Are NFTs a scam?

Are NFTs a scam?

African Digital Art strongly believes in co-creating with its community to ensure a well-rounded and inclusive platform that protects artists’ rights.

Blockchain art, also known as Non-Fungible Token (NFT), has gained momentum with several marketplaces creating the opportunity for creators and collectors to transact globally without borders. High-profile brand names, celebrities, galleries, and auction houses are all going for a piece of the pie.  Despite the growing popularity of NFTs, the space has come under attack, and some opinions have labeled it a mere scam.

While many of these allegations stem from misconceptions, fear, uncertainty, and doubts, some illicit actors give credence to the ongoing perception. A 2022 report by Chainalysis, a blockchain data portal, indicates that over 100 NFT traders profited almost $9 million through wash trading.  “Wash trading is the act of executing a transaction in which the seller is on both sides of the trade to paint a misleading picture of an asset’s value and liquidity.” The report, which tracked a total of $44.2 billion worth of digital assets transactions in 2021, fingered two prominent fits of abuse: wash trading and money laundering through the buying of NFTs. 

Investing in NFTs is like buying stocks or any other type of investment. You have to do your due diligence, study the various platforms available and decide where you want to list your art or buy NFTs. Buying a knock-off product from an e-commerce platform that facilitates consumer-to-consumer sales does not exactly make the platform a scam. It may just mean that the platform is more focused on making as much profit as possible than on protecting buyers/collectors and sellers/creators. Adequate checks and balances need to be employed to ensure creators are not being exploited and that collectors are getting their money’s worth.

Since 2009, the African Digital Art (ADA) has been curating a community of over 10,000 black and African artists worldwide. Today, ADA is co-creating the Nandi Marketplace with this community of creators and enthusiasts to highlight these ingenious black creators and move past gatekeepers that have kept them out of the conversations and opportunities. ADA strongly believes in co-creating with its community to ensure a well-rounded and inclusive platform protecting artists’ rights. Additionally, a panel of independent judges manages ADA’s curatorial process – to avoid fake collections and plagiarism. The process also ensures the verification of all artists and collectors.

Leading NFT Marketplace Stands Accused

These accusations seem to have been fueled by an insider-trading scandal that rocked a leading NFT marketplace in September last year when the footprints of some transactions were uncovered and tied to an insider. A Twitter user alleged that the insider was investing in NFTs before the marketplace presented them on the front page of its platform and then cashed out on the resultant price increase. This accusation led to his resignation and subsequent public admission and apology by the market leader. Trust eventually goes to the dogs if the system gets rigged by an insider flipping NFTs for profit. It threatens to take the shine away from such an innovative technological advancement that creates opportunity on a greater magnitude and a level playing ground for all. Such situations fuel the adversary opinions about NFTs and leave both the creators and collectors feeling vulnerable and exploited.

Common Malpractices 

Aside from the underhand dealings creating an unfairer market for all and sundry, some other unhealthy acts are plaguing the industry. Most detracting are pump and dump schemes and burgeoning bidding scams. Pump and dump schemes are practices that involve collectors buying up NFTs and artificially pushing market demand drastically up. The conspirators cash out when prices go up, leaving those unaware with valueless assets.

Additionally, bidding scams are also a misconduct associated with secondary NFT markets and should be nipped in the bud. When NFT lists for sale, bidders can switch up the cryptocurrency used without informing the seller, leaving creators with nothing in such a scenario. 

Some Good News

Irrespective of these malicious tendencies rearing their ugly head in the NFT market, no one can take away the tremendous opportunities it presents for us today. We are at the threshold of securing our creative objects and creating value combined with sustainable benefits. One of the arguments for NFTs is their potential to make markets more efficient. Transforming a physical asset into a digital one can simplify procedures, annihilate intermediaries, improve supply chains, and strengthen security.

Digital collectibles make ownership transfer faster, cheaper, and transparent in every sense. It can function as access to online communities or a means for celebrities to engage with their fan base. The digitization of artwork enhances the verification methodology with utilizations above marketplaces. Ultimately, they could unwind as a compelling process to drive and maintain sensitive information and records for people and institutions.

ADA’s Nandi Marketplace

… we partner with black creators to build a supportive community led by our shared values. We make every decision with our creators in mind, and we ask for their feedback every step of the way.  

At the African Digital Art (ADA), our goal is to celebrate the culture of art, design, and technology in Africa. Founded in 2009, African Digital Art is an award-winning international entity acknowledged for attaining an expansive scope of creative production consisting of audio/visual production, animation, interactive projects, web, film, graphic art, and design. 

ADA’s preoccupation is global black artistic creation or approach that employs digital technology as an integral component of the imaginative, presentation, or issuance process. ADA brings this immense experience and perspective to the NFT space through the Nandi Marketplace. 

ADA is building a marketplace that advocates for and creates opportunities for black creators. The Nandi Marketplace is by and for the community. Built on Celo, a tried, tested, and highly scalable blockchain platform, Nandi offers personalized tools never seen in the NFT space before. ADA supervises the minting of digital items and digitizes the certificates of authenticity for physical objects, including fine art, sports memorabilia, live event tickets, and limited edition drops from music to fashion brands. 

ADA’s distinct approach brings transparency, equity, and accountability to the game and disintegrates the notion that NFTs are a scam. ADA is not just a technology platform; we serve the black community as stewards/custodians of culture. As a result, our approach is different – we partner with black creators to build a supportive community led by our shared values. We make every decision with our creators in mind, and we ask for their feedback every step of the way.  

Join us to build a new world of prosperity, sustainability, and security for black culture.

 

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