How much do you know about NFTs and illicit activity?

• NFTs are blockchain-based digital items designed to be unique and unlike traditional cryptocurrencies.
• NFTs can store data on blockchains and are commonly bought and sold on specialized marketplaces.
• NFT popularity skyrocketed in 2021, with at least $44.2 billion worth of cryptocurrency sent to ERC-721 and ERC-1155 contracts.
• NFTs offer the potential for abuse, and two forms of illicit activity are observed with NFTs: wash trading and money laundering.
• Wash trading involves executing a transaction in which the seller is on both sides of the trade to paint a misleading picture of an asset's value and liquidity.
• Blockchain analysis can track NFT wash trading by analyzing sales of NFTs to addresses that were self-financed.
• NFT wash trading creates an unfair marketplace for those who purchase artificially inflated tokens and can undermine trust in the NFT ecosystem.
• Money laundering in physical art is difficult to quantify, but NFT money laundering can be estimated thanks to the inherent transparency of the blockchain.
• Value sent to NFT marketplaces by illicit addresses jumped significantly in the third and fourth quarters of 2021, with significant amounts of stolen funds and transfers from sanctioned entities.
• NFT money laundering represents a large risk to building trust in NFTs and should be monitored closely by regulators, marketplaces, and law enforcement agencies.
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Think you know everything there is to know about NFTs and blockchain analysis? Test your knowledge with this quiz, which covers the basics of NFTs, their popularity, and the potential for illicit activity such as wash trading and money laundering. Learn how blockchain analysis can be used to track these activities, and how they can undermine trust in the NFT ecosystem. Take this quiz to see if you're a true NFT expert!