A Survey: Security, Transparency, and Scalability Issues of NFT’s and Its Marketplaces
Abstract
:1. Introduction
Token Standard
2. Relevant Review Articles and Research Methods
2.1. Purpose of the Study
2.2. Structure of This Review Article
3. The Pillars of NFT
3.1. Smart Contract
3.2. Addresses and Transactions
3.3. Speed
- -
- The first is the gas fee, which is mainly used for storing and transacting NFTs on the blockchain.
- -
- The second fee is the account fee, which is charged by the NFT marketplace for each account.
- -
- The third charge is the listing fee, which is charged to list a digital asset (NFTs) for sale.
3.4. Scalability
3.4.1. Layer 1
3.4.2. Layer 2
3.5. Transparency
3.5.1. Permissionless Access
3.5.2. Permissioned Access
3.5.3. Transaction History
3.6. Security
3.6.1. Two/Multi-Factor Authentication (2FA/MFA)
3.6.2. NFT Storage
3.6.3. NFT Wallet
3.6.4. Hot Wallet
3.6.5. Cold Wallet
4. Top Five Blockchains for NFTs
4.1. Ethereum
4.2. Solana
4.3. Polygon
4.4. Binance Smart Chain
4.5. Cardano
5. NFT Marketplace
5.1. NFT Ecosystem Development Structure (Creator, Buyer, and Seller)
Components Interaction
6. Challenges Faced by NFT Ecosystems
6.1. Security Issues
6.1.1. Phishing Attack
6.1.2. Scams or Rug Pulls
6.2. Transparency Issues
6.2.1. Lack of Transparency
6.2.2. Royal Distribution and Marketplace Fee Evasion
6.3. Scalability Issues
6.3.1. NFT Storage
6.3.2. Gas Fees
7. Conclusions and Future Direction
7.1. Ticketing
7.2. Gaming Industry
7.3. Metaverse
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
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PoW (Proof-of-Work) | PoS (Proof-of-Stake) | |
---|---|---|
Energy consumption | Energy inefficient | Energy efficient |
Hardware required | Mining equipment required | No equipment necessary/depends on stake in the network |
Block generation speed | Medium | High |
Security | HIGH (Malicious attacks require 51% of computer power) | Medium (To hack a blockchain network, an attacker needs to hold 51% of the stake) |
Transaction confirmation speed | Low | High |
Applications used in | Ethereum (But soon its switch to PoS), Bitcoin, ZCash, Dogecoin etc. | Cardano, Avalanche, Tezos, Polkadot etc. |
Public | Private | |
---|---|---|
Permissionless | Yes | N/A |
Read | Anyone | Individuals who are permitted and authorized |
Write | Anyone | Individuals who are permitted and authorized |
Ownership | Anyone | It is controlled by one authority or one individual |
Who can Participates | Anyone | Parties with authority only |
Transaction speed | Low, Bitcoin, for instance, can handle 7 tps and Ethereum can handle 20 tps. | High, Processes thousands of transactions per second, visa, for example, can process 24,000 transaction per seconds |
Transaction cost | High, Due to the vast number of nodes on the platform, performance is limited by the time it takes, resulting in a higher price. | Low, because no matter how many people request transactions, the fee for private transactions stays the same regardless of the number of requests. |
Blockchain | Ethereum | Solana | Polygon | Binance Smart Chain | Cardano |
---|---|---|---|---|---|
Currency | Ether | SOL | MATIC | BNB | ADA |
Consensus | Proof-of-Stake (PoS) | Proof-of-History (PoH) | Proof-of-Stake (PoS) Plasma-based sidechain | Proof-of-Staked Authority (PoSA) | Proof-of-Stake (PoS) |
Transaction per second (TPS) [69]—Ethereum, Solana and Polygon | Anywhere from 13–25 TPS. | 50,000–65,000 TPS. | 65,000 TPS | Around 300 TPS [70] | Up to 250 TPS/75,000 Transaction per day (TPD) |
Transaction confirmation time | After merging 12 s per Ethereum block. | 1 s–400 s milliseconds | 2 s–8 min | Up to 15 min | 40 s |
Transaction rate/Average Transition Fee (ATF) | $0.4729 | $0.00025 per transaction | $0.018 | $0.2214 | $0.03–$0.47 |
Top NFT collections (high volume) | Ethereum Name Service (ENS), Board Ape Yacht Club, CryptoPunks, Otherdeed for Otherside | DeGods, Primates, Okaybears, Blocksmith Labs | Aavegotchi, PLAYZ Token V2 V2, | Mobox, PancakeSwap squad, Gamer NFLs | SapceBudz, Clay Nation, Pavia |
NFT Market Places | OpenSea, Rarible, SuperRare | Solanart, Magic-Eden DigitalEyes, SolSea | AirNFTs, OpenSea, Refinable | Binance NFT, AirNFTs | CNFT.IO, JPG Store, Fibo |
