Understanding the NFT Counterfit Problem
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NFT Theft: A growing epidemic
As NFTs grow in popularity, counterfeiting and fraud have become a significant problem for artists and investors.
Non-fungible tokens are innovations taking the world by storm. Since the beginning of the COVID pandemic, NFTs have been steadily growing in popularity to the point where billions of dollars worth of NFTs have changed hands so far.
As with most other things, it’s impossible to eliminate fraud from a market this size, and the more exciting a space gets, the more people will try to take advantage of said space for a quick buck.
From the Buyer’s Perspective
When we invest in an NFT, most people invest in a work of art they feel will increase in value with time, and the last thing any buyer wants is to invest in a stolen or counterfeit piece that gets struck down or loses all its worth.
The last thing Crypto investors want to invest in is a “shitcoin” that has no intrinsic value and is just a tool for its creators to make some money in the Crypto world. NFT counterfeiters have employed bots to scan the internet for online galleries and sometimes employ keyword searches to find specific works of art.
Some counterfeiters are running their operations on such a large scale that they “lazy mint” their counterfeits on specific marketplaces at a rate that artists cannot keep up with, and they make a few sales unsuspecting victims before takedowns can be issued.
From the Artist’s Perspective
Imagine working hard to create an original piece only to discover that some faceless individuals are illegally earning from your hard work. A growing number of artists do not need to imagine this hell; they’ve lived through it, and even more, are currently living through it.
OpenSea is the most recognizable and largest NFT marketplace, and it’s where a lot of NFT counterfeit operations occur. Since NFTs exploded in popularity, the growth of counterfeit claims has been steady, from a few units a day to a couple hundred a day, and now thousands a day.
If an artist has a large following, they can call out OpenSea on Twitter when they notice counterfeits of their works of art, and this seems to work. For artists without large Twitter followings, it’s usually a long and strenuous battle that may result in denied takedown requests.
From the Marketplace’ Perspective
When artist’s fight counterfeits of their works, it often feels like they are also fighting the NFT marketplaces. OpenSea is one marketplace that has done everything possible to make the counterfeiting process easier for counterfeiters.
OpenSea allows the creation of NFTs through “lazy minting,” which is how NFTs can be listed for sale without embedding them into the blockchain. The fact that NFT sellers on this platform do not pay fees until they make sales means that counterfeiters can list as many stolen works as they wish with the hope of making a quick sale.
OpenSea and other marketplaces claim that they’re doing more to make it harder to list counterfeits on their platforms, but it feels like they’re not doing as much as they can.
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