NFT (Non-Fungible Token) is an individual digital signature that is attached to any file (picture, video, mp3, GIF animation) so that the user can buy digital content and prove ownership.
Thanks to tokens, anyone can easily secure the rights to a unique digital object – a picture, a video, or an item in a game.
In other words, NFT allows you to buy not the product itself, but the owner of it by attaching a token with information about the owner to the file.
Collectors immediately liked this opportunity, because tokens are often advertised as a scarce commodity and sold through auctions.
A token is just a certificate with a link to your image, which is sold for money. The token itself is original and non-interchangeable, but you can link it to any file as many times as you like. Attackers can do the same, and no one forbids using pictures and videos already linked to other tokens.
For example, if you delete your work or the platform deletes it due to copyright infringement, the owner will keep the token and it can be reused (there will simply be a corresponding mark in it).
Unless the buyer and the artist have entered into a third-party agreement to transfer copyright, then all rights remain entirely with the author of the work, no matter what price he asks for NFT.
In fact, a token is an original digital signature (certificate) with a link that leads to a jpeg file (that is, there is no file in it). NFT will not allow you to copy the blockchain within which it works, but they do not prohibit copying and re-uploading the platform file.
NFT technology (https://boostylabs.com/blockchain/nft) has been around for about three years, but it only began to gain popularity last year.
It was assumed that non-fungible tokens would help artists monetize creativity and earn money without intermediaries, and fans would be able to support their favorite authors without subscriptions like Patreon.
NFTs were supposed to help artists monetize their own creativity, but in reality, they only made life harder.
NFT issues that affect artists
The main problem with NFTs right now is that the sites where artists (like scammers) post content for sale do not verify the authenticity of the work and do not establish copyright in any way.
So any user can collect pictures of different authors from the Internet and put them up for sale as a collection. Often illustrators do not even know that someone is selling their work, and in the meantime, scammers earn money (most often small).
Sometimes attackers do not just copy other people’s files (even watermarks on paintings do not bother them), but also the composition of collections and their names, and even create fake accounts of famous artists.
There were many examples of such “resale” last year. For example, the work of the artist Qinni, who died of cancer, was copied and put up for sale. This was announced on her page by the artist’s brother.
Moreover, sometimes attackers steal and put up for sale not only art, but also “author’s” screenshots from games like Minecraft.
At first, some artists thought that if they tied tokens to their works, then no one would be able to steal and sell them, because two identical tokens cannot exist within the same blockchain. However, multiple copies of the same picture may exist.
Sites do not respond to complaints from authors whose content was stolen
Attackers steal the work of artists and upload them to the OpenSea site. They take advantage of the fact that they do not charge a fee for creating tokens and do not verify the identity and copyright of the user who posts the content.
You can remove stolen content from the site by sending a message to a separate email, but it will take a long time to be considered because everyday artists send OpenSea “tens and hundreds of complaints.”
Stolen images are not deleted immediately, so many collectors have time to purchase tokens, which then simply disappear from wallets without a refund.
In addition, in order to send a complaint, the artist needs to fill out a form and provide the site with personal information (full name, email, and contacts in social networks), and the complaint, according to support agents, can be transferred directly to the owner of the account that exhibited other people’s work.
Artists sometimes have to go to extreme lengths and close their galleries
“Unfortunately, I am forced to completely close my gallery on DeviantArt,” such a message was published by comics artist Liam Sharp, who drew the Green Lantern and Wonder Woman series for DC. His work was stolen from the DA page (the artist used the site for 14 years) and put up for sale as an NFT collection.
Cover by Liam Sharp for The Brave and the Bold: Batman and Wonder Woman #1.
Sharp complained to the administration of OpenSea and demanded that his works be removed from the pages of the store, however, according to the artist, “he was repeatedly ignored.”
In light of the events, the DevianArt administration has introduced the DeviantArt Protect system, which is designed to protect artists from theft of works.
However, the system does not directly protect art, but only monitors cases when it is uploaded to NFT platforms without permission, after which it sends notifications to artists.
Then they should send complaints about the content and sort it out on their own. The system was developed in collaboration with the OpenSea platform.
Artists Loish, Nesskain, Andre Rios, Detective Pikachu concept artist R. J. Palmer, and Russian artist Olga Anufrieva, whose work on NFT services was noticed by subscribers, suffered from the actions of malefactors.
Other NFT Issues
According to artist Antsstyle, buyers and art dealers are increasingly using NFTs to launder money. He compares the token market to the “Wild West” due to the lack of regulation and legal regulations.
The fact is that all NFT transactions, even for very large amounts, are now tax-free, which is why entrepreneurs and attackers use the system as a means to transfer money from wallet to wallet without commission and deductions.
