The platform that sold NFTs in Jack Dorsey’s first tweet for $2.9 million has halted most transactions because people are selling tokens of content that doesn’t belong to them, its founder said. know, call this a “fundamental problem” in the rapidly evolving digital landscape. property market.
Sales of NFTs, or non-fungible tokens, have grown to around $25 billion by 2021, leaving many confused as to why spend so much money on non-existent items. economy and anyone can watch it online for free.
An NFT is a crypto asset that records ownership of a digital file such as an image, video, or text. Anyone can create or “mint” an NFT, and token ownership typically does not grant ownership of the underlying item.
Reports of scams, counterfeits and “washed transactions” have become commonplace.
US-based Cent made one of the first known multi-million dollar NFT sales when it sold the former Twitter CEO’s tweet as an NFT last March. But as of February 6, it stopped allowing buying and selling, CEO and co-founder Cameron Hejazi told Reuters.
“There’s a whole bunch of activities going on that basically shouldn’t happen – like, legally,” Hejazi said.
While the Cent marketplace “beta.cent.co” has paused the sale of NFTs, the section dedicated to selling the NFTs of tweets, called “Valid,” is still active.
Hejazi highlights three main problems: people selling unauthorized copies of other NFTs, people creating NFTs for content that doesn’t belong to them, and people selling NFT sets as a security.
He said these problems are “pervasive,” with users “mining and minting and minting fake digital assets.”
“It keeps happening. We’ll ban the offending accounts but it’s like we’re playing a gambling game… Every time we ban an account, another will appear, or three more accounts will appear.”
Such issues could become more concentrated as major brands enter the race towards the so-called “metaverse,” or Web3. Coca-Cola and luxury brand Gucci are among the companies that have sold NFTs, while YouTube said it will explore NFT’s features.
While Cent, with 150,000 users and “millions of” revenue, is a relatively small NFT platform, Hejazi said the problem of fake and illegal content exists throughout the industry.
“I think this is a pretty fundamental problem with Web3,” he said.
The largest NFT marketplace, OpenSea, is valued at US$13.3 billion after its latest venture round, said last month more than 80% of the NFTs created for free on its platform are “copyright, fake collections, and spam.”
OpenSea tried to limit the amount of NFTs users could mine for free, but later reversed this decision following backlash from users, the company said in a Twitter thread and added. that they’re “working through a number of solutions” to stop “bad guys.” and support creators.
OpenSea did not immediately respond to Reuters’ request for comment.
For many NFT enthusiasts, the decentralized nature of blockchain technology is very appealing, allowing users to create and trade digital assets without a central authority controlling the operation.
But Hejazi said his company is interested in protecting content creators and could apply centralized controls as a short-term measure to reopen the market, before exploring possible solutions. decentralized solution.
After the Dorsey NFT sale, Cent just started to have a sense of what was going on in the NFT market.
“We realized that a lot of it was just money after money.”
(Reporting by Elizabeth Howcroft, Editing by Louise Heavens)