The Wild West

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I apologize for writing later than anticipated, I was going to publish something earlier but some current events coincided with this piece and have now taken precedent. Some pretext, the first questions I get when it comes to NFTs: “Have you made money? How much money have you made? Is it easy to make money?” The headlines surrounding NFTs are silly. You’ve likely seen them or something similar:

“Indonesian man sells his selfies as NFTs, now worth US$1 million in volume”

“12-Year-Old Girl Makes $1.6 Million By Selling Her NFT Art”

These are real stories and real people. People see this and think, 12-year-olds can do it, therefore I can. I’m not saying you can’t but it’s hard. Check out the Dunning-Kruger chart below.

Earlier this week, I wrote about some of the market basics. So many people see the space and think “I can make money!” Which, heck, maybe you can, before you try check the chart above. Less understanding=high confidence & greater understanding=high confidence. There’s another issue… Not only is trading hard, but bad actors abound. Web3 is heralded as a new decentralized medium for people to interact. It’s admirable, but what is not admirable, is the lack of enforcement. In anything. 

A few months ago, a project was announced called Squiggles. Squiggles was a derivative of Doodles. Doodles is a “blue-chip” ~high quality~ project. It has pleasing designs and is building a solid brand. Squiggles were going to take their designs and turn them into 3D designs. Doodles quickly issued a copyright threat. Doodles was proactive and was able to copyright and secure their IP. This made Squiggles change course, they changed some of their designs and postponed launch. 

Worth noting that derivatives are not uncommon. In fact, I’d say 40% of projects launching nowadays are based/influenced/worse versions of popular projects. BAYC, or Bored Ape Yacht Club, has changed the space forever. I bet 40% of the derivatives are Apes. Meka Apes, Angry Apes, Dumpster Fires Apes, you get it.

Ok, back on topic, Squiggles went from derivative to not. Their discord, attention, and hype exploded. The Discord had over 270,000 people and they amassed over 230,000 Twitter followers. Red flags started rising and people got banned from their servers for asking questions. The day before their mint, a 60-page dossier started getting passed around Twitter pinning the founders to 5+ projects that were “rugged”.

~Rugging is pulling the project out from under their community, taking the money, and running.~

They did this doxxed.

~Doxxing is simply showing who you really are. Full identity out in the public. Exposing the people behind the usernames~

It turns out there was a group of 5-6 college (and some high school) kids with connections that established projects then minted out or minted partially then walked away cash in hand. 

~Minting is simply the initial sale of assets, all these sales go to the owners.~

I posted in several discords that I’m active in. I explained and posted the dossier. People dismissed it as FUD (Fear, uncertainty, despair or distrust).

~You don’t want to be a FUDder, that’s considered bad sportsmanship and is EVIL in the NFT Space~

That being said, more and more evidence kept coming out. People said, why would the creator who is doxxed, lie? My answer is 0 regulation. There is 0 regulation in space. 

Let’s say that you and your group of friends want to create a fake project? ~Don’t do this~ 

Y’all market it well, never answer questions directly or give generic answers, hire an artist to make some cool art that you can show as previews and hire mods to control social media, treat them normally, promise to pay them after, create a project road map that shows pretty reachable goals…  This is the formula of a scam. Will this work? Yes. Absolutely. It may take a little more nuance than this but the base formula of all scams is the same, some look worse than others.

What will you make? 

Let’s say you mint a 5,555 (NFT people LOVE repeating numbers: 7,777, 8,888, 10,000, etc.) generative collection. It’s mint price is .08 ETH. Currently, 1 ETH = $3,101. Meaning that your profit is equal to:Total units minted x (mint price in ETH x ETH Value) or5,555 x (.08 x 3,101)= $1,378,084.40

I don’t want to lose you in the weeds, but just know that Squiggles without interference would have made over 10 million dollars. For a few months of ambiguous statements, hopeful promises and ruining credibility in a niche market… They would’ve split millions. 

The FBI may get involved. I don’t know the laws or rules around this but there are not many. It may be a high enough profile event for them to intervene. To be honest, it doesn’t matter. People when warned and presented evidence, told me that they were “feeling degeny” or “could make it out with a flip” and get out before everyone else. Everyone in the space, mainly new investors, are obsessed with making a profit. Willing to jump into fire for a gold coin. The NFT space is the wild west, if you get greedy, you will get burned. What if that gold coin is just a chocolate gold coin? Or worse, a gold coin filled with dookie. Everyone thinks they are fast enough or smart enough.

Here’s the issue too. Everyone thought that by putting their hand in the fire, they may be able to get out… BUT what if the contract awards you a false NFT or a fake placeholder? What makes you think you will get anything back from the machine? Who’s to say the contract won’t connect and empty your wallet? People are greedy. If you get greedy and just want flips while ignoring red flags, you will likely lose money. Now the guy in the gif is on the other side of the screen laughing at you... Not fun. If you want to trade smartly, collect art, meet some cool communities, and potentially build a brand, you should enter NFTs. Otherwise, research some before going wallet-first into a project or trading scenario. As always, don't invest or gamble with money you aren't ok losing.

 To end on a legendary quote, “Bulls make money, bears make money, pigs get slaughtered.” As in people who bet for and against the market make money, but those who are selfish get killed. Ideally, in my next writing I can teach you how to trade well and what to look for in a successful project, with more optimism. Until then!