Security -Some of the known threats include:
| It is highly secure due to its active community and active developers, as well as being one of the longest-running platforms. | Due to the security concerns associated with its small number of validators (roughly 1000), it is ranked fourth among secure blockchains. | Their Security comes in second to ETHEREUM due to its placement of the validation system and has similar security structures. | The blockchain is less secure because it is heavily centralized with 21 validators or miners, which makes it less robust and more vulnerable to manipulation. Nevertheless, they are still very secure blockchains. | The third most secure blockchain is due to its Ouroboros consensus mechanism which supports a provably safe and integrated community network. In addition, it also has a mathematical model that allows for the creation of provably secure blockchains. |
Transparency | Public Blockchain (Permissionless access). | Public Blockchain (Permissionless access). | Public Blockchain (Permissionless access). | Public Blockchain (Permissionless access). | Public Blockchain (Permissionless access). |
Scalability | The following were changed from layer 1 to layer 2: Staking, sharding, Off-chain scaling: Rollups (Optimistic rollups and Zero-Knowledge rollups), State channels, Sidechains, Plasma, and Validium. [72] | High-performance protocol scaling. Staking, Turbine, Tower BFT, Pipeline, Archives. [73] | Multichain Solutions offer to scale. Ethereum scaling Architecture (Layer 2), PoS chain, zero-knowledge Ethereum virtual machine (zkEVM), Plasma Sidechain, and more. [74] | Compatibility across chains. From a single BNB chain to a multichain chain. [75] | A second layer consists of Hydra Heads (state channels) operating on top of layer 1. Sidechains, and Mithril (stake-based threshold multi-signatures). [76] |
Rank | NFT Marketplace | Active Users (2022) | Scalability (Gas and Wallet) | Sales Volume | Supported Blockchains | Security and Transparency | Best for? |
---|---|---|---|---|---|---|---|
#1 | OpenSea | 1,685,613 + | The marketplace is gas-free for mining but charges 2.5 for selling NFTs, and you can transfer NFTs to any wallet you like. | $2.64 B (past 30 days) | Ethereum, Polygon, Solana, Klatyn | Yes—User authentication Yes—Verification of tokens contract Yes—Seller/collection verification Yes—Transparency Yes—Royalty Yes—Fee evasion | Best overall |
#2 | Rarible | 1.6 million users | A flow-based NFT, and a low gas fee are available. Wallets such as MetaMask, Coinbase wallet, Wallet Connect, MyEtherWallet, Torus, and Fortmatic are all supported. | $2.63 (24 h) | Ethereum | Yes—User authentication Yes—Verification of tokens contract Optional—Seller/collection verification Yes—Transparency Yes—Royalty Yes—Fee evasion | Best for Categories: digital art, collectibles, music, and video NFTs. |
#3 | SuperRare | 7500 artists as of now | The marketplace has a fee of 3% on any transaction. They are currently working with only a few wallets, such as Meta mask, Fortmatic, and Wallet Connect. | 31.4 million (monthly record) | Ethereum | Yes—User authentication Not appliable—Verification of tokens contract Mandatory—Seller/collection verification Yes—Transparency Yes—Royalty No—Fee evasion | Best for finding Artists: Art and music |
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Bhujel, S.; Rahulamathavan, Y. A Survey: Security, Transparency, and Scalability Issues of NFT’s and Its Marketplaces. Sensors 2022, 22, 8833. https://doi.org/10.3390/s22228833
Bhujel S, Rahulamathavan Y. A Survey: Security, Transparency, and Scalability Issues of NFT’s and Its Marketplaces. Sensors. 2022; 22(22):8833. https://doi.org/10.3390/s22228833
Chicago/Turabian StyleBhujel, Sangam, and Yogachandran Rahulamathavan. 2022. "A Survey: Security, Transparency, and Scalability Issues of NFT’s and Its Marketplaces" Sensors 22, no. 22: 8833. https://doi.org/10.3390/s22228833
APA StyleBhujel, S., & Rahulamathavan, Y. (2022). A Survey: Security, Transparency, and Scalability Issues of NFT’s and Its Marketplaces. Sensors, 22(22), 8833. https://doi.org/10.3390/s22228833