Central Bank of Taiwan Deems NFTs Inappropriate, Warns General Public to Stay Away

Although non-fungible tokens have suddenly risen in the digital space, their growth also presents some insecurities. More and more people are embracing NFTs and their many opportunities in the virtual world. Increased attention is being given to the various uses and applications of NFTs. While some brands use the tokens for advertisements, some use them to build and engage a strong community of users.

However, recent reports of fraudulent activity with non-fungible tokens are on the rise. Several scam strategies and activities have been attributed to the use of NFTs. Such an uprising also attracts the attention of different governments, regulatory bodies and financial institutions.

There are rumors and beliefs that many fake transactions are happening in the NFT space. Also, a recent report revealed the Central Bank of Taiwan’s warning with the same view on fake NFT transactions.

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The Taiwan News reports that the Central Bank of the Republic of China has a skeptical view of NFT investments. The country’s apex bank based its statement on a survey of NFT collections. According to the report, the profitability of NFT investments has been recorded as less than 30% among investors. Additionally, many artwork NFTs remained unsaleable.

Collecting NFTs could be questionable

In its argument, the bank doubts the authentication of ownership with collectibles. The definition of NFTs lies in the physical and virtual elements.

Thus, once an investor acquires an NFT collection, they must prove ownership and verify authenticity. But the bank argues that it is possible to bring in dodgy creators since anyone could develop NFTs to steal investor data.

In addition, the Central Bank of Taiwan identified the considerable growth of the NFT market last year. In 2020, the market had around 75,000 traders hovering over NFT transactions. The number has gradually increased to 2.3 million participants in 2021. But the overall price decline in the crypto space has also affected the performance of NFTs.

Cryptocurrency Market Falls Again on Daily Chart | Source: Total Crypto Market Cap at TradingView.com

Remember the case of Logan Paul, the famous American YouTuber who came on board the NFT space last year. Through its partnership with Bondly Finance, the company planned to develop an NFT collection for its Pokemon Break Box.

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He then returned to the sector after a few months, but some investors were wary of his moves. Then came the allegation of photoshopping stock images, which he used for his Cryptozoo collection. But, according to the report, unsuspecting investors bought the NFTs anyway which he sold for millions of dollars.

In a similar report, Bill Gates, co-founder of Microsoft, also warned NFT investors to be careful in their transactions.

According to his description, NFTs are composed of the greatest fool theory. While being sarcastic, Gates wondered how images of monkeys solve the world’s problems. Gates referenced the Bored Ape Yacht Club, which many celebrities have acquired with millions.

Featured image from Pixabay, chart from TradingView.com

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