By Markus David
Director of Professional Services
If cryptocurrency seems “so 2020” (and before that, “so 2017″), NFTs or non-fungible tokens are the hottest blockchain asset – and the most likely to be fake. It didn’t take long before NFTs captured the market and the imagination of millions of users before NFT counterfeiting reached epidemic proportions. Some NFT marketplaces admit the majority of NFTs are created by imposters and fighting counterfeiting on their platforms is “like playing whack a mole.”
NFTs and the Problem of Counterfeiting
People who were initially excited about NFTs discussed the fact that these non-fungible tokens were supposed to protect intellectual property. These tokens would be a secure way that artists could share their work online without having to worry about plagiarism. However, just as cryptocurrency was supposed to spell the end of hacking but instead is often the vehicle behind cyber crime, NFTs are vulnerable to forgeries.
Although there is hope that solutions may arise soon that can combat the counterfeiting trend, just as sophisticated crypto investigation and crypto trace methods are successfully tracking down anonymous bitcoin wallets, currently NFT marketplaces, even the largest, are admitting they are overwhelmed by fake NFTs.
Even high-profile NFT marketplaces such as Cent, which is famous for auctioning Twitter CEO Jack Dorsey’s first tweet for over a million dollars’ worth of cryptocurrency, is shutting down some of its NFT services. According to Cent CEO Cameron Hejazi, NFT counterfeiting has run so rampant that available resources cannot contain the problem.
This move did not come without many strategies to try to combat suspicious accounts. However, as Hejazi described the difficulty to PCGamer, “It kept happening. We would ban offending accounts, but it was like playing a game of whack a mole. Every time we would ban one, another would come up or three more would come up.”
Culprits were selling NFTs that did not belong to them or reselling NFTs they had previously purchased as if it were their own intellectual property.
Even the world’s largest NFT marketplace, OpenSea, has put a 50-item limit on its NFT minting tool because 80% were plagiarized, as management explained on Twitter.
If this 80% number sounds familiar to those who follow news of fraudulent ICOs it is because according to Investopedia, 80% of ICOs are not legitimate. However, despite this high number of frauds, people still invest successfully in ICOs and interest in cryptocurrency is surging. Is there hope for NFTs, just as cryptocurrency is reliably being used by millions of people despite the problems? If so, what can people do to stay safe?
Staying Safe with NFTs and Cryptocurrency
It is possible to securely buy, sell and trade NFTs and cryptocurrency if you know how to distinguish legitimate from fake opportunities. When it comes to both assets, use the following guidelines to avoid being cheated:
Use a Secure, Regulated Platform
It should be reassuring that OpenSea and Cent complain about counterfeit NFTs. Because they are large and have a solid reputation, they want to protect their customers if they want to maintain that reputation. The complaints mean that they are working on the problem and shutting down certain services until they are certain that they can provide reliable products. Often, these complaints will not fall on deaf ears but will lead to solutions that can improve secure NFT trading.
Research the NFT carefully. First of all, make sure it exists. If you want to buy a bespoke NFT, check that it is actually on the marketplace. Who is doing the selling and what information is there about the work. In the case of an ICO, find out who is releasing it, look for a white paper about their credentials and find out their history.
Double Check All Information
Sometimes spotting a fraud can be as simple as noticing inconsistencies in an NFT contract address or the web address of a company involved in the ICO.
Keep Your Crypto Wallet Codes and Keys Secure
Some NFT sales are fake and just a way of gaining access to bitcoin wallets. Always keep your wallet information secure and do not give away your codes and keys. If you have lost your cryptocurrency in an NFT purchase or if your bitcoin wallet was hacked on an NFT marketplace, contact MyChargeBack and get started with a crypto investigation.
If you have lost money to a crypto 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.