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NFTs Are a Pyramid Scheme and People Are Already Losing Money

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Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#61

Post by Alex3917 »

Nextgrid wrote: post #35
niahmiah wrote: post #3

It's stupid at face value. No pyramid required. You cannot intrinsically link real world items to tokens. The source of truth is the real world, not the token. Add an unlimited supply of unique things, and how could anyone expect to make money from this?

> You cannot intrinsically link real world items to tokens. The source of truth is the real world, not the token. This is also why every project do to X but with blockchain (like solving counterfeiting/authenticity, copyright, etc) is either stupid or a con using a buzzword to try and solicit investment or media attention. The reason blockchains work for cryptocurrencies is because the source of truth is the blockcha…

Blockchain doesn’t need to make it impossible to counterfeit real-world items to be useful, it just needs to reduce counterfeiting levels by reducing the profitability. It’s more than capable of doing that. If you can only sell at most one counterfeit item per authentic item, that’s already a multi-trillion dollar innovation.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#62

Post by bradleyjg »

mc32 wrote: post #18
niahmiah wrote: post #3

It's stupid at face value. No pyramid required. You cannot intrinsically link real world items to tokens. The source of truth is the real world, not the token. Add an unlimited supply of unique things, and how could anyone expect to make money from this?

Pyramid scheme or Money Laundering instrument? In any event I can’t see authorities keeping a blind eye on this.

It takes authorities a long time to catch up. We still have ransomware attacks despite authorities having all the tools necessary to shut off the payment channels.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#63

Post by PragmaticPulp »

Don’t forget the wash trading aspect:

Since this occurs on the blockchain, it’s trivially easy for someone to create two wallets and then “sell” an NFT to themself for whatever amount of money they have.

If you have $10K in ETH, you can buy a $1 NFT and then trade it among your own wallets for increasing amounts of ETH up to $10K. Now your $1 NFT is “worth” $10K and you only spent as much money as the gas costs at the time.

Use that momentum to flip the NFT to an unsuspecting buyer who sees the value skyrocketing, and you’ve made a huge return by selling nothing at all. Or simply show your friends that you have an expensive NFT as a way to flex. Or talk to a reporter who wants to write a story on how people are getting rich with NFTs. Amazing.

Contrast this with something like eBay where the buyer would lose 10-20% on each sham transaction, limiting the profits. With NFTs, the transaction costs (gas) are fixed so the more money you wash trade, the lower percentage you lose. Some NFTs are designed to kick money back to the artist with each transaction, but curiously those aren’t trading at exorbitant prices in most cases. Of course, there’s nothing stopping the artist themself from using this scheme to pump up the price of their own artwork.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#64

Post by NoOneNew »

capableweb wrote: post #13
niahmiah wrote: post #3

It's stupid at face value. No pyramid required. You cannot intrinsically link real world items to tokens. The source of truth is the real world, not the token. Add an unlimited supply of unique things, and how could anyone expect to make money from this?

If you're thinking that the purpose of NFTs is to link real world items to tokens, you have a very weird view and would do you better to continue reading up on NFTs. In its most basic form, a NFT is simply a cryptocurrency token with the total supply of 1. Nothing more, nothing less. Anyone claiming anything else clearly don't know what they are talking about. The source of truth is the token, as it's only about the…

That's a fair explanation. A crypto token with a supply of 1. But here's the problem.

And?

This takes the idea that anything has value only due to scarcity to such an extreme, it's laughable. So much so, people thus had to try redefining the idea of ownership to justify its existence. These NFTs aren't "free" in existence. While this is true of anything is digital and on the internet, the cost of an Etherum NFT is far more expensive and more worthless in its own existance (which is an amazing feat). If you post 1 piece of artwork on imgur, artstation or even deviantart, the amount of electricity used to upload and view is going to be difficult to sustainably measure since it's so low. A single Etherum transaction to create an artwork NFT takes 60kWh (https://digiconomist.net/ethereum-energy-consumption). 2 days of an average household's energy usage.

It's solutionism that's trying to create a false narrative of problems that it can "solve". But even a regular solutionist would be disgusted and demand a new word to be formed so they're not lumped into the same category. I don't have a grief with those trying to simply profit off a craze. I don't hate the player, I respect the hustle. I hate the game and the zealots. The zealots who drop on their knees and pray to the almighty crypto whitepapers are sucking in victims just like a cult. And just like cults, "Put all your money into us. We're far safer from those evil outsiders. Stay and never listen to the outside world. Don't participate in their social constructs of value. Our idea of value is far better because the elves from our DMT trips told us so."

