NFT PLatforms

OpenSea And The Problem With Verification

Yesterday I was talking about a cute new digital collectable collection on OpenSea that I was considering buying into, noting that there were 10k which had recently sold out and the cheapest ones were getting more expensive by the minute. Tara was sitting across from me at the breakfast table checking it out as well. We talked about how cute they were and sent a few back and forth to look at. As Tara was getting ready to buy one she asked “wait, why are there only 800 of these, are they still minting them?” We quickly realized that she was looking at a fraudulent collection that had been named almost identically with only one extra letter, but was coming up first in the search results. I immediately sent a tweet to Nate Chastain who is Head of Product at OpenSea and he pulled down the fraudulent account right away. Unfortunately it looked like 30 or 40 people had already fallen for the scam while it was active, and for those people there’s no way recourse or way to get their money back. Had the real account been verified it’s probably safe to say that none of those people would have been scammed, it was only because Tara happened to notice the difference that we didn’t fall for it ourselves. And how long would it have stayed up if someone who knew who to reach out to on Twitter didn’t spot it?

Sadly, this isn’t the first time this has happened with OpenSea, in fact it happens regularly – and much of that can be blamed on how OpenSea handles verification. And because transactions happen instantly, even if a scam is found pretty quickly the money has already been transferred to the scammer with no way to get it back. Essentially they have created a situation with high reward and low risk for scammers to just keep setting up fake accounts and collecting Ξ every single day.

But let’s step back for moment and look at how we got into this mess. Verification as we think of it today both began with and is the fault of Twitter. In 2009 Twitter was sued by Tony La Russa relating to a fake account in his name, and while the suit was eventually dropped Twitter instituted Verified Accounts in the wake of that suit to give them a solution for the future. Years earlier Friendster had gone to war with the so called Fakesters by just banning accounts left and right, which is arguably what caused people to flee that site in favor of MySpace. Following that lead, Twitter had been applauded for taking a more permissive approach to free speech / parody and in theory this step allowed them to keep doing that. You might think this was a good move and had it been rolled out as promised it might have been, but rather than being used to, you know, actually verify an account was who it was claiming to be, Twitter decided to monetize the feature. I wrote about this back in 2015 as one of the big problems on the site at the time, but essentially they gave verifications away to famous people to make it desirable and they would use a few verifications as a lure to companies to get them to buy ads. They also began threatening to remove verification for accounts they deemed to be in violation of their TOS. This had a terrible impact on the public perception of “verified” and instead of seeing it as “this account is who is who it is claiming to be” people began to see it as a kind of endorsement. It took many years of very loud objection to this by many people before eventually Twitter came around and stopped using it as a prize and published a clear set of criteria which allowed non-celebrities or paying customers to get the prized blue checkmark. Anyone can now apply to be verified and Twitter’s official position is that it is not an endorsement but rather confirms they have seen evidence that proves the account is or represents who it claims to. This is a good thing.

Conversely Instagram is still very much doing the “We verify accounts on a case by case basis, but we won’t tell you what our criteria is” thing which leads to incredibly high profile people unable to get verified and regular scams taking place on the app. I’ll skip the breakdown about how every other site handles this and get right to the obvious point – Verified should mean exactly that. The account has been verified. It is who it claims to be. That the site has seen enough evidence to confirm identity. End of story. It should not be seen as an endorsement, or used in an editorial manor. It shouldn’t be weaponized. And to be very clear, when a site decides to have a vague policy that is enforced on a case by case basis, that’s what they are doing – and it directly harms the community. Ironically, almost every site doing this claims to be doing it to protect their users. I know because I’ve talked with most of them. They care, but they are misdirected.

Which brings us back to OpenSea. I’ve written about different issues on OpenSea many times this year but if you are new to this let me quickly summarize that they are the absolute largest NFT marketplace by user base and have raised more venture capitol than any of the other competing site. Unfortunately from an outside view, teams appear to have a fraction of the resources they need to get anything done. I will say that this has taken a significant step in the right direction with the addition of Nate Chastain who I mentioned above. Prior to his hiring the only way I could get any comment or issue addressed was to DM with one of several anonymous team members on Twitter who would promise me they would try to get the person “in charge” to do something and then cross my fingers and hope that it would work out. It did about 50% of the time. Now with Nate I can tweet publicly with a real person and get a comment or an issue addressed 100% of the time. That’s a wonderful step forward, but still incredibly problematic. OpenSea recently raised $100 Million on a $1.5 Billion valuation–that the Head of Product has to personally handle support requests sent to him on his personal Twitter is fucking ridiculous. I appreciate the personal touch of course, but come on–It’s not fair to him, and it’s not fair to the community. With that said, I truly believe Nate is trying to do the right thing, but I also think OpenSea’s policies are misdirected. And while misdirected policies on social media sites can lead to difficult social situations, misdirected policies on market places also end up costing people real money.

