There are different types of Rug Pull Scams.  A few to name are phishing, airdrop, giveaway scams, impersonation, cat fishing, pump and dump scams, counterfeit NFTs, plagiarized NFTs, Bidding scams and more. There are an array of scams in the NFT space and it is possible to lose all digital assets without due diligence.

Support Favorite Artists Buying NFTs

Some people buy NFTs to support their favorite artists and creators. However, the problem these days is that about 80% of NFTs land up being plagiarized work, therefore failing the concept of originality. The value of NFTs is associated with originality. It makes no sense for those who value originality to be investing in fake and plagiarized work. Even worse – no one would want to invest in spam NFTs.

NFTs Getting Stolen

It is possible for NFTs to get stolen when the investor lands up clicking on a bad link or exposing the secret phrase. Those who are careful might not lose NFTs to theft.  It takes for someone to have access to the wallet where NFTs are stored.  Unless someone is naïve enough to give away the secret phrase it is not possible to lose NFTs stored in the right wallet.

NFTs Copyrights Illegality

Those who create the digital work or own the work normally hold copyright to the digital work. Therefore, NFTs do not naturally include intellectual property rights when the NFT is sold. Further, it is illegal for someone to take a screenshot of the NFT and post it and even worse pass it off as their own. Making a physical copy is also illegal.

NFTs in the Unregulated Market

NFTs are also based on the concept of decentralization.  Just like cryptocurrencies, NFTs are unregulated markets. This makes it easy for fraud actors to pull out their scams and trick innocent investors in weak blockchain networks with poor security systems and codes.

NFTs and Profits

It just looks like the dead end with NFTs is already reached. NFTs do not appropriately provide for proof of ownership.  Therefore, they seem to be bringing profits only to those who created it and those who own it and not as much to those who invested to buy a part of the NFTs.

The flow of funds in NFTs is not as transparent as it has to be. Details about creator royalty and reseller revenue is not satisfactory and in the most part the reseller in the top part of the pyramid get most of the benefit.

“About 45,000 NFTs (Non-Fungible Tokens) were released on the Polygon blockchain, each priced at $99. This means that a total of $4.45 million have been raised from Trump NFT sales.”

Later when the hype dies the sales fall.

Due to the highly volatile nature of the NFT prices, NFTs have the potential for money laundering. It is possible to work as a vehicle to transfer anonymous values without being detected. While the NFT market is not dead, it has been weakened.  Some innovative technological upgrade is required with enhanced security features to bring it back to worthy charm.