Blockchain Technology. Digital Assets. NFTs. Before getting into the intricacies, let’s go back in time for a bit.
Have you heard about “The Rich Investing in Arts”?
In a survey by Kotak Wealth Management in 2015, the affluent class in India spent their money on jewelry, holiday and arts, with 4% of their expenditure going towards paintings and arts. The percentage of rich people investing in arts is even higher in the UK, USA, Indonesia and China.
Art investments are preferred for the following reasons :
The downside of any non-digital form of art investment is that they can be forged easily. Did you know that the famous artist Michael Angelo was impeached for art forgery at the start of his career? Thanks to technology for introducing Digital Assets / Digital Arts with the aim of protecting artists and their creations from forgery.
Any content stored digitally — images, videos, photos, texts, presentations, are called Digital Assets and have been in existence ever since the advent of computers.
How have digital assets come to be? All of us know that it takes a huge time and effort to create any form of digital asset. The question is, are the creators of digital assets getting better compensation and being valued for their work? Also, as technology is being developed at warp speed, it is becoming easier for data thieves to tamper with digital assets.
Solution? Blockchain technology aficionados have introduced NFTs — through which any art form can be secured from infringes and at the same time, stand for higher monetary value.
Going back to the introduction…
NFTs (Non-Fungible Tokens) are digital assets like images, digital arts, music, video clips of any event, collectibles, and gaming skins that are stored on blockchains for creators to fetch good monetary returns. They cannot be duplicated as each NFT comes with a unique digital certificate. As you know, the blockchain technology works in an append only mode and therefore, data can be added and cannot be copied or altered. Read more about NFTs in this link to quench your curiosity.
“Why do people invest in Digital Assets (NFTs)?” Probably, the most frequently asked question by most people outside the crypto / virtual world.
The new age Digital Assets like NFTs have been existing since 2014 and Forbes recently stated that globally, $174 million have gone into NFTs since November 2017. Although the reasons to invest in NFTs are the same as traditional paintings or artforms, there are specific reasons why digital art collectors capitalize on them.
Much like the mainstream paintings and arts, NFTs have their own shortcomings. Here in the digital world, a digital asset (NFT) — image, photo, meme, video clip, music file can be just downloaded in no time and be claimed for ownership. Some of the forgeries have been viewed seriously in the NFT market places. If you are an NFT collector, then this must be an eye-opener to you. Read on!
There are myriad ways of NFT Scams happening in the NFT marketplaces. Some of them are:
While there are oodles of NFT market places in the world, we recommend that NFT enthusiasts buy and sell on the most renowned trading platforms only. Scammers are flocking to both fake and identical market places. They simply fudge a website and let users provide their credentials, credit card details to fetch money.
The identical stores are look-alikes of original NFT marketplaces bearing the same logo, selling the same categories of NFTs as available in the original stores whereas fake marketplaces sell NFTs that don’t even exist. The incidents in a fake marketplace are quite similar to what happened with the Ray-Ban Shopping Scam.
2. Fraudulent Creators & Buyers
A digital artist takes ample time to create a piece of artwork but it can be counterfeited in no time by taking a screen-shot, retouching it, minting it in the NFT store / marketplace, or just by creating a fake account.
On the other hand, buyers who are crypto/NFT enthusiasts, tend to purchase a counterfeited NFT and lose dollars in it. Another alarming act that is currently being practiced in the NFT frenzy is overpricing of NFTs by creators which misleads the buyers / collectors.
There are several AI-enabled tools / softwares online to assess the original value of NFTs. Marketplaces can make use of these tools to evaluate NFTs and increase the scope for selling legitimate ones.
3. Giveaway Scams
The crypto world is accustomed to a lot of giveaway scams. The swindlers target cryptos, brands and icons for forged/free tokens/NFTs giveaways. Social Media platforms like Instagram, Twitter, Telegram are being used widely to publicize these scams and project them as legit.
4. Masquerading Communities on Social Media
Fake giveaway alerts and scammer groups are most prevalent on platforms like Telegram and Discord. If you are a crypto enthusiast and want to be a part of any like-minded community, then make sure you vet them carefully before joining. Rarible and Polkadot have experienced such malicious activities by scammers spreading false information about NFTs and attracting crowds to earn big money out of it.
Further, we’d also like to run you through some real time cases of Digital Asset Forgery / NFT Scams that can bring more awareness to anyone in this crypto / NFT space — be it the frenzy or marketplaces.
As NFT buffs, you might know that Beeple’s Everydays: The First 5000 Days is the priciest NFT sold so far (for $69 M dollars). In April 2021, this popular NFT was minted from the creator’s wallet under the pseudonym Monsieur Personne. The swindler further created copies of the NFT and it was sold to a fictional NFT thief called Arsene Lupin. It is said that the sold one had the subsequent token ID of Beeple’s original. However, the smart contracts were not the same (as sold at Christie’s Auction House.)
Personne generated his own smart contracts and modified its functions on a different Ethereum-based blockchain that was coded by him.
If you are a collector, then make sure the token ID called in the auction and the ID in the smart contract are the same. Further, know that the verified accounts are open source and bear a verified code.
However, in this case, Personne did the forfeiting from Beeple’s verified account by making it appear public on Etherscan and Rarible. By doing this, the NFT was made visible for a brief period of time and projected that it was minted and sold by Beeple himself.
Character artists across the world spend not even a day without looking for inspiration from this acclaimed Comic / Character Artist, Derek Lauffman. Known for the famous Marvel’s Super Hero Adventures — RuinWorld Comic, Lauffman creates concepts, toys and comic characters and collectibles and is currently working with Warner Bros and Mattel.
Recently, on Rarible, someone had impersonated a profile like that of Lauffman passing all the verification, minted some of his works as NFTs and indexed for sale without the knowledge of the artist. The fake profile was pulled down from the site later. Even before this could happen, it was said that a few of his fans purchased the work assuming that it was him.
The artist was able to demystify that it was an act of impersonation and was apologetic to his fans. This incident enlightens the importance of groundwork before investing in such purchases to every collector in the crypto world.
Popularly known as Banksy to the Pop Culture maniacs, a British street artist’s works were duplicated as NFTs, minted and sold for $900,000 on OpenSea. Sources also say that there were domains registered as banksynfts.com and banksynft.com It was discovered that the forfeiting was done in the authentication name of Pest Control projecting Pest Supply as their artist. They claim that the artwork was a Banksy-style inspiration, but it varied with concepts and forms.
While OpenSea had already blocked the artist who created the spin-off work, Banksy is still fighting the case. The street art world has a lot of anonymous artists where copyright is a debatable issue but the intellectual property rights / laws are applicable in the virtual world.
The concept of NFTs is built on blockchain technology for the sole purpose to recognize and reward artists, and protect their works on IPR basis. However, the boom of any cutting-edge technology brings its own limitations along with.
At bitsCrunch, we have built AI-empowered Blockchain analytics tools that can unshackle NFT marketplaces — the creator and collectors within, from such vulnerabilities to a great extent.
Keep following us for more updates on NFTs and Blockchain.
AI-Enhanced Safety Feature (SCOUR), An AI agent that acts as a watchdog to flag the spoofing transactions that manipulates both volume and price of the assets in the NFT ecosystem.
Digital Asset Forgery Detection System (Crunch Davinci), An AI model that flags forgeries, copycats and bootleg digital art contents thereby protecting the artists and their creations.
Fair Price value estimation for an Asset(Liquify), A fair value estimation & analytics for Digital Assets (NFTs) using AI to empower the community to embrace and value their assets in real-time.