Minting an NFT means making it a part of the blockchain. It’s the process which allows a digital asset to be distinguishable from its copies.
When an NFT collection is launched, minting usually happens in two phases. There’s a pre-sale — usually reserved for long-time community members and promotional giveaway winners — followed by a public sale, which is essentially a free-for-all.
Public sales can be a bloodbath, especially when a project has a large following. Last weekend, for example, I was up at midnight waiting for the launch of ‘Soul Dogs’. It is a generative collection of 10,000 cartoon dogs which drew inspiration from 90s pop culture.
I had been following the project for the past two weeks, during which time, its Discord community had grown from around 5,000 members to 25,000. In the hours leading up to the public sale, this number rose exponentially, shooting up to almost 40,000.
With over half the collection already minted during pre-sale, there were only around 4,000 dogs left for the rapidly growing public. I decided to pull out the Ethernet cable for this occasion. I really wanted a Soul Dog for my collection and that meant there was no margin for latency.
As the launch time approached, the Discord moderators constantly warned the community not to click on unofficial links. NFT scams are far too common, especially when it came to big projects such as this one.
Scammers often message community members links to fake websites — designed to look like the original — that drain users’ wallets as soon as they press ‘Mint’.
Once it was time to launch, the chat was muted for everyone. For the next five minutes, thousands around the world clicked the ‘Mint’ button, hoping they’d get through. And just like that, the collection was sold out.
Now, what does any of this have to do with a gambling addiction? Let’s take it from the top.
Why were people lining up to buy cartoon dog NFTs?
Perhaps, they read the project’s whitepaper and were drawn in by the concept of Soul Dog City — a space in the metaverse where Soul Dogs can run free and do jobs in exchange for the native currency $BONES. Or maybe, they just liked this artwork enough to shell out S$180 for it.
A look at the Discord chat would tell you neither of those were the real reason — at least not for most people.
The majority of the community was there to speculate on the post-mint value of these NFTs and sell them for a quick profit. That’s why every fifth message on the group would be someone new asking, “What do you guys think the floor price will be after we launch?”
The floor price of a collection is the minimum price for which any of its NFTs are selling. Naturally, a dozen other speculative investors would reply, “5 SOL minimum” or “10 SOL guaranteed”, with all the confidence of a fortune teller with a crystal ball.
To put it into perspective, each NFT could be minted for 0.95 Solana (SOL) tokens — around S$180 at the time. Anyone on the group who predicted that the floor price would be anything less than five times the mint was accused of FUDding (spreading fear, uncertainty and doubt).
As the mint drew closer, the Discord chat became more and more of a hive mind. Those criticising the project or raising concerns, no matter how valid, were quickly shut down by other community members. The latter were worried that these concerns would deter new members and affect the demand for the collection.
As it turns out, their efforts to keep up the hype succeeded.
Why did the member count almost double in the hours leading up to launch?
Think of the NFT community as a spectrum, with those who do their due diligence on one end (lonely place, that is) and those who’re looking to win the lottery on the other.
As crypto influencers and blogs announced the Soul Dogs launch, lottery-seekers poured into the chat group. FOMO was reaching peak levels and attention spans were nowhere to be found.
Most people on the Soul Dogs Discord group were already averse to reading the whitepaper. However, those who joined in the few hours before launch were even more apathetic. They were only checking for signs of life on the group before they pressed ‘Mint’ and hoped for the best.
Right after the mint finished, there were a number of people asking what the utility of Soul Dogs NFT was. A concerned community member questioned back, “Did you buy one without even finding out what it was used for?”
“You must be new to NFTs,” someone replied. “People here pay first and ask questions later.”
What about the scams?
Between the floor price speculations and absurdly basic questions, there’d be the occasional user complaining that their entire wallet had been drained.
For this to happen, they’d have either tried minting through a fake website or shared their wallet’s recovery code with someone else.
The moderators on the Soul Dogs Discord group were particularly wary about this, to the extent that every two minutes, they’d warn users not to accept direct messages or click on unofficial links. But there was only so much that they could do.
One user began spamming the group with the Instagram handle of the man who had scammed him of almost S$300. He pleaded the moderators to help him recover the funds, as if they were some sort of blockchain police force.
Another complained that the moderators should’ve taken down the fake websites before he visited one and got scammed.
Is buying NFTs the same as gambling?
When people invest in NFTs without doing proper research or click on links sent by anonymous users, then yes, they might as well be gambling. In fact, this is such a common occurrence that there’s even a term for it within crypto circles. It’s called apeing into a project.
That said, it’s not my intention to paint this as a problem. Within reason, people should be free to spend their money as they please. If they’re allowed to bet on a racing horse, they should be allowed to bet on a cartoon dog.
What if they aren’t allowed to bet on a racing horse?
That’s what concerns me. Surveys which have gauged the interest in NFTs across demographics have often found that those between the ages of 18 and 34 are most invested in the concept. These surveys don’t offer insights on those below the age of 18 as they aren’t included as part of the sample group.
If I were to venture a guess, I’d say teenagers make up a significant proportion of the NFT community. They may not be the biggest investors, but anyone who was spending US$50 on a Fortnite Skin or a CS:GO lootbox is now shelving a portion of that for some NFTs too.
My evidence for this is anecdotal, of course. I’m basing my assumptions off of my time on Discord groups.
For one, I’ve seen far too many users speak about their winter break recently, which seems to have lasted all throughout December and the first half of January.
I’ve come across a few asking for help with their homework. I’ve also seen arguments which end with one party getting frustrated and saying, “You can’t be serious. You sound like a child right now.” and the other party replying, “Yes, I’m 14.”
Should children be allowed to buy NFTs?
It’s tricky because NFTs, by nature, aren’t a tool built for speculative investment. It’s just how people have started using them.
I don’t think children should be allowed to gamble, especially if it’s with someone else’s money.
When you consider online gaming, there are cases almost every week involving children spending thousands using their parents’ credit cards. This money can often be recovered if the parents contact the respective gaming companies. However, on the blockchain, it’d be gone forever.
What if a kid wants to spend his allowance on an NFT which gives him access to a video game or a comic book though? I don’t see a problem with that.
Placing a blanket ban on children buying NFTs would be unreasonable and frankly, impossible to implement. Decentralised marketplaces don’t request customer data and to have it any other way would defeat their purpose.
All things considered, education might be the most appropriate solution. In the near future, children will need to be made well-aware of the risks and consequences of NFTs — the same way they’re told not to accept candy from strangers.
It’s not that the strangers are inherently evil, but the potential for harm far outweighs the benefit of candy.
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Featured Image Credit: Forkast