Chapter 8: Authenticity issues in the NFT space
NFTs first appeared in the headlines in 2017, with the launching of crypto kitties, but they didn’t gain popularity with the general public until recently. NFTs are growing exponentially, carving out room for many digital artists, content creators, and celebrities to showcase their creativity in the digital space and get paid handsomely for it.
However, just like many new technologies, NFTs suffer from the issue of authorship and authenticity. This has allowed the NFT marketplace to be saturated with lots of scammers who plagiarize other artists’ work to become rich overnight, duping collectors by selling them fake items and stolen assets. Therefore, there is a huge need for a more sophisticated verification system in this space.
In this article, we shall discuss the authenticity issue in the maturing NFT world and how digital artists and collectors can better protect their artwork from scammers and authenticity issues. But before then;
What is an NFT?
NFT is an acronym for Non-fungible token, a type of cryptocurrency that has unique and rare attributes. Fungible tokens are not unique. They can be interchanged with other tokens and still retain the same value e.g money and other cryptocurrencies are fungible. You can interchange a 5 dollar note with another 5 dollar note. The same goes for cryptocurrencies, you can interchange 1 Bitcoin with another Bitcoin and still have the same value. This is not the case with Non-fungible tokens, you can’t interchange a particular painting for a replica — it has to be the same. NFTs include virtual collectibles like; NBA top shot, images, artworks, video clips, video games, virtual real estate, etc.
What the NFT world offers is virtually limitless. Digital artists and creators can now easily mint NFTs for their artworks through a cryptographic tool, that is known as the Blockchain.
Blockchain technology is a decentralized ledger that collects and stores unique information about the NFT and its previous ownership. This data is unreplicable, it is stored indefinitely, and is available for the general public to view and verify. Examples of blockchains are Etherium, Wax, Polygon, etc. While records of blockchain are impossible to fabricate, things can easily be misinterpreted, causing confusion and making it easy for scammers to penetrate.
NFTs are the hot cakes of the digital world, so it’s only natural they come with some legal and originality challenges. While NFTs are considered to be a certificate of authenticity, in reality, creators don’t necessarily have to possess the copyright of virtual collectibles before minting them on the blockchain.
The implication of this is that when you buy artworks from fake digital creators, you may be liable for copyright infringement by the rightful owner of the copyright. In some cases, the collectible may not even be hosted on the blockchain, but a conventional and unsafe hosting solution somewhere on the internet.
The issue with neither the sellers nor the buyers owning the copyright of some NFTs is that it creates room for scammers to abuse the space. Many scammers end up profiting more than the true artists since the market is decentralized and there is no law prohibiting them from doing so. Therefore, before buying any NFT do your due diligence, research the authenticity of the artwork and verify whether the person selling it has the authority to do so.
7 ways to verify the authenticity of NFT collectibles
1. Certificate of authenticity: Generally, you can verify an NFT collectible
from the issued digital certificate of authenticity which is similar to a hardcopy certificate, but the former is built on a blockchain. The certificate of authenticity contains information like the name of the creator, serial number, date of creation, and other relevant info. This should normally help a collector track and verify a piece against counterfeits, but as earlier mentioned, not all NFTs are built on the blockchain, and some who claim to have been built on it may be fake. So don’t limit yourself to just this method of verification.
2. Verify the metadata: This is done by checking the smart contract. What you should look out for on the smart contract are the unique hash, token name, symbol, and link to the collectible.
3. Verification services: You can verify ownership with a standard NFT service provider. They only work with legitimate NFTs creators, so if an NFT is a counterfeit, they will know it. The downside is that they can’t tell whether an NFT collectible was stolen before it became an NFT. This can lead to copyright infringement charges in the future.
4. Use Google: Google is your friend, so before buying any NFT collectible or artwork use Google to verify that there are no other replicas or copycats of the artwork.
5. Social media background check: We live in a digital era, which means most people display things about themselves online. To verify whether the NFT artist is a scam or not you can also check their social media page. What do they post about and what are people saying about them? A quick research on the artist’s social media profiles will go a long way.
6. Check other platforms: This is to ensure that the artist is not selling the same or copycat of artwork or collectibles on other platforms.
7. Verify the price from legitimate NFT marketplace eg Opensea, Rarible, SuperRare, or others. If the price of a piece seems too good to be true, it’s most likely a scam, so better save yourself a useless expense by double checking the artwork on legitimate platforms.
In addition, creators of NFTs should monitor their creations to ensure that;
● The platforms they are using to trade their artwork don’t interfere with the metadata of their NFT or their smart contract.
● They are consistent with their address. Too many addresses can confuse
buyers and can lay the red carpet for scammers.
● The works they create aim for high standards.
● They don’t save effort with minting their piece, so as not to have it built
somewhere outside the blockchain.
The NFT space is still new and growing, so, understandably, there will be authenticity issues. The need for the creation of a stronger verification system for collectibles is undeniable. However, before one is launched, make sure you follow our advice above to conduct a thorough authenticity research before collecting NFTs.
If you found this article helpful, don’t hesitate to share it with your network! They might thank you next time they avoid buying a fake collectible due to proper background check.