So what are those policies? Thats a good question and it seems to be somewhat fluid. To begin with, OpenSea has 2 different and separate kinds of verification. Account level – are you who you say you are, and Collection level – Is this a legitimate project or not? (To sell an NFT on OpenSea you have to make a Collection for it to live in). I’m verified on Twitter, and after connecting my OpenSea account to my Twitter account and tweeting out something OpenSea was able to confirm I was who I said I was and verified my account there as well. You might think that if OpenSea is confident enough in what they know about who I am that they can verify my account that they would use that information to automatically verify my collections. That would make sense, but that is not the case. Collections are verified separately and somewhat arbitrarily. Earlier this year only verified collections turned up in search results. Documents on OpenSea’s site recommended after you create your collection you tweet the link to them or post it in their discord and they would then verify it. That got overwhelming quickly and the backlog became insane, so they changed to allow all collections in the search results, but buying from an unverified collection gives you a popup saying that OpenSea hasn’t had a chance to verify it yet. But due to the sheer numbers of listings being added every day you are much more likely to see that popup than not, so it’s become easily ignorable noise – just enough for OpenSea to waive responsibility for people who get scammed.

These verifications before seemed to be based on someone looking at the collection and seeing if it looked on the up and up and then hitting OK. But that’s changed and OpenSea is now treating Collection verification as an endorsement. Officially, you can no longer request that your collection be verified. Instead, collections are supposedly verified after hitting a completely arbitrary bar of 100Ξ in sales volume, but there are “other ways” to get verified as well. Like being a celebrity (but not a famous artist). Or asking on Twitter. (And that doesn’t even begin to address the problem that tying authenticity to a sales number disadvantages lower priced work made in smaller numbers, in favor of higher priced work made in bulk – which suggests OpenSea is more concerned with how much money they are going to make and less about protecting people from scams.) In addition to having a verified account, other things that will not get you a verified collection include having other verified collections (every new collection has to start from 0), having impersonators actively scamming people by pretending to be you, or making what they consider to be an homage or derivative art. That last one is most troubling because all art is derivative, so this means someone has to make call about what they think is too derivative which means individual people are projecting their personal biases onto a system that is designed to protect people. This means if you like a project that individual employees at OpenSea don’t, they are less concerned with protecting you. I’m sure OpenSea doesn’t see it that way because they don’t want to think that their policies are hurting people, but thats exactly what is going on.

I’ve written before about the issues OpenSea has been dealing with in relation to struggles over IP, so their concern is fair, but all the more reason why they shouldn’t be getting involved with editorial decisions and stick to separating scams from legitimate projects. Let’s look at some cats as an example. Stoner Cats is a high profile celebrity backed project that received a mixed reception from the NFT community, including a competing parody project conceived and launched in 24 hours called Blazed Cats. Both projects are algorithmically generated collections of 10,000 images. On the Blazed Cats website they make many references to Stoner Cats, proudly declare their project as reactionary one-upsmanship and repeatedly refer to themselves as a parody. OpenSea did not rule this as an homage and verified it. Conversely, PunkCats is a collection of original hand made illustrations with the concept of being the matching pet to arguably the most famous NFT project ever, CryptoPunks. In fact several CryptoPunk owners reached out to the artist while they were being drawn and commissioned a cat to match their punk. OpenSea initially declined to verify the collection because it hadn’t hit the 100Ξ bar, but once it did (currently over 300Ξ in volume) they decided it was not transformative enough, too much of an homage and refused to verify it. In this case it’s clear that the decisions are both arbitrary and also reflective of individual biases. According to OpenSea, a pixel human head and neck and a full body of a cat are the same thing, but two full body cartoon cats standing on their hind legs and holding (or not holding) similar accessories in the same way are totally different.

Makes you wonder what other art OpenSea would deem too much of an homage and not worthy of verification?

