Think your Reddit avatar is an “investment” worth $$$? Here’s why you’re 100% wrong.
I didn’t think we’d need to revisit this subject in 2022. I thought people finally started to realize the NFT market is a scam, but apparently not. It’s unfortunate one of our favorite social media spaces has become infected with this digital cancer. Let me explain how and why it’s a REALLY bad idea to spend ANY AMOUNT OF MONEY on a Reddit avatar…
Apparently, the values for some of these digital receipts is appearing to go higher than when they were first reported two months ago. Which plays right into the crypto-evangelist-talking-point-number-one, which is, “Number go Up!” – which is supposed to mean they’re right and all their critics are wrong, and crypto is the best thing since sliced bread.
This triggered what we like to call, another “gloating season” in the crypto-critical communities. Whenever “number go up” happens, dozens of self-appointed anonymous rich dudes announce our posts, “aged like milk” and try to make fun of us.
Unfortunately, this lacks a fundamental understanding of why many of us are not excited about crypto and NFTs. It has nothing to do with whether or not it’s possible to make money in crypto. It’s about whether or not the process is ethical, moral or even legal. Let’s go into greater detail using Reddit NFTs as an example.
Here’s the fundamental bullet points:
Scarcity/Rarity In The Digital Realm Is An Illusion
First off, the notion that any digital asset is “rare” or “limited” is a lie. Once something has been digitized, it can be infinitely copied with no generation loss.
There’s also no guarantee a limited series of NFTs or a so-called “rare” attribute won’t be minted in greater quantity later. Just because somebody says something is rare, doesn’t mean that’s true. It’s not like every other day we don’t hear somebody in the crypto space flat-out lied about their intentions, right? This is what you get in the world of de-centralization: No real accountability.
NFTs Don’t Actually Convey Ownership Of Anything
Yes, it’s possible you can have exclusive legal ownership/rights to something digital, but that’s a function of contracts, enforced by centralized authority such as governments, not technology. That ownership only has meaning in the context of the real, material world. And it’s extremely difficult to enforce unless you’ve got a lot of resources and power. Also there’s legal precedents that suggest NFT ownership is not legally binding even in the real world.
NFTs are not even art. They’re just digital receipts. Nobody is under any obligation to legally recognize what an NFT means. Any rights otherwise will be a function of standard government contractual law, not something the blockchain says. As such, digital art is eternally fungible. A specific receipt may not be, but nobody is forced to care what your NFT receipt says. And someone can make another NFT receipt of the same art and now there are two “non-fungible tokens” that are the same thing. It’s really an absurd concept to embrace in a de-centralized world where one claims no allegiance to central authorities.
Snoo, The Reddit Mascot You Think You “Own” Is A Registered Corporate Trademark
Snoo, the Reddit mascot, is a genderless alien who represents discovery and understanding across communities. All commercial use is reserved for Reddit and its licensed partners.
Also, you are prohibited from giving your avatar (that you supposedly “own”) a nose, fingers, or toes.
The Sale “Price” You See Is Likely A Lie
Crypto exchanges are deceiving you.
People love to compare crypto exchanges to traditional stock exchanges, banks and brokerage houses. This is totally misleading. Traditional institutions are much more transparent and more heavily regulated. CEXs that trade crypto, NFTs, etc, are significantly different. They don’t hold the same licenses. They don’t have to report their activities in any significant detail to the public or other authorities. They are often outside of regulatory jurisdiction.
It’s like comparing an online casino hosted in some strange land with no regulations and consumer protections, with a land-based casino that is heavily regulated by a gaming comission. Apples and oranges.
Wash Trading Is Totally Rampant
This wash trading fraud also extends to people on social media trying to tell everybody their NFTs are increasing in value. None of this is actually verifiable. The exchanges are unregulated. They’ve been caught manipulating the market themselves.
