Why 80 Percent of NFTs Are Spam, Scams, and Fraud – And What You Can Do About It.
The world of digital can be a veritable minefield, especially when your company is trying to keep up with all those trendy ‘metaverse’ start-ups who seem to be nibbling away at your company with those bright ideas and agile innovative thinking.
NFTs – digital tokens, which emerged in 2014, can be thought of as certificates of ownership for virtual or physical assets.
NFTs have a unique digital signature so they can be bought and sold using traditional currency or cryptocurrency, such as Bitcoin.
Traditional works of art such as paintings are valuable precisely because they are one of a kind, but digital files can be easily and endlessly duplicated.
With NFTs, artwork can be “tokenized” to create a digital certificate of ownership that can be bought and sold. The tokens can represent a range of real-world objects such as artwork, music, and videos.
Where Bitcoin has been hailed as a digital answer to currency, NFTs have been touted as the digital answer to collectibles, but plenty of skeptics fear they’re a bubble waiting to burst.
Van Baarle is a popular digital artist, with millions of followers on social media. She’s one of a growing number of artists who have had online images of their art stolen, minted as unique digital assets on a blockchain, and offered up to trade in cryptocurrency on the NFT platform OpenSea.
The open sea is one of the earliest and biggest trading platforms for NFTs (non-fungible tokens) and openly admits to the growing problem of digital fraud which is currently tracking circa 80% of sales being attributed to scammers on their platform.
OpenSea, one of the largest online NFT marketplaces — announced this week that a solid 80 percent of the NFTs minted through its free creation tool are spam, scams, or otherwise fraudulent.
Digital fraud is nothing new scammers and fraudsters will always find a way to part the gullible and greedy from hard-earned cash.
The murky world of ‘click farms’ and the inability of the programmatic technology to be able to combat it is an ongoing battle with many in the industry choosing to include it as ‘part of doing business, and at the last count that cost is currently running at $5.8bn, which is also seen by experts as just the tip of the ad fraud iceberg.
Current ad fraud forecasters see it continue to rise above $100bn+ by 2023 which is driven by the ongoing increase in streaming.
It’s the biggest Elephant in every single media agency’s board room, because even if they could audit it for you, it isn’t really in their business model interest to show you how they actually use the retainer to do what they do.
The reality is, no one really knows how big the problem is because of all the different vendors, data points, and channels, which will now include intrusive programmatic shitty adverts on your Smart TV and Set-Top Box, and at times it seems no one really cares.
Having been around in marketing for some time it sickens me to think that the whole industry knows there is a problem, but the spending continues. This is an industry that is also seeing a decline in the media marketing landscape, and this decline isn’t being driven by fraud.
It’s being driven by ad-skipping, ad blocking, good old GDPR, and related data/privacy concerns from you and me.
So it’s no surprise that as NFTs that are being leveraged with those who own physical assets to convert them into digital tradable assets (NFTs) are also front and center for what is the new digital wild west of the emerging Metaverse where brands will become more susceptible to the unscrupulous.
In theory, blockchain technology was supposed to make it easier for digital artists to sell unique tokens of ownership, offering buyers a permanent record of ownership linked to the work.
Kenny Schachter, a New York-based video artist and art writer, embraced NFTs early and said he has made hundreds of thousands of dollars in the past year, after three decades working within an art world in which video art rarely sold.
“We’re in an incredible mushrooming of opportunity for digital artists,” said Schachter. “It’s 1,000% better than a year ago, two years ago, when there was no marketplace for any of this art.” source The Guardian
Then came the fraud:
DeviantArt has sent 90,000 alerts about possible fraud to thousands of their users, company executives said. It’s now scanning for fraud across 4m newly minted NFTs each week.
The number of alerts doubled from October to November, and grew by 300% from November to mid-December.
In December, bots began attacking the site, Moti Levy, DeviantArt’s chief operations officer said, scraping whole galleries of artists’ works. The pieces would later appear on NFT marketplaces, often with artists’ names and watermarks still attached.
The attacks have focused on DeviantArt’s most popular artists, measured by likes and comments, Levy said, rather than any particular aesthetic.
“Bots are bots,” he said.
Copyright infringement isn’t exactly new in the NFT space. Artists have been complaining about theft and hacking for months. Neither are scams.
They (Opensea) have a $13bn valuation and they’re trying to go public. How much of their valuation is from stolen art?
If someone gained access to your company bank account, then consistently stole 50-75% of the cash you kept putting in would you be happy, and just accept that it’s just part of doing business? Of course, you wouldn’t.
The point of crypto was to be decentralized, but it’s clearly not working out for talented artists and the buyers who purchase fraudulent or spammy NFTs.
Provenance and proof of ownership are required.
The current reporting process for artists whose stolen work is turned into NFTs is confusing and laborious, confirmed Ashli Weiss, a Silicon Valley lawyer who specializes in intellectual property and works with blockchain companies, adding that there is currently little incentive for OpenSea and other marketplaces to fix the problem. “OpenSea is getting paid with each transaction.” The Guardian
To ensure provenance requires a highly secure piece of technology, something that is fast, secure, scalable, convenient, built to mitigate risk with cyber security, and low cost for everyone involved in the buying and selling process.
This must be done to deal with the ongoing scalability and growth of NFT’s market, particularly where cryptocurrency is used for the purchase.
As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.
The records cannot be forged because the ledger is maintained by thousands of computers around the world.
Van Baarle, the Dutch digital artist, said that she has seen OpenSea’s process for reporting art fraud improve somewhat over the past year. In the early months of trying to flag her stolen art on the platform, the site had a “report” button that never generated any response to her at all. By late December, she said, it had introduced a reporting form that made it substantially easier to log the fraud, and each attempt at least generated an email response.
“For a concept that is supposedly about authenticity, to me it looks like the opposite,” Van Baarle said. “From where I’m standing, it looks like one huge mess of theft and fraud and inauthenticity.”
What is needed is a simple ‘proactive’ one-click cyber-secure solution that allows the buyer to instantly verify the provenance and sales history around any NFT with a digital certificate that is stored and updated on the blockchain.
Multi-award-winning VCode® technology could be that solution.
It represents the next generation of code scanning technology – it’s a huge evolutionary leap past traditional barcodes and QR Codes.
The group behind VCode has worked with governments and government bodies for the past 7 years generally around provenance in the supply chain and identity provisioning. Its ambassadors include multiple royal families, government officials,, and sports stars.
VCode is designed to include multiple forms of information to kickstart a transaction.
This transaction could be to display proof of original ownership and intellectual properties, including payment mechanisms and/or loyalty systems.
All use cases and appropriate supporting technology (either NFT owner or VCode) must respect and strictly adhere to principles of informed user consent to the processing of all personal data.
Today access to digital talent is everywhere, the ability to partner with innovative companies is a key business imperative so that commercial consumer-based innovation is welcomed and not blocked.
As many retail brands look to jump into the NFT hype there is no shortage of tech-enabled start-ups jumping in on this ‘bubble’ opportunity, and just like in the real world they’re made of up of chancers, blaggers, and fraudsters.
If you want to explore more around The Blockchain, Crytpo, and NFT I’m ready to talk.