In 2022, the nonfungible token (NFT) market achieved unprecedented success with a record number of new collections and $50 billion in sales volume. Despite the rapid growth of this entirely digital market, it soon became an attractive target for fraudsters. The rise of the NFT market marked a new era of digital ownership and investment, yet it also brought with it a heightened risk of fraud.
The NFT market faced numerous critical issues entering 2023, as a recent report discovered that more than half of NFT activity on the Ethereum blockchain – the most popular network for NFT trades – was fraudulent. Wash trading and copycat collections created significant difficulty in assessing a fair price for an NFT, as there is often a large difference between the floor price and the price ceiling for collections. Furthermore, malicious market activity has further complicated users’ investment and trading decisions when it comes to NFTs. Advanced market intelligence and analytics is necessary to address these issues.
The Bored Ape Yacht Club (BAYC) collection has seen immense success in the NFT market, with a total sales volume of $1.53 billion in 2022. However, the visuals of the apes in the collection can be easily copied as image files and used to create counterfeit NFTs. This presents a significant financial opportunity for those seeking to exploit the success of the BAYC collection by creating fake NFTs.
Fake NFTs, which are created by duplicating the artwork of genuine artworks, can be hard to recognize in the digital realm, leading to significant money-related misfortunes for purchasers. The effect of counterfeit tokens in the NFT market has monetary, lawful and notoriety related outcomes. Financial specialists who lose faith in the biological system because of fake NFTs are not as liable to come back to the market. Without adequate interest, the costs of NFTs are probably going to diminish.
With the rise of Artificial Intelligence (AI) technology, NFT collectors are now able to avoid investing in counterfeit items. bitsCrunch, an NFT analytics provider, recently unveiled an AI-powered tool which is capable of scanning blockchains and marketplaces for replicated or imitation NFTs. This eliminates the confusion of sorting through the marketplace and tracing the history of a legitimate NFT.
After conducting a thorough analysis of over 800,000 assets on the leading NFT marketplace OpenSea, as well as the top-40 NFT collections on the Ethereum blockchain, bitsCrunch discovered that 144 NFTs are exact duplicates of the BAYC collection. Additionally, 231 NFTs were identified as near-exact matches, and 814 were deemed “extremely similar”.
BitsCrunch has identified an abundance of counterfeit NFTs from popular NFT collections such as BAYC, Azuki, Otherdeed, and CloneX using AI-powered analytics. The platform can spot forged material across blockchain networks and detect newly-minted or existing fake NFTs by analyzing current data. Evidently, the issue of counterfeit NFTs is far from exclusive to BAYC.
The pricing of NFTs is often a source of perplexity in the market, as floor prices – the least expensive item in a particular collection – are often not a reliable indicator of what a seller should charge for their own NFT. This makes it hard to come up with a fair price for an NFT one wishes to sell.
AI technology has enabled buyers and sellers of digital collectibles to access the NFT Price Estimation tool from bitsCrunch, which helps to determine a more accurate final price. This tool takes into account various factors, such as trading volume, past prices and the profiles of previous buyers, as well as analyzing the related hype generated on social media, in order to provide a more accurate price estimation. With this technology, buyers and sellers can now make more informed decisions when it comes to pricing digital collectibles.
AI-driven machine learning tools have been utilized to analyze over 30 million NFTs from over 2,200 collections in order to apply advanced data and analytics. This allows users to make informed decisions when buying or selling NFTs.
In order to realize the full potential of the NFT space, tools must be employed which address problems like wash trading and forgery that have been prevalent in the market in recent years. To capitalize on market data, users require AI-driven analytics and intelligence which is presented in an easily comprehensible format.
BitsCrunch provides users with reliable insights into the NFT market through UnleashNFTs, its cutting-edge NFT analytics and forensics platform. The platform offers comprehensive analysis, research, and statistics related to the NFT ecosystem, empowering both buyers and sellers with the knowledge necessary to make informed decisions when trading NFTs.
BitsCrunch has launched a startup program in order to increase awareness and data transparency in the NFT ecosystem. Companies working with NFTs can join this program to gain access to BitsCrunch’s tools for risk analysis and management through the API. With the help of AI-powered analytics, NFT creators, traders, and businesses can detect and prevent malicious activities and ultimately foster the growth of the NFT ecosystem in a more secure way.