The work of Bhat, on the other hand, is just one of many artists from all over the world whose work is being copied and sold as counterfeit NFTs. Todd Kramer, the owner of a Chelsea art gallery, took to Twitter on New Year’s Eve to reveal that 615 ETH (approximately $2.3 million at the time) in NFTs had been stolen by scammers and listed on OpenSea.
However, while Kramer was criticised for not storing his digital work, which consisted primarily of jpegs of Bored Apes and Mutant Apes, he was fortunate in that OpenSea froze trading of the stolen NFTs on its platform, allowing him to avoid prosecution.
Many artists, on the other hand, are not as fortunate as Kramer and end up losing a significant amount of money and sleep as a result. Despite the fact that an NFT’s digital signature cannot be changed, the underlying media file can be copied, tweaked, and minted as a new NFT on a different platform, according to Toshendra Sharma, chief executive of NFTically—a company that assists others in the development of their NFT marketplaces by providing a software-as-a-service (SAAS).
In part, this scamming trend is driven by the hype surrounding the metaverse and NFTs, which has resulted in companies rushing to launch new platforms without adequately protecting their users in a manner similar to what is done in the real world of art.
Swaroop Biswas, an independent artist, explained that placing a physical piece of art on an auction list necessitates the completion of several steps in order for it to be validated. When it comes to art insurance, the companies that deal with it are very scientific when it comes to validation procedures. “For example, Axa, which specialises in art, has approximately six steps of authentication – chemical, sound, fabric, carbon dating, three to four layers of X-rays, and even magnetic resonance imaging (MRI),” says the author “Swaroop shared his thoughts.
X-rays and magnetic resonance imaging (MRI) are used to determine whether or not a painting existed beneath the one that can be seen on the canvas from above. “Van Gogh, for example, was a painter who used to do this a lot,” says the author “Biswas brought this to our attention.
A senior blockchain analyst at the blockchain research platform DappRadar has noted that Renaissance painter and architect Raphael was well-known for regularly copying artwork produced by his students, and that frauds in the NFT space are not all that dissimilar from this practise. In both the traditional and digital art worlds, acts of artists and individuals with larger followings overshadowing those with limited exposure have remained constant “he explained.
In contrast to an art gallery, NFT platforms, according to Biswas, allow virtually anyone to’mint’ an NFT for as little as 2,000-6,000, depending on the size of the NFT. This implies that anyone has the potential to create anything that they desire in their lives. Although you can trace the origin of artwork online, there is no way to determine whether or not it is authentic. ” “Biswas took note of this.
The OpenSea platform offers a tool called Lazy Minting to encourage more artists to mint NFTs. This tool eliminates the need for artists to pay a gas fee, which is a one-time fee charged for creating NFT on a blockchain. OpenSea, on the other hand, discovered that more than 80% of the NFTs created with the tool were plagiarised or faked, according to the company. On most platforms, the gas fee for minting an NFT ranges from $2 to $32, depending on the platform.
The global NFT market is expected to reach $4 billion in 2021, according to Huzefa Motiwala, director of systems engineering for India and SAARC at security firm Palo Alto Networks, but the company has discovered that over 90,000 NFTs are forged. According to Motiwala, it is ironic that while NFTs are intended to be deregulated trust transactions, “the deregulated trust framework on which a piece of artwork, original or digital, is based in order to establish authenticity is a major issue.””
A group of artists has created a Twitter account called NFTTheft in order to draw attention to fictitious NFT listings. According to the account, artists are witnessing hundreds or thousands of pieces of art being stolen and listed.
The absence of entry barriers and checks and balances is already having a negative impact on the industry. The global NFT market is expected to reach $4 billion in 2021, according to Huzefa Motiwala, director of systems engineering for India and SAARC at security firm Palo Alto Networks, but the company has discovered that over 90,000 NFTs are forged.
On January 5, artist Aja Trier took to Twitter to express her displeasure with the fact that her artworks had been stolen and listed on OpenSea 86,000 times without her knowledge. While Tirer was successful in convincing OpenSea to remove the bogus NFTs, she soon realised that she would have to submit multiple requests, each of which would take weeks. In fact, many artists have expressed dissatisfaction with the length of time it takes marketplaces to even respond to their requests.
The fact that, by their very nature, NFTs are supposed to be deregulated trust transactions, Motiwala believes it is ironic that, “the deregulated trust framework on which a piece of artwork, original or digital, is based to establish authenticity is a major issue.””
NFTically, for its part, has stated that it is developing a tool to check the authenticity of NFTs before they are minted. Sharma explained that the scanner will be made available on the company’s website as an application layer. In his words, “any tech-savvy individual can still directly access the blockchain and mint NFTs,” but he did not elaborate “…..
Aside from the issue of fake NFTs, another source of concern is that traders are inflating the price of NFTs by selling them to themselves. According to a report published earlier this month by blockchain tracking firm Chainalysis, 110 traders made a total of $8.9 million by doing just that. The report also highlighted the increasing use of non-financial institutions (NFTs) for money laundering. It is very easy for a buyer to split their crypto assets across multiple wallets in order to make it appear as though multiple people are purchasing an NFT because crypto transactions are only identified by the wallets attached to them.
NFTs are a subset of the larger metaverse concept in which they are embedded. Motiwala warned that identity theft will be a major source of concern in the metaverse in the future. “The fundamental issue is that the metaverse is, by its very nature, unregulated, and as a result, security concerns will only grow in importance.” “He went on to say that lawmakers and the private sector should collaborate closely in order to establish some sort of zero-trust framework for these virtual spaces. N.S. Nappinai, a Supreme Court advocate and the founder of the cyber safety organisation Cyber Saathi, emphasised that when formulating laws for emerging technologies such as artificial intelligence and the metaverse, it is critical to understand the “purpose of the technology” and what it is intended to accomplish.