NFTs (Non-Fiat Tokens) are cryptocurrency tokens that link back to an image, song or other digital asset – like an After Effects file but on the blockchain.
However, these tokens require vast quantities of electricity to mine – leading to planet-warming pollution. Now is the time for action.
1. Scams
NFTs offer artists a wonderful platform to show and sell their work while earning money, but they also create opportunities for scammers and malicious actors to exploit them and cause further issues down the road. It is vitally important that artists understand this side of NFTs in order to protect themselves against unnecessary complications down the road.
Scams in the NFT world are an epidemic. From romance scams and online purchase frauds to more intricate schemes using artificial intelligence (AI) or cryptocurrency-based cryptocurrency technologies. Fraudsters continue to find new ways of targeting individuals with their scams in order to take their money.
Money laundering and tax evasion remain two major issues facing the NFT community, due to their anonymity. Criminals can use NFT transactions as an easy means of launderer money using illicit funds to purchase NFTs that they then resell at a profit on unregulated marketplaces; buyers and sellers use digital wallet addresses without being connected back to real-life identities.
Due to their high value and liquidity, NFTs make an ideal way for criminal organizations to launder money. Criminal organizations could acquire illicit funds from drug trafficking, illegal weapon sales or human trafficking and convert them into NFTs; then sell these at an inflated price to third parties unaware of their illicit origin; any profits earned could then be used to fund other illegal activities.
Environmental impacts associated with NFTs are also an area of grave concern. Mining and trading these tokens generate vast quantities of greenhouse-gas-emitting carbon emissions; each transaction or upload can use up to one month’s worth of energy – this fact should not be taken lightly in light of climate change.
Secure your NFTs is key to protecting them from potential issues. Be sure to move any NFTs you own from online crypto wallets (hot wallets) into hardware wallets like Trezor and Ledger for maximum protection, always lock it with a password, enable two-factor authentication (2FA), and utilize SlashAuth or another secure gating solution in order to ensure only authorized people can gain access to content around your NFT.
2. Money laundering
Money laundering is an international problem involving trillions of dollars annually. Criminals use various means to conceal their ill-gotten gains from authorities while making it appear as legitimate business profits. There are multiple methods used by money launderers online that enable them to remain undetected and remain profitable in business operations.
One of the most effective methods of hiding funds is recruiting unwitting individuals as “money mules.” If this happens to you, immediately stop communicating with banks and notify the appropriate authorities as this could put yourself and others at risk of prosecution.
Other methods for laundering money involve purchasing high-ticket items with cash and then reselling them to make them appear legitimate – real estate, art, jewelry and luxury cars are popular purchases by criminals looking to conceal illegal income. Many countries have anti-money laundering regulations in place; financial institutions must report suspicious activity like multiple deposits of $10,000 or more made within an hour, frequent wire transfers and currency exchanges – however these regulations don’t keep up with newer digital crimes such as phishing scams and virtual currencies.
Online banking and cryptocurrencies like Bitcoin are increasingly being used as vehicles for money laundering. Criminals use anonymous online payment services and peer-to-peer transfers to move and withdraw cash without leaving a trace in their accounts – even though banks and financial institutions comply with anti-money laundering policies, new schemes may evade detection by them.
One of the key elements of money laundering is “layering.” This process sees illegally earned cash travel around the globe to change its appearance and obscure its source, being transferred through shell companies, accounts in different countries or to places with lax regulation enforcement before eventually returning back into legal economy as legal tender. By employing this technique criminals can use their illegal earnings to fund illicit businesses that don’t conform with accepted business practices.
3. Art theft
As non-fungible tokens (NFTs) have emerged as a new speculative art craze and have even attracted high-end auction houses like Sotheby’s and Christie’s, they have also given rise to rampant theft that many artists are finding hard to deal with. Opportunists have begun minting publically viewable works into NFTs before selling them online marketplaces without authorization of the artist themselves; some cases even find these works being sold under their name without their knowledge.
This issue affects everyone with an NFT, but digital artists seem especially susceptible. Illustrator Aja Trier was shocked to discover her artwork had been made into NFTs and sold at outrageously inflated prices on OpenSea marketplace – she managed to withdraw them before they were sold, yet her work continues to be stolen on an unprecedented scale.
Liat Gurwicz, a Los Angeles-based digital artist who has done everything from hyperrealistic Pokemon renderings to concept work for Detective Pikachu, was taken aback to find that her art had been turned into NFTs; some reportedly selling for as much as an SUV!
Gurwicz has since begun monitoring blockchains used by NFTs, alerting artists when their work has been plagiarized and sold on marketplaces. She also helped develop a tool allowing people to check whether their NFT has been flagged for copyright infringement similar to how DMCA notices can be monitored on Web 2.0 websites.
Artists whose works are being sold as NFTs should report it immediately as copyright infringement. Although it can be challenging to track down violators, any indications that they might exist should be pursued as possible leads. Artists might also consider registering their works for copyright protection as an additional layer of security; this process is expensive however and registration will need to be completed for each piece individually.
4. Fraud
Fraud remains a perennial danger in the NFT industry, often taking the form of scams targeting investors and fans who fall for deceptive schemes to get them to put money into low-quality projects they never intended to support. These schemes take various forms, from pop-up ads or email links directing users to fake websites with malware-ridden pages to direct people there who then exchange private wallet keys that give access to digital wallets containing valuable NFT collections and cryptocurrency holdings for private keys which allow scammers access.
This form of cybercrime isn’t limited to NFT marketplaces alone; it can take place on any website with user-generated content. Threat actors have also used investment scams as an attempt to steal funds – something which was evident with Evolved Apes where developer Evil Ape managed to collect nearly $3 Million before going missing without leaving a trace behind.
One common issue is when people attempt to resell NFTs but are unsuccessful in doing so due to nonpayment by buyers, leading them to purchase NFTs at less than their true worth and cause artists to forfeit hard-earned revenue. A trusted NFT exchange that supports instantaneous verification transactions provides the solution by guaranteeing full payments are being received and digital wallets remain empty.
NFTs can be used for virtually all forms of media, making them an attractive means to sell art, music and even personal experiences such as first tweet by Twitter founder Jack Dorsey or Tim Berners-Lee’s original source code for the web. Many notable NFTs have even been auctioned off for millions – such as Twitter founder Jack Dorsey’s tweet or Tim Berners-Lee’s source code being sold off via NFT.
NFTs may seem like a revolutionary technology, but they still present risks as any market would. Therefore, it’s wise to remain up-to-date on trends and best practices within this rapidly expanding industry if you want to invest in NFTs successfully. Stay tuned for further articles covering this rapidly developing space on Man of Many as well as staying informed with culture and tech news!
