AI-driven market analytics and intelligence tools are equipping Web3 users to sidestep counterfeit NFTs and gauge the genuine worth of tokens.
The emergence of non-fungible tokens (NFTs) has unlocked a new frontier for digital ownership and investment. 2022 witnessed an unprecedented surge in NFT collections, pushing the NFT market to break past the $50 billion mark in sales for the first time. However, operating entirely within the digital realm, the NFT market quickly became a hotbed for scams.
Recent data indicates that over half of the NFT activity on the Ethereum blockchain, a preferred network for NFT trades, was fraudulent in 2022. With malpractices ranging from wash trading to fake collections, the NFT market stepped into 2023 plagued by significant challenges that could only be resolved through cutting-edge market intelligence and analytics. Determining a fair price for an NFT is already a complex task, given the large disparity often seen between the minimum and maximum prices for collections. When coupled with malicious market activities, it only muddles the decision-making process for NFT investments or trades.
Notable collections like the Bored Ape Yacht Club (BAYC) have substantial value in the market, but it’s relatively simple to duplicate the visual elements of these apes and create fake NFTs. Given the BAYC collection’s sales volume of $1.53 billion in 2022, the counterfeit NFT market too holds high profitability.
Counterfeit NFTs: The Ripple Effect
Counterfeit NFTs, often created by replicating the image of original artworks, are challenging to identify in the digital space, leading to considerable financial losses for buyers. The counterfeit tokens wreak havoc in the NFT market, leading to economic, legal, and reputational consequences. Investors duped by fake NFTs are likely to lose faith in the ecosystem and withdraw from the market, ultimately causing a dip in NFT prices.
Without the right tools, NFT collectors can easily find themselves overwhelmed when trying to locate an authentic NFT and track its history. Thankfully, recent advancements in artificial intelligence (AI) have led to the creation of tools that help protect NFT buyers from investing in counterfeit content. bitsCrunch, an NFT analytics provider, has recently unveiled an AI-based tool that scrutinizes major blockchains and marketplaces for possible duplicate or fraudulent NFTs.
AI Steps in to Catch Counterfeit NFTs
In its analysis of over 800,000 assets on the leading NFT marketplace OpenSea, against the top 40 NFT collections on the Ethereum blockchain, bitsCrunch discovered that 144 NFTs were perfect visual replicas of the BAYC collection. Additionally, 231 NFTs were marked as near-exact matches, while up to 814 were classified as “extremely similar.”
The counterfeit NFT issue isn’t exclusive to BAYC. Other trending collections, such as Azuki, Otherdeed, and CloneX, have dozens of exact replicas identified by AI-driven analytics. bitsCrunch detects and flags counterfeit content across blockchain networks and newly minted or existing fake NFTs by analyzing real-time data.
AI Aids in NFT Price Estimation
Determining a fair price for an NFT can be perplexing for users, as the lowest-priced item, or floor price, for a specific collection rarely provides an accurate perspective.
Numerous factors, including trading volume and history, the last traded price, and the profiles of previous buyers, must be considered when deciding an NFT’s final price. However, AI can now assist buyers and sellers with the NFT Price Estimation tool by bitsCrunch. This tool uses analyzed historical data, NFT metadata, and the social media buzz around a collection to provide more precise price estimates.
Through studying over 30 million NFTs from more than 2,200 collections, the AI-powered machine learning tool applies advanced data and analytics to aid users in their buying or selling decisions.
The NFT space’s full potential can only be realized through tools that combat issues like wash trading and forgery, which have plagued the market for years. Users need AI-backed advanced analytics and intelligence presented in a user-friendly manner to benefit from market data.
bitsCrunch offers precise NFT analytics and forensics with UnleashNFTs, providing users with dependable insights into the market. The platform delivers comprehensive analysis, research, and statistics about the NFT ecosystem, assisting buyers and sellers in making more informed decisions with each NFT trade.
As part of its dedication to enhancing awareness and data transparency in the NFT ecosystem, bitsCrunch has initiated a startup program. Companies working with NFTs can join this initiative to get quick access to bitsCrunch tools for analyzing and managing risk through API. Equipped with AI-driven analytics, NFT creators, traders, and businesses can identify and prevent malicious activities while transacting, thereby steering the NFT ecosystem towards a healthier future.
Understanding the integrity and value of an NFT can be daunting, especially given the digital nature of these assets and the complexity of the NFT market. With the aid of AI and advanced analytics tools, not only can users discern between real and counterfeit NFTs, but they can also gain insights into the value of their tokens based on comprehensive historical data and market trends.
A critical aspect of any digital market is the ability to trust in the integrity of the assets being traded. The introduction of AI tools to detect forgeries and provide accurate value estimations can go a long way in bolstering that trust in the NFT market. By encouraging the development and adoption of such tools, we can foster a more transparent, secure, and fair trading environment for all market participants.
As the NFT market continues to evolve, it will be vital for platforms, creators, and investors to adopt innovative technologies such as AI to safeguard the market’s integrity and ensure its sustained growth. A more transparent and secure NFT market could lead to a wider acceptance and adoption of NFTs, pushing the boundaries of digital ownership and investment even further.