Cryptocurrencies are a hot commodity right now. More so, because the global adoption of Bitcoin has significantly influenced the expansion of blockchain technology. Though the market has seen significant ups and downs, the underlying blockchain technology is still here and stronger. With that in mind, more and more people are looking to get into the cryptocurrency space. One of the most popular applications of blockchain technology that has emerged in the last year has been the use of non-fungible tokens or NFTs.
NFTs represent unique digital assets that are stored on a blockchain. They can be anything from virtual goods and real estate to memes, and tweets. Emerging themes dominate the existing spaces, and the rise of NFTs is its most vivid example. According to CNBC, NFTs surpassed the trading volume of US$10 billion, with a Year-on-Year(YoY) rise of 704%, thus making NFTs exceptional in terms of return on investment.
Therefore, it wouldn’t be wrong to say that NFTs have penetrated all spheres and industries, making them more appealing to audiences globally. However, as is the norm in the mortal world—nothing good comes without an element of bad. Of late, there have been several reports on some problems that have proven to be a hindrance in the mass adoption of NFTs. We discuss those very problems in this blog, along with the solutions, so that your NFT journey is the most secure ever!
A Look at Some Statistics
From CryptoPunks to BAYC, NFTs are finding new applications, thus becoming rarer. Not only are these NFTs rare, but the sheer value they fetch on the marketplaces is surprisingly massive. With that in mind, take a look at some stats.
- CRYPTOPUNKS holds 2.1B turn over as of 2021 following which Art Blocks with 1.16 B turn over.
- In the year 2021, Ethereum has traded 18.3B USD in Volume, 21.4k collections and 2.14M wallets.
- In the year 2021, Polygon has traded 391M USD in Volume, 31.1k collections, 24.9M NFT’s and 8.06M wallets.
- The most expensive NFT sale was Pak’s “The Merge,” which sold for $91.8 million in December 2021.
- CryptoPunk #7523 fetched $11.8 million in sale value, while CryptoPunk #3100 garnered $7.7 million.
The rise of NFTs is highly attributed to their element of rarity. Although these digital assets provide a sense of luxury and status to collectors, at the same time, the NFT journey has proven challenging for many users. The reason is primarily due to the flooding of NFT marketplaces with a replica of trending NFTs. Moreover, there’s the element of wash trading, inflating the price of NFTs to the moon (not literally). Therefore, as people seek to invest in NFTs, they find themselves in a fix.
Hindrance In NFT Expansion
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Forgery and duplication of any asset is not really new to the world. Still, as NFTs are becoming mainstream, the penetration of attacks on the original art has increased exponentially. One of the new tools in the forgery and manipulation of digital art is wash trading.
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Wash-trading
Wash trading is the repetition of transactions between multiple wallets to increase the trading volume of an NFT and subsequently pump up the price. Wash-trading falsely suggests a volume hike. This volume surge helps draw user attention, leading to an increase in NFT investments.
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Asset Duplication
Along with wash-trading, duplication of digital art is also a significant hindrance in the streamlining of NFTs. When an NFT collection becomes trendy, NFT marketplaces are flooded with identical NFTs. This duplication leads to confusion among NFT lovers as to which one is the original.
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Flooding Marketplaces With Forged NFTs
Even when original art trades at significantly higher prices, duplicates with only a minor difference are bracketed at an attractive price. Users are drawn to it as a cost-effective solution, therefore, they end up purchasing it. Buyers often want to purchase the original art only, but differentiation becomes difficult with a plethora of copycats flooding marketplaces.
The demand for NFTs is increasing, and more platforms have emerged; as a result to cater to it. Most of the platforms intend to make the NFT journey of users seamless and very convenient. However, on the ground level, it hardly reflects.
So, are you wondering how you can make the most out of NFT investments? How can you be sure about your NFT investment and be assured about the originality? Well, we have curated some tips to help you navigate through your NFT investments and start before it’s too late to jump into the trend. First, we look at some security tips!
Security Tips for NFT lovers
As the blockchain technology’s popularity develops, NFT investors must remain up to date with best practices on operations and security. Below mentioned are some of the essential precautions NFT owners must take to safeguard their NFT investment:
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Make Sure of Platforms’ Wallet Security
If a hacker successfully acquires a user’s wallet credentials, it is certain that he may lose most of the NFT holdings. As a result, NFT owners must exercise caution to ensure their private key is always protected. One reasonable way of storing your crypto assets can be in the shape of a Hardware wallet. Ledger and Trezor are the two popular hardware wallets known for their features and offerings in storing and securing crypto assets.
