When in 2017, Cryptokitties choked the Ethereum Network and gas prices went off the roof, critics mocked the NFT trend calling it crypto’s weirdest fantasies. Fast forward to 5 years, NFTs have revolutionized every segment from art, music to real-estate to environment. As a result, it has turned into a $50 billion market. That sounds intriguing but what if we say that we are just aware of the truth, which is half-baked.
NFTs Twin Struggle : The Desire For a Solution Ahead
The NFT market is struggling at two fronts. The first problem, which is skewed prices, involved traders who were using the wrongful practice of wash-trading to artificially inflate NFT prices and walk away with super-normal profits . A chainalysis report unveiled that more than 110 traders bought and sold their NFTs back and forth and walked away with $8.9 million in profits in no time.
In the second problem, which is counterfeiting, traders have used NFT marketplaces to list and sell fake NFTs which replicated original ones and it was very difficult to identify the reel from the real ones. For example, Aja Trier was shell-shocked when she saw that more than 86,000 NFTs have been minted out of her Vincent Van Gogh style painting. She was not the only victim since we are just seeing the tip of the iceberg.
OpenSeas, an NFT marketplace has reported that its free tool has been used to mint more than 80% NFTs which are fake and have no permission from its creators. But what’s intriguing to note here is that there’s no proper mechanism in place which can easily identify whether an NFT is unique, original or a fake creation.
AI’s Role In Countering These Problems in the NFT Space
Artificial Intelligence has been the new buzzword lately and it has shown considerable leaps in tackling the NFT fiasco. Here’s how AI is solving the problems which have been discussed above;
AI Powered Tools for Price Estimation
When washtrading becomes a new normal to lure traders into paying inflating prices for NFTs, due-diligence doesn’t become an add-on but a must-have feature for NFT marketplaces. BitsCrunch is an AI tool that helps in truly determining the actual value of the NFT by analyzing historical information and metadata. Since this tool has been running with more than 30 million NFTs that have been created by more than 2200 collectors, it can easily track and trace practices like washtrading, and price forger. In 2021, BitsCrunch identified that out of $24.8 billion trade on LooksRare, $21.4 billion of the total volume was washtraded. Terraforms were the NFTs which were washtraded the most.
AI Tools for Fake NFTs
BAYC, AZUKI, OtherDeeds and CloneX were the most cloned NFTs on the Looks Rare marketplace. BITSCrunch identified more than 400 NFTs which were the exact opposite of the above-mentioned NFTs. BItsCrunch used specific meta-data and creator information to unveil that most of the NFTs were exact replica and when its command prompt ran an error code with the specific details that replicated the original NFTs, more than thousands of inputs were found, which were later on put under scanner and their listing was withdrawn from the marketplace.
The Road Ahead: What True Adoption Sounds Like
Formula 1 and Nippon Airways have been the recent brands which have jumped into the NFT bandwagon. Formula 1 is planning for NFT introduction in its Monaco Grand Prix event slated for May 26-28, 2023. Whereas, All Nippon Airways have ventured into providing real-time experience to the customers using the NFTs. But at the backdrop of such challenges as mentioned above where it is very easy to replicate original NFTs and make them available for sale, it would be a real challenge for big brands to adopt NFTs as their future technology for providing superior customer experience.
At such times, more platforms like BitsCrunch could pave the way for a more robust and battle tested Web3 and AI future ahead. Until then, we are simply on the verge of identifying the challenges and crafting a solution around the same. As time passes and the technology matures, we shall be delving deeper into a more secure, safe and decentralized technology future built on top of blockchain and AI.
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