The Central Bank of the Republic of China (Taiwan’s central banking institution) has reportedly warned that the non-fungible token (NFT) sector is full of fake transactions. As such, he advised investors to be careful when dealing with such digital collectibles.
Investing in NFT hides risks
According to a recent Taiwan News report, the nation’s central bank does not find dabbling in NFTs as a suitable investment strategy. Citing a survey, the institution recalled that less than 30% of investors make a profit by selling digital collectibles, while a third of the works of art produced do not end up being sold.
NFTs could define both digital and physical objects. As such, one could prove ownership over those assets and verify their authenticity. However, the bank argued that this quality is dubious as each individual can produce a digital collectible and use it to steal data.
Last year, American YouTuber Logan Paul joined the NFT craze by partnering with Bondly Finance. They undertook to create and distribute non-fungible tokens for Paul’s “Pokémon Breakout Box”.
Several months later, the American plunged back into space, but his actions raised questions among investors. It was alleged that he Photoshopped stock images for his Cryptozoo project and then sold those fake items to investors for millions of dollars.
Taiwan’s central bank further noted that despite its progress last year, the NFT market has slowed recently. The number of merchants did not exceed 75,000 in 2020, while a year later it shot up to 2.3 million people.
It is also worth noting that NFT trading volumes saw their most impressive peaks last summer. At the end of August they exceeded 500 million dollars in a single day. However, the trends changed and the craze began to cool down in September.
Bill Gates’ thoughts on NFTs
Last week, US business tycoon and Microsoft co-founder Bill Gates advised investors to pay special attention when trading NFTs because they are based on “the big fool theory”. The billionaire sarcastically noted that “digital images of monkeys will greatly improve the world.”
With his comments, he was most likely referring to the Bored Ape Yacht Club (BAYC), a collection of NFTs featuring different cartoon monkeys. Despite Gates’ negative opinion of them, numerous celebrities have already spent millions to acquire some of the collectibles. Singer Madonna, Brazilian soccer star Neymar and tennis champion Serena Williams are some examples.
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This post Central Bank of Taiwan warns that investing in NFTs could be dangerous (report)
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