What are NFTs: How to avoid NFT scams before you invest
CHICAGO (WLS) -- You may have heard of NFTs, or non-fungible tokens. The I-Team explains what they are and how to avoid NFT scams before you invest.
NFTs can be proof of ownership of digital assets like pictures or music. Some artists are cashing-in on the NFT craze but you can also lose money to a volatile market and even scammers.
There are no guarantees or government regulations in the NFT world but your images could be worth money when you turn them into NFTs.
NFT stands for, non-fungible tokens, meaning it's a unique asset. They're created online on a blockchain, which is essentially a digital record of transactions.
"So then people can have a proof of ownership," said Chicago digital artist Willea Zwey.
She said she is cashing in on the craze by turning her digital images into NFTs and selling them.
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"So, the technology of, like, NFT's really enables -- that it really gives that sovereignty to the artists and to enable them to, kind of like, make money and to monetize from selling their art," Zwey said.
But can people right-click on NFTs and copy them?
Zwey says yes, but "they're not a collector. Only the collector has the proof on the blockchain saying they are the owner. They're the only owner of that piece."
Then the real owner can cash in.
Even if you're not an artist, you can buy and sell other NFTs. It's like buying and selling investments in a virtual art gallery.
The warning to consumers though is the value of all these could plummet?
"Yes, absolutely," said Brian Uzzi, a professor of leadership at the Kellogg Graduate School of Management at Northwestern University. "One is, you could buy an NFT, pay a lot of money for it because you think the artwork is going to go up in value, and there for the NFT will, but that does nothing that guarantees that. In fact, it could go in the opposite direction."
Uzzi adds that you should research thoroughly and beware of NFT scams. You could buy an image that really isn't in the NFT blockchain or you could pay businesses that may claim to turn your image into an NFT but that business could take the money and run.
"If you're an artist and someone comes up to you and says, 'Hey, NFTs are a way for you to make some additional money with your art. I could set you up with NFTs that you could then sell to consumers.' That would be something I think you'd want to take a very close look at to make sure it's legitimate," he says.
Zwey advises to always do your own research,
"There's a lot of information floating around in this space right? Now. And then unfortunately, some of them aren't the best to you know, take advice from," she said.
Before buying an NFT, Google the service, look for reviews on it and try to talk to others who have had good results with a service. Also, make sure you use a credit card so you can dispute the charges if you don't get the service you paid for.
