Many sellers on the crypto platform that sold an NFT of Jack Dorsey's first tweet for $2.9 million were selling tokens of content that were not owned by them and as such the platform has stopped most transactions. This was revealed by the platform's founder, who termed this as a "fundamental problem" in the very fast expanding digital assets market.
Sales of non-fungible tokens, or NFTs, climbed to roughly $25 billion in 2021, leaving many perplexed as to why so much money is being spent on products that do not physically exist and can be viewed online for free.
NFTs are crypto assets that serve as a record of ownership for digital content such as an image, video, or text. Anyone can generate, or "mint," an NFT, and possession of the token do not usually imply possession of the underlying asset.
Scams, counterfeits, and "wash trading" have all become routine.
When Cent sold the former Twitter CEO's tweet as an NFT last March, it was one of the first documented million-dollar NFT transactions. However, as of Feb. 6, it no longer allows purchasing and selling, according to CEO and co-founder Cameron Hejazi.
"There's a spectrum of activity that is happening that basically shouldn't be happening - like, legally," Hejazi said.
While the Cent marketplace "beta.cent.co" has suspended NFT sales, the section dubbed "Valuables" that is exclusively for selling NFTs of tweets is still active.
Hejazi identified three major issues: people selling unauthorized copies of other NFTs, people creating NFTs from content that does not belong to them, and people selling sets of NFTs that resemble security.
He described the problem as "rampant," with individuals "minting, minting, and minting counterfeit 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."
As large brands race to the so-called "metaverse," or Web3, such issues may become more prominent. Coca-Cola and luxury brand Gucci are among the corporations that have sold NFTs, while YouTube has stated that it will investigate NFT features.
While Cent, with 150,000 members and earnings "in the millions," is a relatively tiny NFT platform, Hejazi claims that the problem of fraudulent and illicit content is widespread in the business.
"I think this is a pretty fundamental problem with Web3," he said.
The largest NFT marketplace, OpenSea, which was valued at $13.3 billion following its most recent round of venture funding, revealed last month that more than 80% of the NFTs generated for free on its platform were "plagiarised works, bogus collections, and spam."
OpenSea attempted to limit the number of NFTs a user may mint for free, but reversed its decision in response to user reaction, the business claimed in a Twitter thread, adding that it was "working through a number of options" to avoid "bad actors" while encouraging innovators.
"It is against our policy to sell NFTs using plagiarized content," an OpenSea spokesperson said.
"We are working around the clock to ship products, add features, and refine our processes to meet the moment."
The decentralized feature of blockchain technology, which allows users to generate and trade digital assets without a central authority supervising the activity, appeals to many NFT fans.
However, Hejazi stated that his organization is committed to safeguarding content creators and may implement centralized controls as a short-term remedy to reopen the marketplace before researching decentralized solutions.
Cent began to gain a sense of what was going on in the NFT markets after the Dorsey NFT transaction.
"We realized that a lot of it is just money chasing money."
(Source:www.reuters.com)
Sales of non-fungible tokens, or NFTs, climbed to roughly $25 billion in 2021, leaving many perplexed as to why so much money is being spent on products that do not physically exist and can be viewed online for free.
NFTs are crypto assets that serve as a record of ownership for digital content such as an image, video, or text. Anyone can generate, or "mint," an NFT, and possession of the token do not usually imply possession of the underlying asset.
Scams, counterfeits, and "wash trading" have all become routine.
When Cent sold the former Twitter CEO's tweet as an NFT last March, it was one of the first documented million-dollar NFT transactions. However, as of Feb. 6, it no longer allows purchasing and selling, according to CEO and co-founder Cameron Hejazi.
"There's a spectrum of activity that is happening that basically shouldn't be happening - like, legally," Hejazi said.
While the Cent marketplace "beta.cent.co" has suspended NFT sales, the section dubbed "Valuables" that is exclusively for selling NFTs of tweets is still active.
Hejazi identified three major issues: people selling unauthorized copies of other NFTs, people creating NFTs from content that does not belong to them, and people selling sets of NFTs that resemble security.
He described the problem as "rampant," with individuals "minting, minting, and minting counterfeit 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."
As large brands race to the so-called "metaverse," or Web3, such issues may become more prominent. Coca-Cola and luxury brand Gucci are among the corporations that have sold NFTs, while YouTube has stated that it will investigate NFT features.
While Cent, with 150,000 members and earnings "in the millions," is a relatively tiny NFT platform, Hejazi claims that the problem of fraudulent and illicit content is widespread in the business.
"I think this is a pretty fundamental problem with Web3," he said.
The largest NFT marketplace, OpenSea, which was valued at $13.3 billion following its most recent round of venture funding, revealed last month that more than 80% of the NFTs generated for free on its platform were "plagiarised works, bogus collections, and spam."
OpenSea attempted to limit the number of NFTs a user may mint for free, but reversed its decision in response to user reaction, the business claimed in a Twitter thread, adding that it was "working through a number of options" to avoid "bad actors" while encouraging innovators.
"It is against our policy to sell NFTs using plagiarized content," an OpenSea spokesperson said.
"We are working around the clock to ship products, add features, and refine our processes to meet the moment."
The decentralized feature of blockchain technology, which allows users to generate and trade digital assets without a central authority supervising the activity, appeals to many NFT fans.
However, Hejazi stated that his organization is committed to safeguarding content creators and may implement centralized controls as a short-term remedy to reopen the marketplace before researching decentralized solutions.
Cent began to gain a sense of what was going on in the NFT markets after the Dorsey NFT transaction.
"We realized that a lot of it is just money chasing money."
(Source:www.reuters.com)
