(Bloomberg) -- The non-fungible token industry is continuing to grow, though there are also signs of some less-than-desirable activity, according to a study from blockchain analytics platform Nansen.
The industry “remains spotted by certain profit-seeking practices,” Nansen cautioned, citing patterns in transactions that suggest token founders might be buying up the floor for certain projects. That could be an indication of “wash trading,” a practice where a trader or group of traders buy and sell the same asset to create the illusion of heightened demand.
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“While something appears amiss, it definitely isn’t incriminating evidence of wash trading, because they aren’t being sold directly to each other,” Nansen analyst Ling Young Loon said in an email. “The wallets that they eventually sell to may be related, but that would require a much more rigorous study.”
Non-fungible tokens, or NFTs, have been growing in popularity with the rise of blockchain technology. They allow holders of digital art, collectibles and all manner of other items to track ownership. Daily sales reached an all-time high earlier this month, according to data compiled by NonFungible Corp.
Even with the possibility of wash trading, Nansen sees NFT statistics overall as encouraging for growth of the industry.
“NFTs are a bright new vertical,” the firm’s report said. “The healthy distribution of NFT minters and rising number of unique buyers points to genuine, organic growth.”
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