NFTs: anonymity, ethics and reputation
In the last year, the NFT space and the blockchain have surged in popularity, with the 2021 market boom seeing a frenzied interest in profile pictures, 1/1 art, memes, and gifs. The scope and usage of NFTs have evolved significantly as we enter 2022 with an increased focus on utility and passive income.
It is evident that NFTs are set to become one of the most important pillars for the growth of the tech world, with so many ways of applying them, the artwork is just the tip of the iceberg. Furthermore, NFTs are helping to solve real issues, whether it be social or economic they have changed the lives of many.
To understand the full potential of what NFTs can achieve, we must explore much deeper below their surface level. However, with all of the positives that the blockchain provides, there are similarly negative implications due to its decentralized and anonymous nature. In this article, we will discuss the role of anonymity on the blockchain, and how this correlates with issues such as privacy, ethics, and reputation.
NFTs as identity
NFTs are proving to be important tools for the building of a secure identity. Rather than having to log into something with your personal details to verify that you are you, an NFT on the blockchain can verify this information and act as the key without any need for a third party. Clearly, tokenized identity has the case of making markets more private and more secure, two key benefits that are lacking in the web2 world.
Furthermore, the blockchain is immutable meaning that once something is added it cannot be changed. As a result, we can monitor transactions on the public ledger, and as such, maintain greater levels of transparency and accountability in the ways and means in which users act. Again, this is something much more difficult to track in the web2 world whereby transactions and accounts of big companies are often private.
Anonymity and Pseudonymity
But what does this mean for anonymity? The crypto space has always operated under anonymity and pseudonymity, the former being where you are unidentifiable, and the latter being where you are identifiable, but you choose not to disclose your real identity. Within the NFT space, it is rare to come across a doxxed account, more often than not they will be using an NFT as their identity in some shape or form.
As a result, anyone has the ability to create without being constrained by demographic information, such as who or where they are from. This is perhaps one of the most significant benefits, and it has allowed many users in the space to achieve success, without having to reveal who they are in the real world. Clearly then, we can say that NFTs and the blockchain serve to create a fairer dynamic and a more user-friendly nature. In addition, they turn anonymity into pseudonymity.
It is not our wallet that defines who we are in the NFT space, it is our NFT that constitutes what is called our pseudonymous identity. Our online interactions are made as a result of this with the NFT acting as the key. This simple line of code illustrated by an image defines our reputation, our authenticity, our legitimacy, and our identity. To an extent, this helps to foster rules, ethics, and principles, as we are conscious that our actions will impact our reputation. However, this is not always the case whereby many pseudonymous identities have manipulated their audiences and bent their trust, simply because they know that they will not face any serious implications in real life.
Anonymity provides users with a sense of protection, and in a decentralized world where anonymity and pseudonymity are the norms, there are virtually no rules stating how individuals should act. Other than moral principles, which not necessarily everyone will abide by, the space is considered the wild west. Furthermore, being anonymous means that there are no risks to your real identity being tracked, as well as almost no incentive to take accountability for their actions, meaning that they have the opportunity to act maliciously, or nefariously without any issue or penalty. Of course, this has led to a number of bad actors entering the space, with the intent to scam others as well as projects that have rug pulled their entire collection. We have seen cases where big influencers in the NFT community have manipulated the trust of their audience, pumping projects and spreading misinformation about their trajectory, and then when the time is right, they disappear.
In the NFT space, your reputation is arguably your most important currency. You may have all the money in the world, you may have the best ideas, you may have the most profitable network connections, yet with one wrong move, your reputation can be tarnished. The community will blacklist you and it will be difficult to restore any value once the damage has been done.
So think about your actions, pseudonymity might protect you from real-world damage, but it won’t protect you forever in the NFT space. We have seen it time and time again. Bad actors will come and go, but it will be those that uphold values of truth that will ultimately survive in the NFT space.
Take for instance the OpenSea product chief that was accused of using internal information to buy NFTs promoted on the homepage, and therefore having access before anyone else. Upon investigation from the community, the issue was brought to the mainstream media’s attention and he was removed from his position at the company as a consequence. This insider trading is just a glimpse into the manipulation of audiences and communities that has become rife in the NFT space.
Users are able to hide behind their NFTs and engage in distrustful activity, whether it be manipulating their audience, promoting collections, or simply scamming others. This is a clear issue that arises through the nature of anonymous and pseudonymous identities, especially amongst the influencers with power. Consequently, it can be difficult to know who to trust, and it is something we have to be conscious about as we move forward in the NFT space.
Furthermore, it is important that we challenge this behavior, and hold the people in power to account, with the transparency of the blockchain, it is easy to follow transactions and investigate who was behind them. The community is becoming much more adept at the cues of bad actors, learning from prior mistakes. Furthermore, Twitter groups are coming together and creating investigative spaces, challenging behavior, and doing the right thing for the community.
Just days ago the NFT Twitter community was forced into jury when NFT influencer Beanie had his real identity doxxed, and allegations against his past surfaced. NFT Ethics, a Twitter account dedicated to uncovering the truths about the NFT community policed this via a 70+ Twitter thread. According to the thread, it was outlined that Beanie had a past of fraudulent behavior and that his NFT influence was just the tip of the iceberg. Whether it be domain names, stocks, or NFTs, the thread uncovered clear trends in his behavior and the way that he influenced his audiences. NFT Ethics is just one example of a Twitter page that is diving deep into the blockchain, hoping to establish new, self-regulating ways to create an ethical blockchain and ecosystem that doesn’t reward perverse incentives.
It has similarly brought up the case for more investigative journalism as proposed by Andrew Wang, where a cohort of individuals would research and dig deep into alleged misconduct and scams in the community. The current issue is that there is not enough time or return for investigating these issues. By creating a DAO, the community could help to police misconduct, while similarly being rewarded for their time. However, this could evolve into something dangerous, a cancel culture that we knew from web2 could return. At the same time, we have to be equally aware of those who are using ethics, and morals as a weapon to take down other individuals. This could be enabled by the premise that they are doing what’s right for the community, when in reality they could have ulterior motives, preferring to gatekeep.
Nonetheless, with the correct protocols, and standards in place, this idea could prove to be crucial to holding influencers accountable for their actions, and it is needed more than ever.
Members of the NFT community are certainly becoming more skeptical of projects, influencers, and the reasons behind why they operate anonymously. As a result, NFT projects are taking extensive actions to ensure that they gain the trust of their community. For example, the Psychedelics anonymous NFT collection has taken the steps to doxx their entire team, revealing their treasury, and allocations for funds.
Although not every project is required to display this level of transparency, it certainly sends a strong message out to their community whereby they can be reassured that the team is accountable, and staying for the long term. Today, it is not enough for a new collection to enter the space anonymously and expect the community to trust their intentions from the outset, the key to unlocking trust is reputation.
NFT collections can remain anonymous while still successfully building a project and community around them. However, there has to be something to judge, for instance, reputation can be achieved through previous positive community building or via collaborations where the collaborator is not anonymous and can thereby act as a source of trust.
For the community to move forwards with confidence, there have to be principles, there has to be clear trust, there has to be reputation, and there has to be accountability. You should always consider these values before interacting with any collection or taking any piece of advice from individuals about NFTs.