The flip side of NFT security. Where are the pitfalls?

The sale of digital goods was long before the advent of NFTs. Fans of computer games bought characters or pumped their heroes through the purchase of a code, and the market was calculated at all in symbolic numbers. We all remember how in payment terminals, along with topping up the phone or paying for utilities, the world of tanks avatar appeared. Of course, the client did not buy a token, but replenished the account. Then a person upgraded his character for replenished funds, but this does not change the essence.

With the help of NFT technology, every owner of art, design or collectible can sell the item digitally. Moreover, the segment of application of NFT tokens is much wider. For example, they may establish or restrict a user’s right to use certain information. In this regard, it is recommended to use professional NFT token development services and expand your capabilities.

What is the attraction of NFT?

You don’t have to “invent the wheel” to make money. As with any investment asset, the value of the token may increase over time, and the owner will be able to receive a “passive” income akin to investing in real estate in a resort.

Moreover, any token is only formally tied to the platform from which the sale started. Movements can take place in any adjacent ecosystem where blockchain technology is supported. In any chosen platform, transactions with the token are fixed. It will not be difficult for the copyright holder to prove his ownership or establish clarity on the rights of replication, copying of an object for commercial purposes.

The transparency and openness of ownership rights has already attracted many well-known artists, designers and game developers to the NFT space. The dynamics and capitalization of the NFT zone of influence clearly reflects not only the actual growth, but also the potential increase in the number of subjects of trade relations.

As with any investment, in addition to tempting prospects, there are always risks. And NFT here differs little from traditional types of investments.

What risks does the NFT space contain?

The issue is that neither the uniqueness nor the transparency of payment transactions excludes the possibility of fraud. Despite the openness of the movement of tokens, their use does not at all guarantee absolute security. The owner may not always be able to exercise the right of ownership. And it doesn’t happen that often.

In addition, various usage rights can be used for an NFT fragment: copyright, the right to copy and reproduce, the right to use the item in full or in certain cases, and so on. There is absolutely no guarantee that acquired rights will not tolerate transformation over time. In addition, it is not known how and who will regulate relations in the event of disputes between the subjects of ownership, and resolve conflicts in case of copyright infringement.

As experience with copyright has shown, in different regions of the world it is problematic to control and stop violations of the developer’s rules. There are always external factors and circumstances due to which it is quite difficult to prove belonging and achieve justice. In addition, the NFT is a very young space, in which there are no clearly formulated laws and rules for each situation. This is confirmed by UAStar specialists.

By definition, the token does not name the object itself, but indicates its location in the system. Moreover, the server acts as a location. What happens if the server is compromised? In this case, the token will no longer be able to point to the purchased asset. How then to prove ownership? Under the condition of small rates, these risk factors are not perceived as a threat, but for large capital investments, additional risks are completely useless.

Another risk factor concerns plagiarism. The created token is problematic to counterfeit, but in practice it is not a physical object, but only a digital certificate that establishes ownership. An attacker can simply copy an asset tied to a token and pass off the copy as his own property. Even with meticulous consideration, the concept of “copy” in the vastness of the network is a rather vague definition.

An online platform serves as additional insurance, within which the object moves and payment transactions are carried out, but they cannot provide a full guarantee of security either.