NFT Scams to Avoid
Non Fungible Tokens (NFT) are all the rage in today’s digital economy, with people making money by trading them. They’re digital assets like art, images, GIFs, music, video game objects, collectibles, memes, virtual couture, and more that come in all kinds and sizes. NFTs enable creators to embed a string of code into their works, allowing them to distribute them without concern of piracy while simultaneously ensuring that royalties and sales are paid directly to them by their supporters and admirers.
NFT initiatives are also being considered by small firms for marketing campaigns, promotional tools, and customer loyalty programs. NFTs are profitable; in fact, the worldwide NFT market is predicted to reach $80 billion by 2025, encouraging people to start their own. NFT scams are now commonplace, thanks to the large sums of money at stake. Before you start buying these tokens, be aware of the following NFT frauds.
What is an NFT Scam, exactly?
Online investing scams do happen and they cost victims a lot of money. Some NFT marketplaces, for example, are phishing sites, where scammers establish websites that appear to be legitimate to trick visitors into providing personal information such as their crypto wallet private key. This is made worse by the fact that there is no way for them to get their money back.
Common NFT Scams to Be Aware Of
Over the last few years, the popularity of digital assets trading as NFTs has skyrocketed, with NFTs now fetching millions of dollars. But like with any growing economy, it’s only natural for scammers to try to take advantage of unsuspecting purchasers. Here are some popular NFT scams.
1. Rug Pull Scams
Scams using rug pulls are number one.
A rug pull is a scam in which a project’s promoters hype it up on social media, then suddenly cease supporting it and grab their investors’ money after the price has risen. As a result, the price of the NFT plummets to zero, causing investors to lose money on the NFT. A variant occurs when the developers of an NFT disable the ability to sell the token, preventing purchasers from doing so because the developers have added code that disables this ability.
How to Avoid It: The first thing to do is look into the project’s creators to see whether they are genuine developers who have received positive feedback on social media. It could be a red flag if they have a high following but limited participation. Burner wallets allow you to set a limit on the amount of money you wish to commit to a specific purchase, including crypto for transaction fees, lowering your risk.
2. NFTs that are fake
This occurs when con artists steal an artist’s work and post a fake in an NFT marketplace, where they auction off counterfeit artwork. Unsuspecting buyers will then purchase an NFT that is worthless.
How to Avoid It: Do your own research before purchasing an NFT from any marketplace to ensure that the NFT you are purchasing is from a verified account and represents the real artist in question. A blue checkmark will appear beside the usernames of the most authentic NFT merchants.
3. Phishing Scams
The NFT phishing scheme asks customers for their private wallet keys or 12-word security seed phrases via fraudulent adverts on fake websites and pop-ups. Scammers will hack into your wallet once they have your wallet’s keys and deplete all of your crypto and NFT holdings.
Avoid giving your wallet’s keys to pop-ups or questionable websites. For crypto transactions, only utilize verified websites; never use links, pop-ups, or your email to enter your wallet’s key information.
4. The pump-and-dump system
Pump-and-dump tactics are when a group buys up NFTs to artificially increase demand. Unwitting investors who believe the NFTs have any value will enter the auction and begin bidding higher. Scammers will sell the NFTs for a profit once the bids rise, leaving investors with useless assets.
How to Avoid It: Check the NFT’s transaction history and the creator’s contact details. Pump and dump schemes may be indicated by transactions that revolve around a single day.
5. Bidding scams
When investors wish to resell their purchased NFTs on the secondary market, they fall victim to bidding frauds. Bidders may exchange your preferred currency with low-valued cryptocurrencies without alerting you after they offer their NFT for sale in an NFT market, resulting in possible losses for you.
How to Avoid It: Before selling, double-check the currency.
Scams with NFTs that are less common
Scams with NFTs that are less typical include:
6. Scams using NFT giveaways or airdrops
Scammers use social media to impersonate legal NFT trading platforms to advertise NFT giveaway schemes, often known as airdrop frauds. If you share their message and sign up on their website, the scammers will give you a free NFT. After getting access to your account, they prompt you to link your Metamask wallet credentials to claim your prize. During this time, they record what you enter and begin stealing your library of NFTs.
To avoid this, double-check the account’s social media page for verification and/or double-check that the link supplied to you matches the URL of the NFT company.
7. Posing as a customer service representative
A phishing scheme in which hackers impersonate customer service representatives for blockchain marketplaces and contact unwary buyers via Discord or Telegram. Under the guise of resolving concerns, NFT scammers would obtain personal information and access to cryptocurrency wallets by using the false link and official-looking websites.
How to Avoid It: Only communicate with the designated creator’s official webpage or the NFT marketplaces’ official social media platforms.
8. Scams involving investors
Trading scammers would often use the relative anonymity afforded to NFT over the internet to construct projects that appeared to be feasible investments, only to disappear with the funds they received from interested parties.
How to Avoid It: Make sure you can verify the project’s creator and have their contact information. Investigate to determine if there have been any previous complaints about transactions with others.
How to avoid scams in the NFT Space
Essentially, the majority of typical NFT scams work by stealing your cryptocurrency wallet login credentials or convincing you that you have successfully purchased or sold a legal NFT. Follow these guidelines to prevent being misled by such con artists:
Keep your private keys to yourself: Don’t give out your private key to anyone.
Create strong passwords for your cryptocurrency wallet and other NFT accounts to improve your online security. You may want to use two-factor authentication for all your NFT accounts for increased security.
Deal with official websites instead than bargains and shady blockchain networks.
Before investing, do your research: read reviews, discover how engaged creators are, and see if there have been any previous complaints about their transactions. Always be cautious and only buy when you’re certain of the facts.
Always double-check the NFT project price: Always verify the price on an official trading platform before making any NFT purchase. It’s most likely a scam if the price displayed is lower than what’s advertised on a real trade platform.
