The booming NFT art market could have been built on fakes and plagiarized content. More than 80 percent of the NFTs created on the OpenSea free minting tool either counterfeits or spam, according to OpenSea — a peer-to-peer marketplace, supposedly, for rare digital items and crypto collectibles.
NFTs or nonfungible tokens are cryptographically unique digital tokens that provide proof of ownership for a wide range of tangible items — items that can be stored digitally such as artwork, digital collectibles, music, and items in video games.
The “lazy minting” tool was originally created in 2020 to make it easier for artists to get into the NFT space by charging no upfront gas fees—the variable price miners charge to write new data on a blockchain. However, OpenSea tweeted that it had recently seen an exponential increase in the misuse of the feature.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
The largest NFT marketplace, OpenSea threatened to limit the number of free NFTs a user can mint or create on its platform to 50, but later reversed this decision after users protested and apologized to them.
The NFT community, including creators and crypto industry personalities, criticized OpenSea for inhibiting collections that use OpenSea’s own NFT smart contracts — chunks of code that perform set instructions to help users manage ownership and transferability on the blockchain.
“Every decision we make, we make with our creators in mind. We originally built our shared storefront contract to make it easy for creators to onboard into the space,” OpenSea said in a tweet thread.
“However, we’ve recently seen misuse of this feature increase exponentially. Over 80% of the items created with this tool were plagiarized works, fake collections, and spam.”
Increased theft and fraud in the growing NFT industry have resulted in people losing millions of dollars. Many are warning that this NFT bubble is not only attracting speculators but also scammers who are committing Ponzi schemes.
NFT sales soared past $24.9 billion in 2021, compared to less than $95 million in 2020, according to market tracker DappRadar.
In January, OpenSea registered a record-breaking month for sales in Ethereum, the second-largest cryptocurrency and a favorite of NFT users, soaring past the $4.95 billion mark, according to data from Dune Analytics.
This trading volume surpassed both the previous all-time high of $3.42 billion in August 2021 and $3.24 billion in sales in December.