Hardware wallets are cold storage wallets, unlike hot wallets like Metamask. The hardware wallet keeps the private key on the device itself. Users need to keep the wallet close to authenticate the transaction, making it more difficult for hackers to access.
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Verify NFTs Before Investing In Them
Before investing in a collection, NFT collectors should always conduct due diligence to determine whether an NFT is legitimate. Thorough research can come in handy in such situations and help reduce the danger of purchasing a counterfeit NFT. Official collections on OpenSea often obtain a “verification tick” if their trade volume exceeds 100 ETH.
NFT enthusiasts should also ensure they are linked to the official webpage when NFT is being minted. Scammers routinely duplicate websites by slightly changing the content of the official website domain to steal NFTs and cryptos. When purchasing a new NFT collection on marketplaces like OpenSea or Rarible, make sure the smart contract officially originates from the project team.
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Beware of Malware and Phishing Attacks
Phishing is one of the most frequent methods employed by scammers to target NFT collectors. To entice investors, hackers commonly use “honeypot” schemes. They send fake airdrops to NFT holders to deceive them into receiving tokens. When users make a claim, they are exposed to a fraudulent link or contract that requests authorization to utilise their assets. If users provide authorization to the malicious contract, it has the potential to wipe out the funds in their wallets completely.
Todd Kramer, a New York-based art curator and NFT collector, lost $2.2 million in an NFT phishing scam in December 2021. He responded to a phishing contract disguised as a legitimate app, compromising his wallet security. Scammers drained the NFT wallet consisting of NFTs from the BAYC, CloneX, and many other collections.
While investing in NFTs is lucrative and highly rewarding, users can not ignore its associated dangers. It becomes essential for retail NFT collectors to verify and conduct thorough research on NFT collections and NFT marketplaces. Could there be a way for users to conduct comprehensive research about NFT marketplaces and NFT collections seamlessly?
bitsCrunch: Your NFT investment Guardian
Enter bitsCrunch—the guardian of the NFT ecosystem. bitsCrunch is an analytics company focused on NFT marketplaces and NFT collections. With the implementation of its four main features- Scour, Unleash NFT, Crunch Da Vinci, and Liquify, the platform is providing the most accurate data on NFT transactions.
The company envisions safeguarding NFT platforms and saving users from any unsuitable NFT investment. All four of its revolutionary features are data-driven and scout for information on NFT transactions. Continuously monitoring wallet transactions helps it to detect any wash trading behaviour. How bitsCrunch provides a safe NFT experience to its consumers, read along to find out.
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Unleash NFTs
Unleash NFTs is a portfolio tracker and an analytical dashboard monitoring your preferred NFT collections from any location. The tool helps you understand and improve your NFT holdings’ value.
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Scour
Scour is an AI watchdog that can detect spoof transactions manipulating the volume and value.
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Liquify
Liquify functions as an accurate and reliable valuation assessor of NFT assets using Artificial Intelligence, taking sale history, metadata, and other vital features into account. As a result, you will only pay the actual value of NFT and get the most out of your NFT investment.
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bitsCrunch Crunch DaVinci
As stated earlier, newly minted NFTs lack exclusivity and functionality. To protect you and your digital assets, Crunch DaVinci employs cutting-edge AI models to detect copycats, counterfeits, and illegally copied digital arts. It also prevents NFT marketplaces from onboarding such NFT collections, which only damages the original art.
To Wrap It Up
bitsCrunch serves as a defender of the NFT ecosystem. It also acts as a guardian to your NFT investments. The platform provides buyers and sellers with AI tools such as Scour, Crunch DaVinci, and Liquify. Users can employ these tools to research and detect smart wash-trading and asset fabrication. Moreover, users can also estimate the accurate profitability of their NFTs with the help of bitsCrunch.
bitsCrunch’s disruptive technology not only caters to individuals but to NFT marketplaces too. NFT marketplaces can integrate the services of bitsCrunch to safeguard the authenticity and provenance of the artists and NFT assets.
If you want to be updated with the latest NFT trends and updates, follow bitsCrunch on its social media platform. If you want to read in-depth about the platforms’ offerings, check out the blogs.
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