Disclaimer: I’m not advocating for criminal behavior. Just being funny (and informational).
NFTs, or non-fungible tokens, are digital goods that represent real-world goods (most of the time). They don’t actually do anything by themselves. It’s more so a way to represent a “right” to something else.
When you hear about NFTs, most of the time it’s an NFT representing a JPEG of an ape or something equally useless. Folks will still buy these for two reasons:
- Clout (because they spent a lot of money)
- Flipping it (to someone who will pay more)
- Networking (really) with other people who bought the same type
Snob goods are things people buy just to flex. If you’re trying to flex for blockchain bros, you’ll drop 100s of thousands on an NFT, maybe.
Other people buy them to network with others.
Since NFTs can represent a real-world right to something, it can be the right to be part of an exclusive club. Instead of buying a country club membership, which is allegedly about golf but is really about business relationships, this is the same thing. It’s not about art or JPEGs, it’s about business relationships with a tech-savvy cohort.
And lastly, others buy to them flip to one of the aforementioned groups.
So How Do you Actually Launder Money With NFTs?
It’s the same as other art. Just in a new medium.
There is legitimate art investing, but there’s also tax-deduction hacking.
NFTs let you do all that and more. The big advantage of NFTs is they are:
- Have wild price fluctuation (so you can assign any price you want and it won’t look suspicious)
- Public auction, so it doesn’t look like a shady deal
Let’s say you wanted to blackmail someone. Or they did you a favor and now you’re scratching their back. Or you decided to vertically integrate and import cocaine as well as consume it.
You can send cash for “goods” via NFTs.
It goes like this:
- Do bad thing, whoopsy naughty naughty
- Create NFT, set auction price for whatever you want
- Person who is paying you buys the NFT. “Above board” transfer of cash. They’re just investing, or whatever.
Unlike real art, you don’t need to take possession and store the art somewhere. It’s all done digitally. It’s now easier than ever to send cash around the world to pseudonymous accounts (AKA we don’t know who is actually behind them).
And in case someone else buys your NFT (since it’s a public auction) then win-win. Just make another until the intended payer pays you.
Speculation Makes It Possible
If you paid $50,000 for a painting by an unknown artist, that would rightly draw suspicion. But because it’s an NFT, it’s suddenly okay.
Because NFTs are a very new medium and they also double as a financial vehicle, it’s ripe for speculation. While most are useless, prices can go for double the median American income (or more).
Hell, the buyers themselves might be fake and are just trying to separate the money from themselves in a way that makes it look like a purchase and not a transfer.
This doesn’t mean all NFTs are fake or there aren’t real opportunities hidden within them. I’m just saying there is definitely a very clear, illegitimate use for them.
Why am I telling you this? Because it’s fun, and this is (legitimately) a way to educate folks to understand how to think outside the box in terms of handling money or using it as a payment vehicle for other, legitimate means like donations, transfers, memberships, and more.