The Entire Crypto Market Is Heavily Inflated
In addition to crooked exchanges and phony NFT sales, there’s an even bigger fraud going on in the crypto world: FAKE MONEY in the form of unsecured “stablecoins” flooding the market. Both USDT and USDC, the two largest suppliers of so-called “asset-backed crypto coins” have not submitted to a formal independent audit to verify the claims they’re making are true.
This has resulted in more than $160+ Billion in crypto monopoly money being used to buy/sell crypto and NFTs on every major exchange in the world. No crypto. No NFT is insulated from this fake money floating around as if it represents actual liquidity in the market.
In fact, just this week, Tether printed another $1 Billion out of thin air – coinciding with a short run up of crypto and NFTs — surprise, surprise, while everything else in the crypto economy flounders, a billion dollars just shows up to give things a little boost. This is almost certainly fraud. But since these exchanges are un-regulated and outside of most jurisdictions, there’s no easy way to take action or get to the truth. They’ve already been exposed by law enforcement as fraud in the past and it hasn’t stopped them from doubling down.
The Return/”Investment” Model For NFTs Is A Ponzi Scheme
Since NFTs create no value and represent no value, the only way anybody sees a return on them is if they can flip them to someone who will pay more. And obviously, the person who is paying more expects to do the same to someone else. This return model requires constant growth and is mathematically un-sustainable. Even if every other part of the crypto ecosystem was 100% honest, the best you can hope for is to not be the last one to sit down at the game of crypto musical chairs because you lose everything. This is exactly the model of a Ponzi scheme: early investors are exclusively paid by new recruits. This scheme will inevitable collapse. Just because it hasn’t yet, doesn’t mean it won’t.
Some will argue, the same thing applies to comic books or Pokemon cards, but those things have actual material use and most people who buy them, aren’t being snow-jobbed into thinking they’re “investments” and will double in value in the future. This is the constant deception that is attached to NFTs that makes it predatory and fraudulent.
With all this being said, people will still say to themselves, “That’s why you get in early”… which brings up the last item of note:
Ethics, Morality, Legality
There are a lot of ways to make money. Some are faster than others. Some more more respectable than others. Some ways create value while solving problems and delivering things useful to the community. Some ways of making money are honest and straightforward. There are ways to profit without hurting others. There are ways to profit by also helping others.
On the other hand, there are also ways to make money that cause harm. Some ways involve deception, manipulation, lies, coercion, etc. You can steal assets from somebody else, creating value for yourself at somebody else’s expense. You can mislead and defraud others; you can take advantage of other peoples ignorance to disproportionately profit.
Of course, nothing is truly black and white. For most situations there will always be a yin to someone else’s yang, but the ideal mantra of the moral is to avoid unnecessary harm whenever possible. This means if you have a choice between two ways to make money, don’t simply think about how much money you’ll make; think about what kind of footprint the act leaves on you and the community, and whether you’d appreciate being on the other side of that transaction? If you aren’t comfortable with being on the other side, perhaps you should re-think whether that’s an appropriate choice? Because sooner or later, you will be on the other side of such a transaction, and in the world of crypto, people have a 99% chance of being at the wrong end despite how self-assured they are.
Crypto falls into the “causes more harm than good” category unfortunately. NFTs only see a return through deception and exploitation. They are neither rare, nor valuable in any objective context. Their value is solely a function of marketing and hype and emotional/intellectual manipulation.
Some people who lack a reasonable amount of empathy simply won’t care about this situation. They feel they might as well get over on others because others would probably do the same to them. This is an indication of sociopathic behavior. It’s not an endearing trait, and while it may serve you in one area, it will also cause greater damage in many other life areas.
The market is rigged.
NFTs are worthless.
Rarity is meaningless.
Ownership is un-enforceable.
Almost everybody in the space is lying
You MIGHT be able to make some money in this space, but only at the cost of defrauding/deceiving others.
It’s much more likely you will end up losing than winning.
Even if you’re a sociopath and don’t care that this market is 99.999% predatory and deceptive, think about whether you’d want to be on the wrong end of this? Or your wife? Or parents or grandparents? Every NFT trade funds the grift and deception.