Sales of NFTs, or non-fungible tokens, soared to around $ 25 billion in 2021, leaving many baffled as to why so a lot money is being spent on items that do not physically exist and which anyone can view online for spare .
NFTs are crypto assets that record the ownership of a digital file such as an trope, video or text. Anyone can create, or “ mint ”, an NFT, and ownership of the nominal does not normally confer ownership of the underlying item .
Reports of scams, counterfeits and “ wash trade ” hypertext transfer protocol : //www.reuters.com/technology/unreal-demand-irregular-sales-worth-billions-fire-up-wild-nft-market-2022-02-07 have become commonplace.
The U.S.-based Cent executed one of the first known million-dollar NFT sales when it sold the erstwhile Twitter CEO ‘s pinch as an NFT last March. But as of Feb. 6, it has stopped allowing buying and sell, CEO and co-founder Cameron Hejazi told Reuters .
“ There ‘s a spectrum of activity that is happening that basically should n’t be happening – like, legally ” Hejazi said .
While the Cent market “ beta.cent.co ” has paused NFT sales, the part specifically for selling NFTs of tweets, which is called “ Valuables ”, is even active .
Hejazi highlighted three main problems : people selling unauthorized copies of other NFTs, people making NFTs of capacity which does not belong to them, and people selling sets of NFTs which resemble a security .
He said these issues were “ rampant ”, with users “ minting and minting and minting forge digital assets ” .
“ It kept happening. We would ban offending accounts but it was like we ‘re playing a game of whack-a-mole … every time we would ban one, another one would come up, or three more would come up. ”
“MONEY CHASING MONEY”
such problems may come into greater focus as major brands join the first-come-first-serve towards the alleged “ metaverse ”, or Web3. Coca-Cola and luxury post Gucci are among companies to have sold NFTs, while YouTube said it will explore NFT features.
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While Cent, with 150,000 users and gross “ in the millions ”, is a relatively small NFT chopine, Hejazi said the offspring of fudge and illegal content exists across the industry .
“ I think this is a pretty cardinal trouble with Web3, ” he said .
The biggest NFT marketplace, OpenSea, valued at $ 13.3 billion after its latest orotund of venture fund, said last calendar month more than 80 % of the NFTs minted for free on its chopine were “ plagiarized works, bogus collections and spam ” .
OpenSea tried limiting the number of NFTs a drug user could mint for free, but then reversed this decisiveness following a backlash from users, the ship’s company said in a Twitter thread, adding that it was “ working through a number of solutions ” to deter “ bad actors ” while supporting creators .
“ It is against our policy to sell NFTs using plagiaristic capacity, ” an OpenSea spokesperson said .
“ We are working around the clock to ship products, add features, and refine our processes to meet the consequence. ”
To many NFT-enthusiasts, the decentralized nature of blockchain technology is appealing, allowing users to create and trade digital assets without a central agency controlling the action.
But Hejazi said his company was bang-up on protecting content-creators, and may introduce centralized controls as a short-run measure in order to re-open the market, before exploring decentralized solutions .
It was after the Dorsey NFT sale that Cent started to get a sense of what was going on in NFT markets .
“ We realized that a distribute of it is just money chasing money. ” ( Reporting by Elizabeth Howcroft, Editing by Louise Heavens and Andrew Heavens )