With so much information out there about NFTS, what are some of the top things that people outside of the know should be looking out for? This NFT and web3 expert shares his top red flags when it comes to this tech.
“Like all things that exist in life these rules only exist for new players to help them learn the game, but you have to learn the rules in order to learn when to break the rules as my middle school English teacher used to say. Abiding by these rules will most likely help you avoid a rug pull, but infamy can earn value much like a cult classic if the community around it grows large enough, so not all rug pulls will be bad over the long run,” says Web3 expert Connor Borrego.
Top 3 major red flags when it comes to NFTs that people should look out for:
Red Flag #1: Anonymous Artists, and Founders
The first thing that any NFT collector should look out for when entering into the game of collecting .jpgs is to make sure that the team behind the artwork you are collecting have public profiles on their website and that those names match public profiles on the web. Meaning they’ve got a real name, a linkedin profile or an instagram account, maybe a twitter account, and they don’t appear sus, generally passing the sniff test.
The reason for this is that web3 has evolved from anonymous users developing in a sandbox utopia of creativity and speculation, to a hardened business model with real teams competing to stake their claim as the first viable startup of the metaverse.
Because the branding of the project is so central to attracting and building the community around them that helps support the vision to help it get off the ground, it enhances the value of the NFTs when their creators are accessible to the collectors and they can peek behind the scenes at the project’s development. Anonymous founders on the other hand are notorious for rug pulling, or taking the funds from the sale of the NFTs and running away from whatever project vision that they had sold alongside the NFTs.Red Flag #2: Spammy Community
Many NFT collections are simply membership seats for online communities that support the project of the founding team, but the communities aren’t necessarily exclusive choosing to communicate through self-hosted public forums like Discord, which serve as recruiting grounds in the early days of garner support for the NFT project and share progress updates with the growing community.
A shady market of bots, and foreign laborers, are known tactics employed by both good and bad projects alike as strategies to help grow their communities; fake it till you make it as they say. Reaching out and messaging the founder directly may help you make a determination on whether or not the project is good or bad, but the truth is that it is at best early, so add them to your watch list and come back later.Red Flag #3: Direct Messages, and Mentions
On many social media platforms, users featuring profile pictures from your favorite, or the most famous NFT projects, are sliding into dms to share some alpha, usually in the form of a link to the universe only knows what website claiming to be the next big NFT project. Many of these accounts, if you look into their profiles, have like 0-60 posts, 0-20 followers, and following 700+ people, uber sus for sure.
Whether they are bots or people operating burner accounts, this “marketing” tactic which could reasonably be employed by sincere projects, and ponzi scheme rug pulls, is also a favorite among hackers trying to drain your wallet of crypto currencies, and steal your NFTs.
It’s best to not pay attention too much to the names of the projects they are promoting as they are often unaffiliated, however it could also be an indication of a popular project which at the right price might look like a nice addition for your collection.