The truth is I could nit-pick this for hours. I have hundreds of screenshots and links to support my argument that OpenSea is not uniformly applying their policy across all projects and instead making personal judgement calls on a case by case basis. Which is literally the only thing they can do to enforce editorial policies like that. This is unscalable and it’s not what they should be doing anyway. OpenSea should not be making judgement calls about IP, or deciding what is or isn’t a homage or is or isn’t derivative enough. That’s not their business and they shouldn’t be getting mixed up in it. They are a market place and their responsibility is to their customers who they should be trying to protect by verifying what is a legitimate project run by a known individual or company and sussing out the frauds and scammers. By creating these arbitrary rules and moving goal posts around, they are creating the absolute perfect environment for scammers to prey on their customers, and they are only able to react after the fact – after people have been scammed and money has been lost.

Make no mistake: The way OpenSea currently looks at verification makes it very easy for people to be scammed, and every single day they continue in that direction they are allowing those scams to persist, and people to be harmed because of it.

I’ve said this on Twitter but I’ll say it again here: OpenSea needs to immediately drop the 100Ξ barrier to verification and make collection verification a subset of account verification. Once someone meets the reasonable requirements for account verification, any collection they create should be automatically verified. This way new collections by known creators are verified the first second they make something available, and there’s no window for scammer to sneak in. Funds from the first 24 hours of sales on unverified accounts or collections should be held in escrow so that if a scam is detected people can get their money back. Anyone caught intentionally posting fraudulent work or scamming people should have their entire account banned. OpenSea should defer all IP claims to existing copyright law, they should let people files notices and appeals and respond accordingly, but they should not be responding to “requests” from people who may or may not have legal grounds to make those requests, nor be making judgement calls on their own. They should recognize that as an art market, all art is derivative and they should immediately stop acting like they are in a position to decide who’s ideas are original enough. They should also use some of those massive piles of cash they have to hire a proper staff to manage all this so that individual employees are not expected to deal with issues brought to them over Twitter.

For NFTs, Twitter Is The Marketplace

Last month NiftyTable published stats showing that more than half of the traffic going to the major NFT sites was coming from Twitter. At face value, that means more than half of the traffic across several sites for essentially an entire industry coming from one site… that’s insanity! But we need to consider a few things to put that into context. Traffic stats mean people are very regularly clicking links on one site and being taken to another. Not just once, but all the time. This would primarily be driven by discovery, new people finding new artists they are interested in learning more about. Now there are unquestionably lots of Discord servers filled with NFT discussions, but those are largely contained groups who follow each other on the NFT platforms as well, so there’s not a lot of discovery going on beyond the first introductions. (Some of you will note that discoverability is the number one thing I’ve been saying NFT platforms need to work on.) Facebook as well has some chatter, but again it’s not really a place people are discovering new work so much as seeing work from people they are already following or connected to.

Conversely, sites (or apps) like Clubhouse, Instagram and Twitter are more outwardly focused – that is, unless you have a private account, one of the features of these platforms is that they potentially act as a megaphone and can show you off to a much larger audience than you might have on your own. One might think that Instagram, being a primarily visual platform might be the most useful here when it comes to new artist discovery. Similarly the sheer number of Clubhouse rooms dedicated to giving new artists space to talk about or “shill” (I hate that term) their own work would suggest that a lot of discovery is happening there. That said, Instagram and Clubhouse are similar in that they don’t allow linking to other sites. You simply can’t post a clickable link. This means even if you do post (or talk about) a link someone needs to either retype it or copy and paste it into another browser tab, in which case traffic statistics would not know the origin of the that click. So I suspect it’s highly likely that traffic being driven by both Instagram and Clubhouse is being significantly underreported. To what extent it’s impossible to say, but the assumption that no real traffic is coming from those sites is probably incorrect.

But it’s not just technical luck either. No matter how that gets refactored there’s no getting around the fact that a lot of traffic is coming from Twitter, and there’s a reason for that. Clubhouse is fleeting – if you aren’t in the room you miss it. Instagram is more portfolio-ish, comment threads are silo’d and sharing work that you find and like is difficult. Instagram is also afraid of female nipples, among others things, which results in a lot of self censorship and a lot of posts being taken down for violating “community guidelines.” While not all art has nipples, some art does and if a platform is restricting what some artists can do other artists are going to be cautious about using it, even unintentionally. Twitter is non of those things. Sure it’s ephemeral to a degree, but you can easily search and find older posts and connecting different people and disparate conversations is a snap. And showing off artwork, your own or others, is really easy. And it’s also now, in that when there’s a hot topic of the moment, whatever that moment is, everyone knows they can go to Twitter and talk to people about it.

And it’s not insignificant that none of the NFT platforms really have a way to connect with people. Sure you can follow artists you like, sure they will shuffle you along to their Discord servers, and sure some are promising that they have a social component in the works, but right now onsite, there’s nothing social happening. So people go to Twitter, because that’s where all the social is happening.

