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Trust in the Blockchain

The core concept of a Blockchain is of a series of linked transactions distributed within a computer network.  The nodes verify each other’s data so unauthorised changing of information of a block at a single node will fail because the linked nodes will refuse those changes.  The system has the added advantage that successful transactions are recorded so the path and details of a chain of changes can be read.  NFTs benefit from this technology because their existence and ownership can be traced.

Losing details of the Blockchain would require a major disruption of the Blockchain network.  There are almost 10,000 different Blockchains.  The largest chains are unlikely to go down.  Many NFTs trade on the Ethereum platform, using it as the cryptocurrency to buy NFTs and as the Smart Token store to record ownership.  The size of a cryptocurrency can be measured as its market cap; its current price multiplied by its current supply of currency units.  In June 2022 Bitcoin had a market cap of $3.8 x 10^11 and Ethereum $1.3 x 10^11 .   At the opposite end of the scale sat OneCoin an alleged cryptocurrency that was privately traded but never existed on a Blockchain.  To summarise if a NFT is hosted on a major Blockchain that is publically tracked the probability of losing the chain is minimal.  Very small chains promise greater rewards but at a high degree of risk.

Transactions are a public record that can be followed along the chain from deposit to withdrawal. Cryptocurrency fraud has not relied on any insecurity of the BlockChain.  Indeed it has relied on the BlockChain to rapidly collect and move funds.  The smart criminal will move those funds out of cryptocurrency before they can be traced.

In 2020 a Twitter hacker sent out tweets allegedly from famous people such as Jeff Bezos.  People were invited to send funds to a Bitcoin address (the hacker’s) with the promise of the investment being doubled and returned.  Coinpath technology was used to identify transactions related to that address on the Blockchain and showed that funds were withdrawn to a Binance Exchange Wallet.  This in turn can be linked to a specific hacker.   Hackers pass funds through multiple wallets to hide their money trail.  They split their gains and mix funds with other ‘legitimate’ investments to reduce traceability but the chain and related transactions are still there.  This watering down of the trail is designed to slow down the process of tracing funds improving the chance of successfully laundering their gains.  There is an on-going race between the complexity in hiding a path through the Blockchain and the sophistication of tools such as Coinfirm’s ability to trace that path.

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