NFTs stand for non-fungible tokens. NFTs are essentially digital assets – ranging from art, music, photography, memberships and other types of collectables. Owning an NFT means owning digital ownership, which can be proven via the blockchain. They have exploded over the last year, and since crypto prices have crashed in the last few months – NFTs are now in the limelight. To understand this space – I purchased one NFT about a month ago to understand the product. I have to say it is the best-designed financial product of all time. However, I also believe it’s 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 any NFT website – you will see two big words. Those words are “Sold Out”. Scarcity is the big driver of consumption. Humans tend to value goods and services much higher when they are hard to get. Even in the fashion industry – words like collaborations and limited editions are used to charge high prices and get consumers to buy and wait in line for hours for them. Words like ‘limited releases’, ‘drops’, and ‘closing soon’ are all used effectively to heighten FOMO.
Exclusivity
One of the big rewards for NFT owners is the feeling of exclusivity – the feeling that the owner is a part of something cool and hip – almost like a private members club. This is an excellent brain hack to make purchasers feel like…