I was one of the first 140 people to join Twitter in 2006 and a quick look at my archives shows that as much as I’ve loved it, I’ve been critical of the platform for a very long time now. I’ve come close to leaving several times. But I’m still there and I still use it because as annoying as it is for somethings, it’s incredibly valuable for others. Being able to engage with a community is one of those valuable things. As you can imagine after being on a site for 15 years, people ask me all the time if they should be on Twitter. These days, and for quite some time now, I most often tell them no. In general with social media I think it’s better to not do something than to do it poorly, and to do Twitter correctly you need to invest time in it. This is something most people are not willing to do. They want to create an account, post something once or twice a month and then suddenly have thousands of millions of followers. That’s simply not how it works. You have to be engaged, invested, and understand the social norms of the place. So I’ve told people that if they’ve already been on Twitter and have a community there then they should use that, but if they don’t not to bother trying to start at this point.

However.

I think my position on that has evolved in the recent weeks. It’s becoming more and more clear that the vast majority of the discovery, commentary, meta-commentary, community engagement and (barf)networking is happening on Twitter. Not just randomly, this is where people are asking for recommendations, where introductions are being made, where friendships are forming and where connections are being made. Which, oddly, is what Twitter used to be really good at before it got distracted by trying to be “where breaking news happens” or whatever crap marketing line they were using was. Now, my earlier position still holds true – if you aren’t willing or able to commit several hours a week at the very least to interacting with people on Twitter, that is not just posting, but actually engaging, then I still don’t think you should use the site. But if you have an account already which you just aren’t using, or you are willing to put in the work to build up a new one, there’s really no better place right now for interacting with other artists, collectors, and various people of similar interests. It’s not make or break, but it’s noteworthy enough and a shift in what I’ve been vocal about so I thought it should be mentioned. Hope that’s helpful.

And of course if you are on Twitter feel free to follow me, and if you are interested in NFTs of my photography you can check them out here.

Some Thoughts on NFT Platforms & Marketplaces

Some may have gotten the idea from a previous post that I’m anti-platform. That couldn’t be further from the truth, I think platforms play an important role in this ecosystem in the same way that galleries play an important role in the traditional art world. But actively playing that role is important, and platforms that do nothing except take a portion of an artists sales are as worthless as galleries that do the same. So I wanted to spend a little time detailing a bit more what I want to see from platforms, and where they can add value as opposed to just taking it.

First and foremost let me direct you to a detailed comparison chart a few friends and I made between the top 30 or so platforms that are live right now, that can be found at NFTART.LOL. At the bottom of that page are links to several more comparisons that other people have put together some of which include platforms I didn’t. I also didn’t include at least 20 platforms that haven’t launched yet, or another 30 or so that I was promised are “in the works.” My point is that there are a lot, A LOT, of platforms and people making platform plays. In most cases each one is a little different, in one or two cases people couldn’t tell me why their idea was any different. And in most of these cases the platform plans to take a % of the sale (often between 2% and 30%), so understanding what the platforms are and aren’t doing is important before you decide to cut them in to your sales.

Now, if there was only one or two platforms and they were doing something no one else could do that would be enough, but that’s clearly not the case. And as you see from dumplingpets.com and fake.sale there’s no need to even have a platform – those aren’t white labeled solutions, they are writing the contracts themselves which I’ll talk more about later – but lets talk about where the value add with platforms is.

Discoverability. If you are an artist putting things out into the world, chances are you want people to see them and if you don’t have an audience already then posting things on a platform can help. This is the default benefit across all the platforms right now, though obviously it’s better with some than others. OpenSea for example has a massive user base, but also a fairly dysfunctional search and classification system so the chances of someone who wasn’t already looking for your art stumbling across it on OpenSea is fairly slim. Other sites like MakersPlace and Foundation don’t have a search per se, but instead have many different ways they sort and classify both artists and artworks so a collector looking for something similar to what you are doing has a better chance of finding you. Again, this varies from site to site, so be sure to spend time on the site you plan to list on. It’s helpful to go to a site without a plan, and just click around and see what you find and where it leads you – if you end up seeing work you like, that’s a good sign. If you end up scrolling through lots of work that isn’t really you thing, that’s probably the experience others are having too.

