By Evan Spicer
Director of Cryptocurrency Investigations
MyChargeBack
Non-fungible tokens (or NFTs) are an exciting way to create a market for ideas or artwork online. Precisely because they are non-fungible, NFTs are unique and can’t be exchanged–this makes them ideal for artists who want to sell their work and protect their intellectual property.
However, in the brave new world of the blockchain, things don’t often turn out as planned. NFTs may help owners leave their distinctive mark but can compromise privacy.
How NFTs Identify You
But isn’t the blockchain anonymous? Transactions are public, but no actual names are on these records. However, an NFT could perhaps be compared to a logo or a profile picture that can identify a person. If I have an NFT image of a pink polka-dot kangaroo, then any transactions associated with that unique image of the pink polka-dot kangaroo can be identified as mine.
Also, once transactions are made, they cannot be erased. It should be noted that with crypto assets, such as cryptocurrency, NFTs, and crypto wallets, anyone who gains access to them can see your entire history. Couples who may borrow each other’s bitcoin wallets can see all activity on the blockchain, including what NFTs someone holds.
The Problem of Receiving NFTs
This can be particularly troublesome with NFTs that can be sent without the recipient’s consent. It is not difficult to imagine a scenario in which pranksters send offensive NFTs to someone they dislike who will be embarrassed and inconvenienced when the NFTs cannot be removed.
You cannot destroy NFTs, only “burn” them. But that does not get rid of them. It simply means you send them to an account that cannot be accessed. This costs a fee and can be quite expensive for people who are often sent NFTs they did not solicit and do not want.
Not only do crypto coins and NFTs reveal all of your activities and transactions, but they can put people in compromising situations if they are sent NFTs without permission and have to pay to get rid of them.
Money-Laundering on the Blockchain
There is little you can do to obscure your transactions, but some people opt for tumbler technology, which puts records of your transactions along with those of other people and mixes them up so observers do not know which transactions belong to which users.
If this sounds suspiciously close to money laundering, that’s because it is. MyChargeBack experts often deal with culprits on the blockchain who use this kind of technology in an attempt to avoid detection.
The use of these devices can create suspicion around bitcoin transactions and can raise an alarm, not something people want to do who are seeking privacy on the blockchain.
The problems with privacy, cryptocurrency, and NFTs on the blockchain may just be indicative of the kind of growing pains that often accompany a new technology. One advantage of this situation is that those who misuse NFTs and cryptocurrency to disguise their own criminal activities often find their attempts are foiled, particularly through our CryptoTrace investigations and blockchain explorer technology that can track down transactions and identify the holders of anonymous bitcoin wallets and NFTs.
If you have lost money to a crypto or forex scheme, seek assistance from MyChargeBack experts and get started with your fund recovery claim. We have extensive knowledge and working relationships with regulators and more than 450 law enforcement agencies around the world, as well as the solutions that can improve your prospects of getting your cryptocurrency back.
