More than 80% of the free NFTs minted on OpenSea are spam or frauds, according to a study by Vice.
This trend is making it incredibly difficult for newer NFT and blockchain enthusiasts to decipher which NFTs are the real deal.
When searching the marketplace for an NFT many have encountered a problem with multiple sets of the same NFT appearing. Some users have already complained that their art and content has been copied before they could even sell the first version.
This problem is one that a blockchain savvy investor can overcome by checking the ledger, but for the newer investor it poses a massive problem.
The upturn in fraud and spam started when OpenSea introduced free minting, or as some call it, lazy minting.
This enables users to bypass the expensive gas fees for creating NFTs and only pay for gas when the NFT is sold.
The result of this new feature was an incredible number of fake and spam NFTs flooding the market. Without the upfront gas fee, many realized they could quickly create alternate versions of popular NFT collections at no charge.
Unsuspecting users can purchase these NFTs only to realize they are not part of a popular collection and are essentially worthless.
The fee-free minting process was originally capped to 50 NFTs per user but after many projects complained about the limit, OpenSea reversed course and removed limitations. Once the limitations were removed, an incredible number of spam NFTs and fraudulent ones hit the market.
OpenSea has struggled to keep up with the number of users reporting fraudulent NFTs. These fake NFTs range from copies of other collections to theft of digital content from non-NFT artists.
OpenSea is stuck now between limiting the free-minting process or allowing the spam and fraudulent NFTs to continue. OpenSea has said all the actions it performs is with content creators in mind, but many are finding it hard to manage when their NFTs are duplicated without charge.
Users online have recommended that OpenSea create a reputation system that will push authentic NFTs to the top of the marketplace but many worry that smaller and newer content creators will struggle under the number of spam NFTs being created.
OpenSea is currently the largest NFT marketplace in the world with the highest daily volume. If it cannot fix this issue, there could be a shift in the market as many other NFT marketplaces have been created as competition.
There is no doubt that the previous year has been incredible for NFTs. With major companies, influencers, musicians and celebrities joining with their own collections a bigger problem is growing with scams.