Non-fungible tokens (NFTs) started off with CryptoKitties — a game centered around breedable, collectible, virtual cats. According to the official project website, “Each cat is one-of-a-kind and 100 percent owned by you; it cannot be replicated, taken away, or destroyed”.
If you are very new to NFTs start with this article: What I love, hate, and fear about NFTs.
A number of NFTs in Category 1 are plagiarised works, fake collections, spam, and frauds. And then there are rug-pulls, along with wash trading — illegally inflated trade volumes by constant buying and selling within a group.
OpenSea, the most popular NFT marketplace has a tool for free minting of NFTs. The platform has admitted that 80 percent of these NFTs are plagiarised works, fake collections, and spam.
opensea free nft minting blog large
Another platform called DeviantArt has issued 80,000 fraud alerts in a few months. The LooksRare platform is plagued with wash trading.
The Myth of Crypto Decentralisation
Do you remember the $69-million Beeple NFT that started off the NFT hype cycle? The buyer, MetaKovan, is actually a business partner of Beeple.
A research study recently analysed 6.1 million trades of 4.7 million NFTs since 2017. They found that 10 percent of traders accounted for 90 percent of all NFT transactions. This group trades 97 percent of all NFTs at least once.
Many NFT projects turn out to be multi-million dollar rug pulls. That’s when anonymous founders vanish with the investors’ money. Examples include the Evolved Apes NFT project, the Big Daddy Ape Club, and Blockverse.
Then there are ridiculous projects that promise to give you ownership of a colour. You read that right. Ownership of a colour. They even promise you royalties every time someone uses your colour.
I think Digital Art NFTs are heading for a massive crash in 2022.
Category 2: Collectibles
Austria was the first country to offer “Crypto stamps” — physical postage stamps that have a “digital twin” or NFT on the blockchain. The stamp comes with an NFC chip that contains a cryptographic key. The chip can be read with a NFC-enabled smartphone.
Other countries working on such collectibles are Switzerland and Gibraltar.
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Category 3: In-game/ Metaverse assets
This category relates to in-game assets, metaverse assets such as avatars, skins, weapons, and virtual real estate. Many top brands such as Gucci and Nike are also issuing NFTs in this category.
