The NFT marketplace is flourishing and gaining consumer interest by the day. At the same time, this development also exposes users to new scams, counterfeits, and money laundering schemes. According to a PrivacyHQ survey, half of NFT owners have lost digital assets at least once.
Earlier this year, OpenSea, the largest public NFT marketplace, reported losing hundreds of NFTs that cost a handful of users an estimated $1.7 million. With over $25 billion floating in the NFT industry, scammers will continue to flock to this largely unregulated industry unless platforms take proactive steps to prevent fraud.
While user security is important, these marketplaces are also profit-oriented businesses responsible for ensuring security measures also make financial sense. These platforms have begun to explore security solutions like REV3AL technology. Robust authentication systems like REV3AL can help NFT marketplaces reduce costs, improve security and lower the associated costs.
What is the cost of NFT scams?
The cost of scams to NFT users is clear. When users choose to engage with NFT marketplaces, they adhere to the risk disclosure agreements and terms of service that displace any liability to scams, counterfeits, or cyberattacks that may occur on the platform. These terms insulate the platforms from covering lost assets, funds, or personal information.
While marketplaces have limited liability on the cost of stolen user assets or fraudulent activity, they still pay a hefty price when scams occur. Bad PR from fraudulent activities can cost platforms their users, revenue growth, brand reputation, and trust.
Cent marketplace, the NFT platform that gained popularity for selling Jack Dorsey’s first tweet as an NFT, recently shut down its marketplace due to rampant reports of counterfeit digital assets. Although Cent was a smaller NFT marketplace with about 150,000 users and a few millions of dollars in revenue, according to Reuters, the counterfeit epidemic ultimately cost the platform its users, sales, growth, and brand reputation.
What steps can NFT platforms take?
NFT marketplaces can save themselves from paying the ultimate price for unregulated activities through proactive measures to prevent fraud and counterfeit arts. The challenge is that over-regulating platforms can often go against the ethos of decentralization and ruin the user’s experience.
Systems like REV3AL are a critical piece of technology in the NFT industry. It is built on self-governance and self-authentication, core tenets of decentralization. REV3AL’s API integrates seamlessly into NFT platforms, allowing users to access its certification and authentication tools easily.
Before minting and listing their finished artwork, artists can upload their work onto REV3AL and encode it with multiple authentication layers to certify its originality. It protects the digital piece from potential counterfeit and copyright infringement.
Once listed, potential buyers and collectors can also use REV3AL’s platform to authenticate NFTs within seconds and gain confidence in their purchases. This multi-pronged approach to authentication also ensures that authentic and original NFTs maintain their value for artists and collectors.
Recommendations
REV3AL is a critical infrastructure technology that will reduce the occurrences of scams on platforms, ultimately building trust and user growth. Integrating REV3AL’s multi-factor authentication system into all NFT platforms ensures user security and fund safety. Users can also feel at ease knowing that the platforms they interact with employs a reliable system and set of tools to protect them from counterfeits and scams.
