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Do NFTs need identity verification?

Is it necessary to verify the identity of those involved in the purchase and sale of NFTs? Should buyers and sellers of NFTs provide identification when registering on an exchange?

Today we talk about cybersecurity. Specifically, identity verification and NFTs.

NFTs are non-fungible tokens

If you buy an NFT, you are not buying an original artwork, photo or video clip. You are buying the digital file that proves your ownership (proof of ownership is stored on a blockchain).

The value of an NFT lies in the fact that they are unique tokens that can be used for various purposes, including digital art, collectibles, etc. But they only exist as digital files.

NFTs are a type of digital asset stored on a blockchain. They can represent anything from one-of-a-kind works of art to concert tickets and even deeds to virtual property.

NFTs don’t represent anything physical, which is why they are said to be “non-fungible”. Each NFT is unique. And, therefore, irreplaceable and non-interchangeable. 

What sets NFTs apart from other digital assets is their method of storage on the blockchain.

If you buy, sell or trade an NFT, information about the ownership of the asset and its value must be publicly available. This is why blockchains are often used as storage platforms.

⚠️ The blockchains store the history of each transaction carried out in an encrypted way. No one can alter this data or  change ownership records or price histories. That is why they are so safe. 

NFTs: thefts and scams are on the rise

Despite the high security surrounding NFTs, thefts and scams are increasing (cybercriminals are constantly innovating). For example:

  • When a person sells or buys an NFT, nothing prevents them from using someone else’s payment card. A shopper could be using a stolen card and no one would know. In fact, a user can buy NFTs with cryptocurrencies without giving any personal information. 
  • Many sellers have realized that they can make more money with these tokens. If they create more tokens from the existing ones, and sell them again, they make more profit. These fakes make it difficult for shoppers to know if they are buying genuine or counterfeit items.

What does anonymity translate into when buying and selling NFTs? 

  1. In that sellers of NFTs have no way of knowing if they are selling to legitimate users (and not scammers). Sellers of NFTs take a risk by accepting payment information from strangers (and could become involved in shady dealings and fraudulent activities).
  2. And that buyers also have no way of “trusting” the seller and the legitimacy of the NFT.

What is the solution to avoid thefts and scams in NFT market?

Verify the identity of those involved in the transactions. In this way, both buyers and sellers can be tracked and held accountable for their actions. In addition, identity verification in the purchase and sale of NFTs also allows the identification of users who have cheated in the past.

Identity verification protects all parties involved in an NFT transaction.

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