Ever since the boom of crypto and NFTs, more and more influencers have jumped onboard the NFT hype train. Some influencers like Gary Vee and DeeZe built their entire following purely on NFT content. Others such as billionaire Mark Cuban and rapper Jay-Z endorsed NFTs.
However, more NFT influencers joining the space isn’t always a good thing. After all, you probably won’t be able to tell skill from sham.
So, will you get the 10X profits promised by some NFT influencers? Are they even worth following today? In this article, we will be going through just that. And oh yes, we’ll add some NFT scams into the mix too!
The Role of NFT Influencers
With great power comes great responsibility. I believe NFT influencers, or influencers in general, exist for one key purpose — to let people have someone to follow. You could be following an NFT influencer to gain insights on the market, be part of an “undervalued NFT community”, or just be in the know.
Whatever the case, NFT influencers have to produce quality content. Because quality content equals more following, right?
Unfortunately, that may not be the case anymore. While the role of NFT influencers is to guide their followers to invest in superb NFT projects, I feel that many internet celebrities are misguiding their fan base instead, for personal gains.
Here are some reasons why I think the role of NFT influencers has shifted; into a much darker one.
From Twitter bullshitters to company executives, any influencer with “confidential information” can be the mastermind of NFT scandals. Here are five cases of ingenious insider trading, ruthless rug-pulls, and serious hacks that shook the NFT community.
OpenSea NFT Insider Trading
In mid-September 2021, perhaps the most high-profile NFT scandal was exposed. Product Head of OpenSea, Nate Chastain, allegedly purchased digital art copies just before they were put on OpenSea’s front page. These NFTs would gain a significant amount of value from the advertisement, and Chastain would then sell them to make a profit.
When this was exposed by some meticulous individuals, the Ex-Product Head had no choice but to step down. It’s estimated that he made a profit of around 19 ether, all kept in secret wallets.
While nobody was directly involved in this scandal but Chastain, people who were genuinely buying the NFTs got ripped off by the OpenSea employee. Yep, just knowing which NFTs will make it to the homepage could make you 19 ether.
This one was a classic NFT rug-pull. NFT project ‘Evolved Apes’ was a collection of 10,000 digital art copies, with stunning visuals and a hyped community. The founder of the project, Evil Ape, promised an enticing fighting game, where “only the strongest ape will prevail”.
Well, the game was never developed. After receiving 798 ether from the initial public sale of the NFT collection, Evil Ape vanished and ran away with millions of dollars in ether. Guess who was the strongest ape in the end!
To this day, the investors of this project are still trying to keep the NFT collection alive, renaming it “Fight Back Apes”. This is a classic example of how the money you invest in NFTs, can be easily stolen by a scheming founder.
Hack of Creature Toadz NFT
This hack started when a moderator of the Creature Toadz NFT Discord server sent a fake minting link in the chat. Claiming that it would mint Creature Toadz NFTs, the hacker scammed community members into depositing 88 ether into his address.
The hacker later returned all of the stolen funds, but only after being exposed by an NFT analyst, OKHotshot. The hacker was identified as Twitter user HEERR, who has since deleted his profile.
If not for the hacker getting caught and threatened to be reported, he may not have returned those funds. One simple mistake could lose your entire investment in an NFT project.
Fake Banksy NFT
Popular graffiti artist Banksy sold his “first NFT” to a British fan and collector of his artworks. The British collector spent $336,000 buying what he thought was Banksy’s first NFT, but later realized that it was a fake.
In this case, Banksy’s team was warned that there were several flaws in his website, posing a dangerous risk of being hacked. Just a week later, a hacker exploited these vulnerabilities and posted the fake NFT on the website’s front page.
Again, we suspect that the influence of the media and the victim finding out the identity of the hacker may have caused him to freak out and return the stolen funds. But things won’t always turn out that way.
To conclude this segment, NFT projects are no strangers to scams. So, always be cautious about the “hidden gems” that NFT influencers tell you about. Do your own research!
The Real Return Rate on NFTs
I’m sure you have seen countless YouTube videos with clickbaity titles such as “Gm. This NFT project is going to 10X in 10 days. Don’t miss out!”. Of course, you know that these thumbnails are just hooks to get viewership, but as you watch the video, you may start to believe that these NFT influencers are actually making 1000%…
Warren Buffet, one of the most legendary investors of all time, has made an average annual return of 20% since 1965. To put that into perspective, you would gain more than 500% in returns if you invested in Ethereum since the start of the year. So, does this mean that you’re better than the greatest investor of all time?
Consistency is key; you may make 500% in Ethereum, but lose everything on multiple NFT projects. According to NFT influencer Gary Vee, he was being brutally honest when he said “99% of NFTs won’t be good investments…”
So, are you really sure that all the NFTs recommended by influencers are winning plays? Just remember, they put “This is not financial advice” at the end of a tweet for a reason.
Last but certainly not least, you should take note of sponsorships. It’s common sense not to trust an influencer’s opinion on an NFT project when they’re paid to promote it. However, you don’t usually know who is sponsored or not.
Unlike brand deals or sponsorships in other fields, NFT sponsorships are very dangerous. Typically, influencers in other fields (like fashion) will be paid a commission every time someone uses their “discount code” to purchase an item. However, influencers can end up holding a stake or some NFTs as their reward for promoting the project.
This gives rise to a convenient rug-pull, especially once the project launches and NFT influencers just want to cash out. In such situations, you’ll be investing in a sinking ship.
To put it bluntly, yes, many NFT influencers are inadvertently (or knowingly) scamming you. While some do share investment-worthy NFT projects, social media algorithms are not doing them justice, prioritizing clickbait thumbnails and titles over genuinely helpful information. Truth be told, you’ll be seeing much more shams than skill.
If there’s one thing you should take away from this article, it should be to take the words of NFT influencers with a pinch of salt. I guess you should do your own research before believing me as well.