In 2021, non-fungible token (NFT) collectibles will undoubtedly be hugely popular, and NFTs have made billions in sales over the last year. For example, Opensea had NFT sales of $ 3.44 billion last month, Axie Infinity had sales of $ 838 million, and the pixelated NFTs Cryptopunks had sales of $ 653 million. However, there are many NFT skeptics wondering why JPEGs are being sold for millions in ether, and some suspect that auctions and sales may be aided by shill bidding or rigging.
As NFT market values rise, skeptics are wondering why JPEGs are selling for millions
You’ve probably seen all of the NFTs on the news, as rock jpegs and pixelated images sold for more than most mid-sized homes. Non-fungible tokens (NFT) have made billions of dollars in the past 12 months and believers don’t expect the trend to end. For example, on August 31, Autoglyph # 463 sold for 460 ethers, or $ 1.582 million, and Art Blocks NFT Fidenza # 6 sold for 460 ethers, or $ 1.582 million. Cryptopunks sell for millions, Bored Ape Yacht Club (BAYC) NFTs for hundreds of thousands, and the trend continues across myriad projects.
Of course, many crypto enthusiasts are skeptical of NFTs and the millions of dollars that these image files are sold for. For example, software engineer Jameson Lopp this week showed his dislike of NFTs, saying he believes the high prices won’t last. “Similar to ICOs and overvalued shit coins,” Lopp stressed on Twitter: “I assume that over 90% of NFTs will not be able to maintain their current value. You’re not too late to lose a lot of money. “
However, Ethereum proponents and supporters of other blockchains issuing NFTs believe that Bitcoin maximalists are doing everything wrong. A person stressed in this week:
I love Bitcoin Maxis that say NFTs are a scam to steal your BTC considering they have argued for years against the notion that BTC is a scam to steal your fiat.
Shill Bidding plagues Internet auction markets
But how do we know that non-fungible token (NFT) markets are not being manipulated? There is many skeptics who has talked about how NFT markets could be manipulated by things like shill bidding. Some NFTs have sold for millions, but what if some of them looked like they were very valuable by using a shill to tamper with the bids. In essence, a shill is a plant or henchman (usually a friend or accomplice) who has a close relationship with the owner of the collectible. However, shills are not associated with the project and behave like organic bidders.
A shill could easily make it appear that a particular NFT is more valuable than it actually is in order to mislead a real buyer. All one has to do is make an NFT and have a friend buy the NFT for the stated price and in the meantime the shill will pay the owner back the money under the table. No one can guarantee that this won’t happen in the NFT auction room as shill bidding plays a prominent role in the collectors’, art and general auction scenes. Internet auctions are even worse, as Kenneth Walton’s book Fake: Forgery, Lies, & Ebay describes how Walton and his friends were prosecuted for Ebay shill bidding practices.
The problem still persists today as the retro video game collector industry is in turmoil over bidding controversy. On August 23, allegations of fraud and deception in the retro video game market were sparked by a video by Karl Jobst. Allegedly, the retro video game market is plagued by shills and allegations have been made at Heritage Auctions and Wata Games. Both companies deny Karl Jobst’s allegations, but the video and tampering talk about the retro video game industry has gone viral.
In the NFT world, buyers are hidden behind alphanumeric addresses and users cannot tell if shill bidding is taking place unless the system checks for such violations. The fact is, the sales of NFTs could be manipulated to some extent, and this could happen to any non-fungible token (NFT) collector project if unethical practices are used to instill confidence in the NFT values.
What do you think of the possibility that unethical shill bidding could empower the NFT market? Let us know what you think on this matter in the comments below.
Photo credits: Shutterstock, Pixabay, Wiki Commons
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