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#65

Post by skyzadev »

yrgulation wrote: post #36

Suppose I was someone with money to launder. I'd draw a cat's arse, and buy it with my anonymous BTC wallet "money". No one would ever know where the money come from, especially if I anonymise transactions with one of the many services (e.g.: from what i read, some buy mining services, pay with the dirty money and viola, "clean" coin, while other services just make thousands of transactions to distribute payments and…

Seems plausible if you can cover all traces of where your crypto came from, and considering NFTs stay unregulated by legislation/governments.

If NFTs remain a thing after all the hype & fake demand fades then I am sure regulation for NFT purchases will come into effect to combat such practices.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#66

Post by capableweb »

SkipperCat wrote: post #54

At first I thought Bitcoin and crypto currencies were bunk. Totally useless compared to USD or any other national currency. Although I still believe I'm correct, I've pretty much been shown that a lot of other people disagree with that premise because I've seen Bitcoin go from about $10 to $60,000. I still think it's a total bubble but have to admin there's a lot of other people who disagree. The one thing we can agr…

> The one thing we can agree is that people who want to own Bitcoin do own Bitcoin and those that don't want to spend $60k on a coin dont.

Almost right. Yes, the ones that wanted to own Bitcoin badly enough have Bitcoins by now. The ones that want Bitcoin but not badly enough don't. The ones that don't want to have Bitcoins don't have Bitcoins. The error in your statement is within "those that don't want to spend $60k on a coin dont" because you don't need to spend $60k minimum to buy Bitcoin, that's the price of a full Bitcoin, which you don't need to buy.

> But with NFT.... You don't have to spend any money at all. You can just download the item.

That's not how NFTs work. Yeah, sure, you can download the NFT metadata, or the multimedia that the NFT links to, but that's not "ownership" as defined by blockchains, where the owner is the one the blockchain consensus has said is the owner.

A bit like saying is the same to own the hosting of a SaaS landing page if you download the HTML file. Sure, now you have a copy of it, but that's the limit of your ownership there.

Disclaimer: I'm myself not into NFTs because it mostly seems like hype at this point, I own zero NFTs myself and have no interest in buying. But I also care about accuracy.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#67

Post by IAmGraydon »

mrleinad wrote: post #49
delaaxe wrote: post #37

Earlier quoted context omitted.

NFTs are not meant for physical items, they’re digital certificates. People literally burnt a Banksy painting before auctioning its NFT.

So they not only destroyed art, but also wasted energy on creating the NFT, adding to global warming. If there's anything that's not absolute evil in all that, I fail to see it.

Evil? No I don’t think so. I believe the correct word is idiotic.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#68

Post by bradleyjg »

markkat wrote: post #57
niahmiah wrote: post #3

It's stupid at face value. No pyramid required. You cannot intrinsically link real world items to tokens. The source of truth is the real world, not the token. Add an unlimited supply of unique things, and how could anyone expect to make money from this?

A house is linked to a title. The title is a paper token.

That proves too much. There’s nothing inherent in the paper that grants any rights and privileges. It’s the legal system that does that. A digital token is either meaningless (if the legal system doesn’t recognize it) or massive overkill (if the legal system treats it the same as a wet signature).

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#69

Post by capableweb »

PragmaticPulp wrote: post #63

Don’t forget the wash trading aspect: Since this occurs on the blockchain, it’s trivially easy for someone to create two wallets and then “sell” an NFT to themself for whatever amount of money they have. If you have $10K in ETH, you can buy a $1 NFT and then trade it among your own wallets for increasing amounts of ETH up to $10K. Now your $1 NFT is “worth” $10K and you only spent as much money as the gas costs at th…

Sure you can do this. But keep in mind that "wash trading" is illegal, and you still need to declare where the money comes from when you want to cash out.

Yeah, any asset that can artificially propped up. Cryptocurrencies doesn't make this harder nor easier, they simply make it possible to do without a central authority. We still have laws people need to follow in their countries, and up to government to act against people who break the law.

If anything, blockchains makes it easier for local governments to spot things like this, because the centralized exchanges need to corporate, and all the transactions are stored forever. So if you have a IT department with even a small amount of IT knowledge, it'll be easy to setup a system to spot things like this and tie the data to actual individuals via the exchanges.

Re: NFTs Are a Pyramid Scheme and People Are Already Losing Money

#70

Post by sillysaurusx »

I've been watching the @cryptopunksbot Twitter account: https://twitter.com/theshawwn/status/1373488203785629698

It's a bot that tweets whenever someone "buys" a cryptopunk, which is apparently a pixel artwork of a face.

These have supposedly been being sold at a rate of around one per hour, for around 20 ETH each ($35k).

I could see a rich person buying one of these out of boredom. But it seems certain that insiders must be buying these to create a false sense of demand.

It's probably time for some sort of awareness campaign (which this article is doing).

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