If there was ever a time to be wary of buying non-fungible tokens, it is now. In this video clip of "The Crypto Show" on Motley Fool Live, recorded on Feb. 2, Fool contributors Jon Quast and Travis Hoium remind investors to be cautious when purchasing NFTs.
Jon Quast: What is a rug pull?
Travis Hoium: A rug pull is basically the project does the mint, you do all the work to build the project, build the community. You sell all of your NFTs and then delete everything. The Discord disappears, the Twitter (TWTR) account disappears, and they just run away with the money.
We're literally at that stage of NFTs, where it's the Wild West, so there are amazing things going on and there are terrible things going on is the way to think about this right now, and that's what makes it really hard.
I've never been part of a rug pull yet because I think I'm pretty conservative on what I'm buying. We know who the people are behind the project. You can see that they've built something, but that isn't to say that it doesn't happen on a semi-regular basis and it's something the industry is trying to figure out how to deal with.
