Over the past year, NFTs (non-fungible tokens) have become both a hit and a miss, depending on how you look at them. Any time a new technology comes into the public consciousness, there are bound to be scams and new ways to take advantage of people who simply do not understand. For NFTs, the latest scam has been selling tokens for things that you do not own, and HitPiece has been the face of this nonsense.
WTF are NFTs?
The easiest way of thinking about an NFT is as a certificate of authenticity. It shows that you have digital ownership of a particular thing, and it is verified and logged via the blockchain ledger. For artists, they might mint an NFT to represent a painting or digital work. They might even mint an NFT for a logo, such as our F5 Live: Refreshing Technology logo.
For musicians or comedians, they might mint an NFT for a particular recording of their work. It could be a single joke, a song, or an entire standup set or album. It all comes down to what the creators are looking to accomplish, or how much they are wanting to share within their community. With games, the best example of where NFTs make sense, in-app items could be maintained as NFTs. You could trade gold from one user to another without the fear of whether or not the seller or buyer will actually show up to give/receive the items, or whether the money will be transferred.
The fundamental problem with NFTs
How does the person minting the NFT validate that they are the owner of the work? How do we know that the NFT represents a valid piece of content. For example, if you were to purchase an NFT of our most recent episode of Piltch Point, how do you know that we are the ones that minted the NFT, and not a random person who downloaded our episode from the website and minted it in our name?
This is the problem with HitPiece - a website that minted and sold NFTs of content that was not owned by the person minting the token. Instead, it was all stolen content being fraudulently minted and sold or auctioned. The scheme was brought to light this week, as artists of various media were contacted by their fans to ask about the tokens. Artists like comedian Patton Oswald tweeted about the problem as they realized what was happening. The site was shut down and the thieves seem to have made off with some serious money.
However, attorneys representing the creators of the site have been contacted by the Recording Industry Association of America (RIAA), demanding information about the fraudulent activity on the now defunct site. RIAA said in the letter, sent to us by the organization,
Your clients' operations have been variously described in recent days as a "scam," a "complete sham," "immoral," "unethical," and a "fraud." All of these criticisms are of course accurate. Although it appears that your clients now contend that they did not actually include any sound recordings with their NFTs (which, if true, likely amounts to yet another form of fraud), it is undeniable that, to promote and sell their NFTs, your clients used the names and images of the Record Companies' recording artists, along with copyrighted album art and other protected images, the rights to which belong to the Record Companies and their artists. Your clients' outright theft of these valuable intellectual property rights is as outrageous as it is brazen.
Harsh words, but ones that are appropriate to the context. Obviously, grifters need to be dealt with swiftly before people get hurt and especially before the believe they have been hurt by someone different from who is actually involved.