11th August, 2022
Crime without punishment
The NFT criminal underworld is anonymous and hiding. Deep in the digital valleys, we see them jumping over fences in nocturnal camouflage to steal the sacred ducks from the heavenly orchards. Some do it for the money, some do it for the thrill. In the movie, The Thomas Crown Affair, Thomas concealed a painting in plain sight, delighted by his wild manipulations. Thieves are competitive, they like glory; but what they love is a great exaggeration. Stolen NFTs are kept on the blockchain in front of their rightful owners’ eyes. “You can see it but you can’t get it:” a feeling that drives a thief, a feeling a thief wants to pass along to their victims: they cannot stand it - that’s why.
Their tactics and attacks range in terminology, and frankly, these buzzwords are a bit of a headache: scams, phishing, rug pulls, pump and dump, malware, keylogging, and data breach. Earlier this year, we lost an Ape when Kramer Gallery suffered a $2.2M loss from theft. Bored Apes, Mutant Apes and Doodles NFT collections have already been compromised. The community of artists and their visionary investors are also under threat, jeopardising ecosystems that are built to give birth to the legacy itself. It is unfortunate that stolen NFTs can be easily resold via common NFT marketplaces, but this is a bigger question, yet for another occasion.
Who is hiding in the bushes and why?
The NFT market has grown to an estimated $22bn in 2021 and is projected to increase to $147bn by 2026. The growth of NFT use cases in the Metaverse and among the Gamers claim that this figure might be too low. Meanwhile, the recovery of stolen assets is not impossible if done by crafty investigators teamed up with clever lawyers but it’s a niche craft, hard to come by.
The most expensive NFT, Beeple, was sold through Christie’s for $69 million in 2021 and thus the race to beat the price with the next big NFT is on. Yet, where there is a duck race, there is a big wolf hiding in the bush.
Solutions, please!
The solutions are generally split into two categories: digital and physical or hot and cold.
Digital solutions are offered by a variety of providers. The main questions to ask ourselves here are whether we trust digital services, their procedures and means of operation, whether we trust our own abilities to evaluate them with confidence and whether there is a chance of underestimating the risk.
Cold solutions are pieces of paper stuck under a couch, hard wallets injected inside sunscreen bottles, seed phrase capsules hanging on chests and traditional institutional-grade backed-up vaults, managed and insured.
Sub-Zero Habitat or a Beaver Dam?
It’s not obvious that life can thrive in sub-zero habitats behind the nuts and bolts but yes it can!
A happy underwriter is a sign of a flourishing marketplace and a cold storage solution will make an underwriter happy. Artists, collateralised loan providers, wealth management firms, auction houses, and migrating NFT owners are all part of an ecosystem that already exists but it can only thrive safely if the underlying asset is kept securely, in all impossible eventualities.
The Marmite Factor
Developments in the digital space move as fast as time itself. A bolted volt storage service for NFTs is like Marmite: love it or condemn it. Yet, it has arrived in the heavenly orchards of London to help ducks race and bushes thrive in peace.
