EC The Dark Side Of NFTs

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Image Source: Unsplash

A few weeks ago, I wrote a piece about how NFTs (non-fungible tokens) are the perfect viral asset.

"NFTs have a lot of interesting characteristics. They’re speculative, subjectively valued and community-based. You could say they’re the perfect viral asset. And because it’s art, there are far fewer regulatory concerns than many crypto projects face.

"There will be price crashes — and huge rallies. Models will evolve and change. But I’m sure that in the long run, art NFTs are here to stay. They’re just too good of a fit for what the world wants."

While I did say there will be price crashes and huge rallies, I didn’t talk enough about the potential risks and downsides of NFTs.

This week we got a prime example of the dark side of NFTs. Nate Chastain, a now-former employee of NFT marketplace OpenSea, was apparently buying art just before it was promoted on the OpenSea homepage. He would then flip the art for a quick profit after it was featured. This questionable activity was revealed on Twitter by user ZuwuTV.

Tracking down this activity was possible due to the open nature of the Ethereum (ETH-X) blockchain. Sleuths were able to track the transactions through multiple wallets back to one owned by the OpenSea employee. His wallet was easily identifiable because it held his cryptopunk (a uniquely generated character that is also an NFT), which he uses as his avatar on Twitter and elsewhere.

Investigating Questionable Activities

Alleged perpetrator Nate Chastain was no small fry at OpenSea. He was the head of product, meaning he played a key role in driving and managing the development of the platform. He was very active on Twitter, engaging with users and taking feedback.

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