Non-fungible tokens can be high-value assets that users need to protect at all times. One of the threats to look out for is the spoofing of NFTs. Although protecting oneself isn’t overly complicated, the threat is more real and tangible than one may think.
The NFT Spoofing Problem
There are many factors to consider when dealing with non-fungible tokens. Putting some dedicated research into tokens, creators, artists, use cases, and even marketplaces is essential. All of these factors will determine whether the asset you want to buy is worthwhile, although there is never a guarantee of success in this industry.
Many people are drawn to NFTs due to their price potential. Prominent collections like CryptoPunks and Bored Ape Yacht Club have paid dividends to early investors. However, there are dozens of failed projects for every successful collection, at least from a short-term perspective.
Unfortunately, there are many other potential problems to take into consideration. One such issue is NFT spoofing. It is a relatively common method involving fake NFT stores for marketplaces that replicate existing projects. Although criminals aren’t interested in login credentials, it is not unlike phishing websites. Instead, they will trick unsuspecting users into buying worthless artwork.
Spoofing is considered illegal in various countries, including the US and UK. Unfortunately, it remains one of the biggest threats to various industries, including NFTs. The sentiment is the primary driving factor when buying, selling, and trading non-fungible tokens. It creates an effective ecosystem for spoofing efforts, as many people want to manipulate prices for personal gain.
Bots Remain A Massive Problem
One trend most people have noticed in the NFT space is how bots tend to drive up prices or try to push markets lower at an opportune time. This form of financial spoofing is very common on marketplaces like OpenSea. Bots will play low bids on NFTs, and some users – the “I need liquidity” crowd – may be tempted to accept the offer, even if it means selling at a loss. Unfortunately, many people buy NFTs and aim to flip them within 24 hours or less. If that approach fails, they are willing to take a loss and move on to other projects.
Most bids will never be accepted, but that is perfectly fine. Bots can perform these bids rapidly and at scale. A high failure rate isn’t problematic as long as someone eventually accepts one of the bids. There is no regulation in blockchain – and certainly not in the NFT space – so it will be tough to weed out this bot-related activity.
One addendum to look out for is how someone can accept a bot-placed bid, yet the bot may still cancel it. It creates a lower floor price for the NFT collection, allowing the bt’s owner to sue their real account to place an even lower bid. While this approach may not appear profitable to many, canceling bids cost money, and there is a chance to pick up NFTs even cheaper. If the outcome remains profitable, this trend will continue for some time to come.
Providing Crucial Solutions To NFT Enthusiasts
All of the above might make it sound tricky to navigate the non-fungible token industry, but there are tools to keep users safe. The team at EverdreamSoft has come up with ways to address NFT spoofing with a multi-pronged approach. The first “tool” is the Orb Explorer, a way to see your NFTs across wallets and chains, and a way to pull in more information on any tokens you might have your eye on. Additionally, it has a search function for NFT collections and where to buy them, ensuring users find credible and reputable sources.
Second, EverdreamSoft is building more blockchain tools to index existing blockchain content and future additions. The company aims to become the “Google of tokenized assets” with a strong focus on NFTs. It is a good option for potential buyers, although it benefits creators too. Artists can pay to spotlight their content, promoting good behavior and removing doubts from the equation.
Closing Thoughts
EverdreamSoft has years of experience in the NFT industry since its Spells of Genesis trading card game. The team can leverage all that knowledge to enhance the industry and provide safe and secure tools and environments for artists and collectors alike. It is evident such solutions are needed to bring more legitimacy to the industry.