Promotion. While discoverability is largely passive, this more likely requires the conscious involvement of someone at the platform. This would be anything the platform is actively doing to promote the art or artist. Obviously it would be unrealistic for any platform to do everything for everyone, so this is largely a tiered situation where more is going to be done for one person and less for someone else. Those “more” situations are probably happening thanks to a prior agreement or arrangement. On the low end this could be retweeting announcement posts to the platform’s main twitter account. It could be something like pushing the art up to a “featured” position on the website for some period of time, or including it in a weekly emails or announcements. On the higher end, some platforms are taking an even bigger step and cultivating relationships with collectors who they are then introducing to artists via group video calls or even 1 on 1 chats. This gets into the kind of thing that artists would often hope galleries would do for them, and it demonstrates a desire to actually help out the artist (because even if the artist sells something elsewhere, if the collector they have a relationship with is interested they will likely follow), where as platforms who intentionally try to stay in between artists and collectors are probably more looking out for themselves. It should go without saying that in the long run looking out for artists is a much better plan, it should – but there are no shortage of short sighted plays being attempted in this ballpark.

Advice. This gets overlooked a lot, even by platforms themselves who often try to shuffle artists off to discord servers or clubhouse rooms hoping for “the community” to manage it which isn’t bad but also isn’t great. As people who are dealing with this market every single day, the platforms have an incredible amount of information that can be useful for artists planning next steps. And while best practices and things to avoid can be universal, thinking of artists in a one size fits all manor is also a mistake. The platforms that have people who can spend time with individual artists talking about their work, their goals, and their future plans are incredibly valuable and I personally think this is an area were most should spent a little more money on bringing in a few more people to really help develop those relationships. And relating to the previous point, developing a trusted relationship with an artist is a much better approach to retention than playing gatekeeper with collectors.

Community. I hope I didn’t give the impression in that last point that community isn’t worthwhile – far from it! Especially for early career artists, finding a supportive community can be life changing. This is one of the things I’ve been most excited about in lurking around the NFT space over the last few months, the community support, generosity and encouragement is unparalleled. And the platforms that are working to help foster that get big ups. Compare OpenSea to Foundation for example – Foundation has recurring “happy hour” clubhouse rooms where anyone can come and just hang out, the staff is super responsive to emails and messages on social media, while OpenSea just directs everyone to their Discord server which is nearing 45k members, many of who are begging for help or asking questions and there’s rarely a useful reply from anyone at OpenSea, and the team is unresponsive to emails and social media inquiries. (Granted this is just my observation and experience – I have accounts on both sites and I think there are pros and cons to what each is doing, but on this community issue it’s very clearly something Foundation has prioritized and seems to be something OpenSea has ignored.) Big picture – if you care about people who are using your site and work to find ways to help them work together with each other, that’s a good direction to aim for.

Support. Since I mentioned it, this is big. If you as an artist have a problem with something on the site, is there a way for you to get it addressed? A problem could be a technical issue, it could a conflict with another user or a case of infringement. It could be a mixup with a payment or a question about how something is being promoted or future plans. If there is a contact available to you that is responsive that is very good, if there’s just some help docs or a “community forum” that’s not so good. If I have a problem on a site and I can’t get anyone to help me, I have to seriously ask myself what value they are offering me to justify the money I’m giving them from my sales.

And that’s the crux of it really – when we are talking about justifying a % of sales these things are important. These are a very clear value add and if done correctly can provide a lot of benefit to artists using those platforms. Conversely, for the platforms that are not prioritizing these things I would suggest they should reconsider their model and perhaps move to a flat monthly subscription fee or something. I’d rather pay $5 or $10 a month and get no services than give a % of every sale I make in exchange for no services. But that’s just me.

To circle back to the issue I brought up earlier, there is no need for platforms. They are not required. But depending on what you are trying to do, they can be very useful and working together with the right platform can be mutually beneficial. But knowing what the “right” platform for you is requires thinking about what you are trying to do, and identifying which issues are important to you and then finding the platform that aligns with those needs. I write posts like this with the genuine hope that it inspires platforms to be better, to reflect on what they are doing (or not doing) and take steps to improve the weak spots. And if not, at least it gives artists better questions to ask. Platforms being better is good for everyone, so I hope this helps push things in that direction.

I’ve said this publicly a few times recently but there is an absolute flood of platforms right now and I don’t expect all the ones we are seeing today to still be standing in a year. Maybe not even in 6 months. Take a look at this post my friend Jonathan Mann wrote just 3 years ago where he compares the 4 major NFT platforms at the time, only one of those still exists. I think we’re going to see some platforms absorb/buy others, some pivot away to a more niche area they can focus on with less competition, and some simply collapse. Which ones remains be seen, but anyone who has seen these cycles play out time and time again can see the direction this is going. It’s going to be a fun ride, grab the popcorn and buckle up.