Artists! Watch Out For Frauds, Counterfeits & Cyber Threats In NFTs
NFTs are the new hype, certainly. But are there any risks you as a creator should be aware of before diving into the vast ocean? Of course! There are an endless amount of possibilities where NFTs are concerned but possibilities for fraud and counterfeit are also vast.
The number one thing artists should know is that your art in NFT form will not bring you much profit if you don’t already have a large following or at least a loud enough presence online and a loyal community. These are the people who will want to buy your NFT, otherwise, you will need an extensive marketing campaign to make your NFT known.
Anil Dash, CEO of Glitch, who worked with Kevin McCoy to create the very first NFT shared some thoughts in his interview with The Atlantic:
“The only thing we’d wanted to do was ensure that artists could make some money and have control over their work…The idea behind NFTs was, and is, profound. Technology should be enabling artists to exercise control over their work, to more easily sell it, to more strongly protect against others appropriating it without permission.”
Kevin McCoy, CEO, Glitch
According to Dash, the problem with the NFTs is that the actual artwork could not be put into a blockchain and therefore NFT is just a reference to it, not the artwork itself.
In short: Right now NFT’s are built on an absolute house of cards constructed by the people selling them.
— Jonty Wareing (@jonty) March 17, 2021
It is likely that _every_ NFT sold so far will be broken within a decade.
Will that make them worthless? Hard to say
Let’s take a look at some of the risks and challenges that come with the NFTs.
Evaluation
Right now perhaps the most problematic thing about NFTs is the evaluation and estimation process. The price of any unique art depends on its creativeness, scarcity, uniqueness, and many other factors. Just like a painting gets evaluated by art historians and appraisers, NFTs also must be assessed. Right now there is no one standard that could allow for accurate assessment and this almost guarantees market fluctuations. For a musician, this may be a problem because it will be a challenge to set a price for your own NFT and, of course, whatever price you set might fluctuate, too. So your work could be worth much less once in the future when price-fixing is set.
Laws and Regulations
The NFTs market is developing at a phenomenal speed but we still don’t have a legal definition of an NFT. Leading countries like the UK and Japan are working on coming up with one as well as other aspects pertaining to the legal department. Regulations and rules must be implemented by an independent body that can help manage the immense market as well as prevent fraud.
Cyber Threats and Fraud
Cyber threats are real. There have been several cases where fraudulent NFT were sold as the real art. Musicians and creators should take the time to learn everything there is to know about Smart Contracts to be able to detect these #fake NFTs. “Replicas of the original NFT stores are put up on the internet. These stores look authentic because of the original logo and content. These fake NFT stores are a massive risk because they might sell NFTs not even present in the digital world,” Geekflare shares.
There is also the risk of people impersonating popular artists and selling fake tokens as that artist and numerous other risks of fraud of which the creators should be aware.
Smart Contract And NFT Maintenance
This is perhaps the most prevalent risk in the world of tokens. According to Geekflare, “there are several scenarios where hackers attack a DeFi (Decentralized Finance) network and steal a large amount of crypto. Recently, the most-renowned DeFi protocol named Poly Network was attacked by hackers, and $600 million was stolen in this NFT theft.” The inadequacy of Smart Contact security in these cases becomes a reason for crypto theft.
As the market keeps evolving, so do the threats and fraud possibilities. For artists and creators, it is crucial to really know how the NFTs work, what the Smart Contract is, and how to protect yourself from fake NFT stores. No guarantees can be made, of course. But this should not stop artists from creating their NFTs and sharing them with the world, especially their loyal communities. Almost anything we do in life carries its risks, the best thing we can do is learn about it and enjoy the process.
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