I interviewed Amine Oubrahim, founder of Nomad Media Club on how to spot and avoid NFT scams. Predictably, most of the advice is common sense, but given the unregulated, rogue nature of the NFT markets in general the subject is worth discussing.
Oubrahim states the most important factor is the team page of the NFT issuers. Vetting the individuals behind the project is key, as it indicates if this is a serious business or not, as well as the likelihood of the so-called rug. This is difficult, as a couple of the most successful NFT projects had anonymous founders (BAYC), setting a dangerous precedent for subsequent projects, as one of the value propositions of the “crypto” is engaging in free trade without controls, regulations or identity. Oubrahim goes on to compare NFT purchasing is as risky as investing in a pre-seed round of a startup, that expectations of returns need to be reasonable.
I have $2M in Ether.
I create an NFT piece.
I use my $2M to buy my own NFT.
I still have my $2M in ETH, and I also have an NFT piece that is worth $2M according to price history.
I sell my #NFT to someone for only $200K, or at a 90% discount!
Now I have $2.2M in ETH.
CtrlC+V— Nikhil D Prince 🇮🇳 (@NikhilDPrince) April 10, 2021
Another reason for the team to be anonymous is to engage in wash trading which is very prevalent in the NFT markets. Most exchanges do not require KYC to trade, and anyone can spin up as many accounts and addresses as they would like. If a coordinated…
