Sunday25 September 2022

NFTs become part of scams as they rise in popularity but remain misunderstood.

Reading time is around minutes.

The NFT or Non-Fungible Token is becoming a rather big deal in circles where blockchain and cryptocurrency are popular. The NFT, as designed, is supposed to represent ownership, or the chain of ownership back to the original creator. However, as nothing really changes hands it is not much more than a list in a distributed database. NFT themselves are neither a good thing nor bad thing. They just are, but they can be and have been used as parts of scams. They have also turned out to be not exactly what the buyer thought when they dumped a ton of cash on buying or creating one.

One of my favorite NFT stories is still the one about the group called Spice DAO (decentralized anonymous organization). They saw a hot opportunity and jumped at a chance to pick up something without knowing what they were getting. In this case there was a book of concept art (including an entire storyboard) created for a potential motion picture version of Frank Herbet’s Dune that was being auctioned off. The group made an auction winning bid around 100 times the estimated value for the book and proudly announced their plans to roll out their conquest as a “collection of NFTs that are technically innovative and culturally disruptive”. The problem here is that buying this art book, did not convey any copyright over the original work. Creating any content, including NFTs, could be actionable under copyright law. The money that was crowdfunded for the purchase is basically lost and despite the group’s legal efforts. It is unlikely that this will change without the original copyright owners changing their stance.

Now this story is funny, but not really about NFTs per se. It is more about someone getting a bit excited and buying with the intent of making something into an NFT without understanding how the real-world works. On the opposite end, there are people that are playing off the general lack of understanding around NFTs to pull people into a scam.

A recent scam centers around the game Outerverse which is published by Freedom Games. They have recently made an announcement saying that players will not be able to use NFTs in their game. The announcement was due to a scam set up by a group masquerading as Outerverse. The scammers are using the name Outerverse Metaverse and Decentralized Platform. The group claims that their $OUTERVERSE tokens are usable in the game. In fact, they are 100% not a real part of the game and nothing more than a scam.

The developers of Outerverse have asked the website hosting the scammers to remove the site and content (the scammers are mimicking the original website even down to the font). They are not hopeful that it will be removed quickly though so they are advising players that NFTs have no value or utility in game and to steer clear of any sites claiming otherwise.

Both of these stories, which are very different in what they cover, do highlight how new trends can be misunderstood and abused. On the one hand a lack of understanding of how real-world property ownership can impact the creation of an NFT, on the other a lack of understanding what NFTs are and who does and does not accept them led to enriching a scammer.

Fads in technology come and go and there is always a rush to jump on the bandwagon. This can lead to a lot of misunderstandings as the fad is pushed out quickly and with little real information It is important to be sure to do as much research as you can before diving into any of them. It can save you a lot of time and probably money.

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.