What: Bots, crashes, scams and digital counterfeiting are still rife in the early stages of web3 innovations and NFT releases.

Why it is important: The high visibility of luxury brands and the consumer expectations regarding their shopping experience are threatened by bots, scams and digital counterfeiting which ultimately could affect brand perception.

Nike’s Rtfkt and Gucci have both recently apologized to consumers after an inventory system overload and bot raids threatened the respective release for each of the companies. With the functionality and supply chain for digital assets still in the construction phase, established brands will likely face greater criticism when facing the same issues as smaller projects within the growing web3 industry as consumers hold them to a higher standard.

Ian Rogers, chief experience officer at crypto hardware wallet provider Ledger and advisor to LVMH, recommends brands don’t shy away from entering the space but ensure they understand the risks and prioritize security and ease of use.

While navigating high gas fees for minting remains a challenge, brands can actively address some of the other potential problems. Combatting bots can be accomplished by limiting mints to one per digital wallet, blocking access through a token-gate and keeping drop times secret. Brands should be transparent and honest about the completion of their digital projects to help address fraudulent minting or wallet phishing.

Opensea and Metamask are also actively addressing fake or ‘copyminted’ NFTs. Metamask now notifies users of potential scams when entering sites. And Opensea is working out a verification process for official accounts while also using image recognition to ensure authentic NFTs aren’t fraudulently replicated.

The perils of entering web3 for established brands