Nothing hits the ‘trending’ list faster than celebrity-endorsed products. However, when it comes to NFTs, the hype isn’t quite what it seems. Recently, with the success of the Bored Ape Yacht Club NFTs, celebrities have come out to push other NFT collections, but it can mean anything but a financial windfall for those who buy into the craze.
Risking financial ruin for the possibility of financial gain is a trick as old as time, but statistically, the devastation far outweighs the gain. NFT investments are much the same.
Hype Wins Out
If you were to ask Floyd Mayweather for financial advice, you’d likely find yourself in considerable debt and nearly beggared, based on the celebrity boxer’s recent endorsements. When the Bored Ape Yacht Club came out with their Ethereum-based NFTs, they skyrocketed to success, but Mayweather was touting another bored NFT that tanked.
“What I need everybody to do right now: Go get a Bored Bunny NFT,” said Mayweather, dressed in a Louis Vuitton vest with a diamond bracelet, a necklace, and a gold watch. “You’re hearing it from the one and only Floyd ‘Make-That-Money’ Mayweather.”
For those who did as the celebrity said, the windfall never came. The bored bunny NFT crashed after a brief spike. The project has yet to recover, and while the Bored Bunny team denies any wrongdoing, their team missed some apparent steps in the promotion process.
Bonnie Patten, the executive director of the consumer advocacy group Truth in Advertising, had this to say about NFT and other celebrity endorsements. “Droves of celebrities and influencers have leaped at the chance to shill NFTs to their fans. Many of them don’t disclose that they were paid to do so and don’t acknowledge (or, in some cases, they actively downplay) the serious financial risks involved.”
Not Everyone Buys the Hype
When the Bored Ape Yacht Club first launched in 2021, celebrities like Jimmy Fallon and Paris Hilton quickly jumped on the ‘bored’ train, picking up Bored Ape NFTs that cost well into the hundred thousand dollars or more range.
The Tonight Show with Jimmy Fallon featured both his and Paris Hilton’s NFTs in a weird celebrity endorsement that left plenty of critics in the crowd.
Montoya, a creator on YouTube, posted a critique of a clip posted to Twitter of the Paris Hilton and Jimmy Fallon exchange and had this to say: “If Paris Hilton bought an NFT for a million dollars and it dropped down to five-hundred thousand, sweet tax write-off for her, but for the average person, it is a financial… it’s a black hole which they will never recover from.”
CoinDesk, a publication that tracks the cryptocurrency industry, called the influx of celebrities endorsing NFTs “perverse deal-making.”
Risk and Reward Are Rarely Equal
Usually, when you enter an investment agreement, there’s a discussion about risk vs. reward. Most investment companies will tell you if a threat is considerably more significant than the possible reward.
However, with cryptocurrency and NFTs especially, there is little regulation to ensure investors know the risks and rewards of deciding to invest. Even watching the market isn’t a good indicator of how quickly a cryptocurrency will fluctuate. And while Bitcoin and Ethereum seem to be solvent, there’s no telling what could cause them to drop like a boulder or when.
Even investing in stocks, which comes with its own risk, isn’t as financially hazardous as risking your financial assets on cryptocurrency and NFTs if you’re unaware of those possible losses.
With an industry that has come about so quickly that there’s little oversight, some celebrity influencers have started calling out those who willingly endorse NFTs as the go-to answer for financial success.
FaZe Clan, known by his influencer name of FaZe Banks, published screenshots of alleged messages from the Bored Bunny team offering him 500 to 750 thousand dollars to push NFTs for their brand. He said he “didn’t make that mistake” because he’d “educated myself.”
Calling out NFT creators for promises they can’t keep is one way influencers can help keep ordinary people from financial risk that will never gain the reward they’re looking for. Turning down big payouts for endorsements is another way they can help.
Ultimately, however, consumers have to be responsible for educating themselves on the risks and rewards when deciding whether to invest in a product like cryptocurrencies or NFTs.
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This article was produced and syndicated on Wealth of Geeks.
Image Courtesy of Unsplash.