Why you should stay away from NFTs
NFTs stand for non-fungible tokens. NFTs are mainly digital assets – everything from art, music, photography, membership and other types of collectibles. Owning an NFT means owning digital ownership, which can be proven through the blockchain. They have exploded in the last year, and since cryptocurrency prices have crashed in recent months – NFTs are now in the spotlight. To understand this place – I bought an NFT about a month ago to understand the product. I must say that it is the best designed financial product of all time. However, I also think it is the most dangerous product out there (even more dangerous than cryptocurrency).
Let’s find out why:
NFTs exploit artificial scarcity and fear of missing out (FOMO) to a new level. If you go to an NFT website – you will see two big words. These words are “Sold out”. Scarcity is the major driver of consumption. People tend to value goods and services much higher when they are difficult to obtain. Even in the fashion industry – words like collaboration and limited circulation are used to demand high prices and get consumers to buy and queue for hours for them. Words like “limited releases”, “drops” and “closing soon” are all used effectively to increase FOMO.
Exclusivity
One of the great rewards for NFT owners is the feeling of exclusivity – the feeling that the owner is part of something cool and hip – almost like a private membership club. This is an excellent brain hack to make buyers feel like they are buying a high status item.
Authority
With big celebrities and big brands like Adidas, Nike and luxury brands like Gucci and Prada on their way into the room – the element of trust has gone up – another component that gives the room more legitimacy.
Freebies and airdrops
In an average financial product – there is tension before investing. For NFTs – there is a bit of excitement before buying, but there is even more excitement after buying. NFTs offer lots of physical goods and free airdrops (free NFTs to existing owners) as a way to reward loyalty. Excitement and anticipation are well used to entice people to buy.
Expenses (disguised as investment)
When someone gets a monthly salary – they have a tough decision ahead of them – how much to save and how much to spend. With NFTs – buyers get both – something that has the excitement of spending and the hope of creating wealth. This is one of
the main reasons why NFTs are hacker brains (especially young brains since they know they should save more but do not). Also, unlike traditional investments, which sit in trading and bank accounts – NFTs are also pretty to look at.
Society
One of the ways NFTs hack our brains is by making the owner feel part of a community and part of something big. Most NFTs have well-thought-out roadmaps (primarily fake) and use fancy terminologies such as web3, decentralized, and other concepts that sound futuristic (almost like being part of a movement). The feeling of being part of a community is a raw human need that is used effectively by NFT’s brands.
Scams
This is one of the biggest problems with this place. I have talked to several NFT enthusiasts, and all have been exposed to fraud where they have lost thousands (lakhs in a few cases). It is said that for every NFT there are several scams. Unlike credit card fraud where the bank wants to compensate the customer, in the crypto world – there is no one who can help you. All of the above points are used well by spam bots and scammers to get innocent people to transfer money to them.
In conclusion, this article aims to spread investment awareness and nothing else. The emergence of NFTs is not a problem – as there are thousands of dubious financial products. The lack of awareness of the risks associated is what is worrying. Investors should also know how intelligently this category is designed and how it is used to hack our minds.