Any user can create a simple image (or take an existing one) and attach a token with a price tag of $100,000 to it, and then sell it to their business partner or transfer it to their own account with a different address.
For example, artist Beeple, after a $69 million deal, launched another auction with new work. According to Antsstyle, this sale turned out to be a simple transfer.
The work was bought by the artist’s business partner, who wanted to “master” the accumulated cryptocurrency and transfer it to another asset before the rate fell.
Human One by Beeple
Tim Swanson, former director of market research at the blockchain consortium R3, believes that “non-fungible tokens are already being used not only for laundering criminal proceeds but also for tax evasion.”
He claims that the tax liability account buys the token from an unknown account and then resells it to a third party at a lower price, incurring a loss that offsets the aforementioned tax liability.
That is, according to the records, it turns out that he does not earn, but in fact, he masters the necessary funds.
Traders earn on NFT loans
The example of NFT loans on the NFTFi platform, which CoinDesk called the “NFT pawnshop”, is also indicative. There, users are offered a cryptocurrency loan and are asked to leave their tokens as collateral. If the user cannot repay the debt, the NFT is taken by the platform.
So one of the traders borrowed 3.5 ether (about 12 thousand dollars) from the platform and offered an NFT in return, which cost 3.25 ether. In three months, the value of this token reached 300 thousand dollars.
The trader did not repay the debt, NFTFi took the token and made a profit from it (it went up in price). Later it turned out that this NFT had already been used as collateral for a loan, but its previous owner declared himself bankrupt.
The new owner bought it “cheaply” and converted it into cryptocurrency with the help of an NFTFi loan, which is why he easily abandoned the asset when it was necessary to return the money.
Such chains are now especially popular with traders and brokers who want to realize and repledge digital assets.
NFT transactions harm nature and bring us closer to global warming
To produce one token, electricity is needed, and in considerable quantities. Blockchain servers run around the clock and consume electricity, increasing carbon dioxide emissions. Eco-activists believe that such technology brings global warming closer.
Artist Jany Lemercier has canceled the sale of his crypto painting through the Nifty Gateway. According to him, the creation of several crypto-tokens in terms of energy costs is comparable to the electricity that an artist spends in his studio for two years of work.
Zhani stated that he would not sell digital works and create tokens until the problem was resolved. Now the artist is looking for sites that consume little electricity. In addition, Lemercier limited his energy consumption (including heating costs) in his studio and focused on “live” exhibitions.
At the same time, he abandoned air travel in favor of rail transport and staged a campaign in which he demanded that Autodesk stop selling its software to mining corporations.
Most NFTs are related to the Ethereum cryptocurrency. Its servers, according to experts, consume more energy per year than Iceland.
The creators of Ethereum have been promising for many years to move to a more sustainable way of working (Ethereum 2.0), but so far the solution is “in development”.
John Crane, CEO of NFT marketplace SuperRare, believes that “blockchain transactions are mistakenly associated with carbon emissions and make a big deal out of nothing.”
As an example, John cites the situation with the creation of a non-digital painting or sculpture: “air transportation of a work and lighting of galleries is also accompanied by carbon dioxide emissions, but no one is worried about this.”
How to protect yourself from theft
If you post your work on the Internet, it is extremely difficult to protect them from theft. Attackers, bots, and dishonest sellers can copy them at any time and upload them to any of the sites without your knowledge.
You can complain about the theft of content, fill out a form and wait for the verdict of the site administration, but this is a long process that does not always end in favor of the artist.
The NFTStreet resource advises not to upload source files and upload images in the lowest possible quality, as well as put watermarks on them. Even if such content is stolen and tokens are tied to it, buyers will be wary, and most likely will not buy anything from the attacker.
- Try to copyright your work and share it on social media.
- You can protect yourself against the theft of NFT tokens from your e-wallet on Rarible, OpenSea or Nifty Gateway. When registering an account, the system asks you to enter a phrase of 12 words. Don’t disclose it to anyone.
- Pay attention when looking for sites in the search engine. There are mirror sites that scammers create to get your password. In appearance, they look the same as the original OpenSea or Rarible, but there are always extra letters or symbols in the address bar.
- Do not use the passphrase on other sites and do not report it even when it is asked for by specialists from the support center of one of the sites.
- Get closer to your audience on social media. Observant fans of your art can report the placement of stolen art in NFT markets.
- Save original files with the source of your art on offline media. Do not upload sources to the network.
- As you work, leave intermediate versions of your art with dates, so that later you can use the files as evidence.
- Close all your abandoned accounts (or hide all the work in them) so that scammers cannot pull content out of them and pass them off as their own.
- If you have Twitter, you need to ban the @tokenizedtweets bot account and other similar accounts. You can search for them using the #NFTBlocklist tag.
- If you still found your work on one of the sites – write complaints to support. It’s better than doing nothing.