. We need to bring the same suspicious hippo eyes to assessing the brand, social presence and community of NFT projects.
Some of the simplest ways to assess you’re not looking at a rugpull include the following:
Reviewing project social media accounts
We want to check out where projects are sharing their info to build their presence and engage with communities.
Common ones are Twitter, Insta and of course, the mighty Discord.
On these channels we want to look at metrics such as account age (how long have they been active), number of posts (I find one that are posting several times a day are pushing for too much attention), who’s sharing and engaging with their posts? (are these real people or armies of social bots they’ve purchased? You can usually tell if the same people comment the same one liner every time a post drops).
Our next stop is the self-proclaimed land of NFT and gaming communities.
Many projects are using Discord as the place to validate their project and build communities that will market their work and buy products. Here we can do a little discovery to see if anything gets our suspicious hippo eyes alerted.
Again, similar to social channels, we want to look at the volume and quality of posts. What’s being shared by the project teams? Quality content or just the same old message about “needing to mint and be part of this life-changing project”?
Scope out the community interaction too. Are we seeing real people having real conversations or just bots? Lots of lots of bots?
Ok, I’ve not mentioned anything about followers so far, but I do this for good reason!
You see, followers counts can be easily manipulated through purchase of fake accounts and bots across all platforms. That’s not to say it’s still not a useful metric for us to measure. We just need to be cautious when taking the figure at face value.
Same as above, do your research. Snoop around the audiences and see what it’s like beneath the surface.
#2: Who’s the team behind the project?
This one is super important.
I mean, if the people behind a project don’t seem legit, then what hope does their project have?
One thing that really gets on my nerves is when teams hide behind fictional names and avatars (it’s not lost on me that most of the digital world does this in general). I’m not saying this is a massive red mark on the project but personally, I like transparency when you’re asking me to hand over a bunch of cash for your work.
What we want to do is find out more about the team of creators on projects. Who are they? What have they done before? What’s their mission on the project you're researching?
Social media becomes your detective tool once again. Do your own research on teams. Surf the Twitterverse, LinkedIn and anything you can find to learn more about them.
It doesn't take long and enables you to avoid weed out the many dud projects that are just desperate to grab your cash and flee the scene.
And, another important point…
Be wary of the celebrity founded and endorsed projects. Everyone wants to make a quick buck out of this space while it’s hot, even those who probably have no knowledge of the blockchain world or interest (yes, I’m looking at you Ozzy Osbourne and your crypto bats).
Just because someone you’ve seen on screen is endorsing a project doesn’t mean it’s legit, good or will stay around when the market does cool.
So be logical where you can, do your research and assess project fundamentals not how many celebrities are being paid to make a quick buck by trying to get you to buy in.
#3: What does the website tell us?
Now this is more of the classic validation approach we’ve all been using for 20 + years, scoping out a supplier's website.
Just like you would when researching any company to do business with, you check out the look and feel of their website. This (along with social media these days) is the shop window that we as buyers have into the offer and service that companies provide.
When we talk about NFT art, here’s a few things we want to look for:
- What does the site look like? Has it had some professional effort or is it some strange looking tumblr infusion?
- Does it share information about their founders and wider team?
- Does it showcase a fleshed out roadmap of what the project is looking to achieve a year from now?
- Does it list use cases for the project? Are there references to the future and does that mission connect with you?
- Do you even like the product? Skip this if you’re looking at this as an investment asset to flip and make quick cash. However, if you’re an art collector, does the product entice you?
Even if you follow all of the above, it doesn’t mean you’re onto something or going to hit the jackpot.
Just like any hot market, this too shall pass and many people are going to be left with worthless assets. A very small number will survive this just like the Amazons and Google’s back in the late nineties, so be real with yourself.
Anyways, that’s my 2 cents on validating NFT art projects. Hope this helps and do share your own thoughts on how you go about this in the comments.
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I’m not a financial advisor, a psychologist or any from of accredited professional. As such, this is not financial advice and I’m not qualified or licensed to provide anything like this. This content is a bunch of thoughts from a fellow human for educational purposes only — that is all.