Non-Fungible Tokens, better known simply as NFTs, have quickly become one of the most popular applications of blockchain technology. Though there are a huge number of potential use-cases the focus has been on the speculative trading of NFTs as collectable art, inspired by eye-watering valuations of early collections. Opportunity is, unfortunately, always accompanied by opportunists, so what are the risks of buying NFTs?
CryptoPunks have become one of the most recognisable examples of the NFT genre. Created by Larva Labs in 2017, they are a collection of 10,000 algorithmically generated 24×24 pixel art images featuring profile pictures of punks, apes, zombies and aliens each with unique characteristics.
In February 2022, Punk 5822 sold for $23.7million, having been bought in 2017 for just $1,641. The stratospheric increase in the value of early NFTs like Punks has fuelled the rapid growth in speculative trading on marketplaces such as OpenSea where users try to create or buy the next big thing.
Unfortunately, many people are buying NFTs without doing a full risk assessment of what is involved so they have become one of the most popular targets for cybercrime.
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