Many people liken NFTs to a Ponzi scheme.
A Ponzi scheme is a ploy to get investors to put their money on a scam or something intangible, with the promise of supernormal returns. The “guaranteed returns” are paid out using funds from the new investors, while the masterminds gradually drain the fund of its money. Eventually, when the pool of money is withdrawn and no new money comes in, the scheme comes to an end. The notorious and infamous example of a crypto Ponzi scheme was Bitconnect.
NFTs Are A Perfect Ponzi Tool
It’s hard to prove the value of an NFT. Is it the aesthetics? Is it the promised utilities that they will be developing in the coming years? Or is it the yield that you can farm from holding one of these tokens?
Even if the projects may be legit or have no ill intentions, the fact that value cannot be proven makes NFT a perfect tool. Also, there are several other factors about NFTs and crypto that attracts Ponzi masterminds to come into the space:
- Hard to accurately value an NFT
- Insane returns of early adopters attract speculators and dumb money
- Unregulated and uncertain space allows for ambiguity
