The NFT boom: Top 3 Uses of Residential IPs
April 2021 by IPRoyal
The non-fungible token (NFT) market capitalization has grown by 1,785% in 2021 alone, making the competition of obtaining rare NFTs increasingly fierce. Also, given the market’s lack of internal regulation, there have been many instances of price inflation and plagiarised goods. Therefore, tech-savvy individuals have started making use of residential proxies to avoid these issues as well as be more successful at obtaining high-demand NFTs.
Proxy servers act as a gateway between the end-users and the websites they browse. Along with forwarding web requests, they also act as a firewall and web filter, provide shared network connections, and cache data to speed up common requests. Karolis Toleikis, CEO at IPRoyal has shared 3 ways people involved in the NFT market can benefit from using a residential proxy server.
1. NFT copping. The NFT market is similar to other markets where hype plays a defining role in determining the price of the listed items. As with any limited edition goods–such as sneakers, watches, or t-shirts—NFTs have proved to create a lot of competition to obtain the desired goods. Therefore, IP proxies can be utilized as a tool for making successful purchases of rare NFTs.
“A reliable proxy that is both efficient and dedicated allows the user to automate the process of bidding and purchasing high-demand NFTs,” said Mr. Toleikis. “However, NFT enthusiasts should always make sure their proxy servers have a secure SSL-encrypted connection and are ’dedicated,’ meaning that a proxy is being used by one user at a time for maximum efficiency.”
2. Detecting wash trading. Wash trading is a term that refers to a form of market manipulation in which an investor simultaneously sells and buys the same asset to create artificial activity in the marketplace. That is because the infrastructure that supports NFTs is still in its early development stages and such activity is barely regulated. Having access to a residential proxy and web scraping technology can help scan through suspicious cases and detect signs of wash trading.
“Currently, most marketplaces that sell crypto-assets do not invest many resources in preventive measures against fraud and insider trading. However, a residential proxy user can run a web-scraping-based algorithm to check for suspicious activity surrounding a given NFT,” said Mr. Toleikis.
3. Scanning for duplicate NFTs. Another problem that has become prevalent in the field is NFT duplicates. There have been reports of anonymous accounts copying people’s NFTs and selling them for a profit. While web scraping has been used for detecting and preventing intellectual property violations in other areas, there have been instances of people using the technology to scan crypto-marketplaces for NFT duplicates.
“Just like with checking for wash trading, a dedicated residential proxy server and the web-scraping tools that it gives access to allows the user to quickly perform a large number of web searches and check for similar-looking items listed online,” said Mr. Toleikis.
While the NFT market is driven by hype, lacks internal regulation, and—as many experts have pointed out—its growth dynamic resembles that of a financial bubble—instances of insider trading and plagiarism are expected. A residential proxy offers tools that help their users avoid these pitfalls as well as make the most out of this market situation financially.