bitsCrunch’s Saravanan Jaichandaran on the rise in NFT forgery

However, along with popularity, this celebrity intervention is believed to give rise to NFT forgery. From misleading listings to ingenious scams, the burgeoning concerns surrounding NFT forgery have rattled both creators and investors. By analysing over 800,000 assets on OpenSea, an NFT marketplace, against the top 40 NFT collections on the Ethereum blockchain, bitsCrunch found out that 144 NFTs are exact visual matches to the BAYC collection. About, 231 NFTs were flagged as near-exact matches, while ‘extremely similar’” copies were about 814, as per insights from Cointelegraph. In conversation with FE-trasnformX, Saravanan Jaichandaran, co-founder, chief data scientist, bitsCrunch, explores the impact of NFT forgery and how it might be avoided. (Edited Excerpts)

What is NFT forgery and why it has become a concern in the NFT space?

NFT works on blockchain technology which is capable of tracing and storing all the transaction details that make it a safer ecosystem. In forged NFTs, scammers create various possible ways to scam potential buyers through misleading listings, social engineering tactics and exploiting vulnerabilities, among others,  in the marketplaces.

Plagiarism, phishing and counterfeit NFTs, among others, are some of the common scams that a buyer and investor can face. This damages the creator’s reputation which in turn causes financial losses for the buyers as well. This eventually can impact the trust and authenticity of NFTs.

What are some common methods or techniques that individuals use to forge NFT?

Among many ways to forge NFTs Phishing scams, price inflation and counterfeit scams, among others, are some of the common methods. Phishing scams with the help of ChatGpt are used to send attractive messages and mails often pretending to be from an authentic NFT platform or creator asking for credentials to access buyers’ crypto wallets. By using deepfakes scammers also artificially blow up the price of an NFT with fake bids.

By using deepfakes scammers duplicate or replicate the authenticity of NFT creations violating the copyright of the original creator by producing unauthorised copies. Buyers make a purchase thinking it is original. Once they get access, they drain out all the money and disappear. Apart from this they even send unauthorised links that could potentially lead to websites that automatically breach the security of the visitors. 

Can you provide some user cases of recent cases of NFT forgery? 

In January 2023, United States (US) prosecutors in New York charged a 24-year-old French citizen Aurelian Michel, who rug-pulled his NFT collection, running off with about $2.9 million in funds. Michel had marketed the Mutant Ape Planet NFTs to potential buyers by falsely promising them benefits including rewards and exclusive access to other cryptocurrency assets. However, after he sold  NFTs, he left buyers with worthless assets and never provided them with any promised benefits. Instead, he diverted millions of dollars worth of buyer’s cryptocurrency for personal gain. 

How can users protect themselves from falling victim to NFT forgery?

With insights from OpenSea, an NFT marketplace, in January more than 80% of the NFTs minted for free were plagiarised. To avoid this users should enable two-factor authentication for an added layer of security, which prevents unauthorised access to your account. With the help of generative artificial intelligence (AI), one can keep a track record of the NFTs. Many artificial intelligence (AI) systems promote the ability to identify forged documents using traditional methods (freehand simulation, tracing or simple electronic manipulation) and to detect false accounting. Apart from this one needs to stay informed about the current updates, trends and news in the NFT space. This helps identify potential scams and make more informed decisions. 

What role does artificial intelligence (AI) play in preventing the sale of forged NFTs?

The NFT marketplace is a bustling area where people buy, sell or trade NFTs, much like any stock market. These marketplaces leverage blockchain to ensure safety and transparency of transactions. Apart from this with the use of AI algorithms, users can review the listings to detect plagiarism and flag potential copyright violations. This helps remove the infringed content promptly. Performing regular audits and constant monitoring of listed items can remove suspicious NFTs and maintain their integrity. 

bitsCrunch, an NFT analytics provider, recently launched an AI-powered tool that checks major blockchains and marketplaces for potential copycat or forged NFTs. Artificial Intelligence can now aid buyers and sellers by using the NFT price estimation tool by bitsCrunch. The price estimation tool uses analysed historical information and metadata for an NFT combined with the social media hype around the collection. The tool eventually aims to provide more accurate price estimates. Furthermore, the NFT market needs to inculcate more AI-based tools to improve the analytical part of the NFT trading market. 

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