NFT stands for “non-fungible token” and it’s a digital asset that is unique to you, meaning it cannot be shared or replaced. NFTs are used in games like CryptoKitties, with thousands of dollars changing hands. The problem is that some shady people are trying to lure investors into buying fake NFTs which can be easily identified by looking at the source code and other indicators. The fake NFTs are often sold for a pittance, meaning people are getting ripped off. One of the most common ways to spot the fakes is to try to open them in the CryptoKitties wallet and see if they have a symbol next to their name, indicating that someone has already bought it. The other way is to download the original NFTs from the CryptoKitties website and check through their metadata. A game-changing business is in the works, and it’s one you’ll want to hear about ahead of time. The non-fungible token (NFT) market is poised to become the next big thing in cryptocurrency, with major implications for gaming, advertising.
Here are the main points to take home from this article:
- You should always be wary of trading platforms, even legitimate ones. Stick to NFTs that are distributed on reputable blockchain networks and constantly scan for potential scams.
- Always make sure to verify links & the email address of the sender before clicking on any content from it.
- The article discusses the most common and visible NFT scams, how to avoid them & read reviews for an app for more information.
NFT scams have been around for a while and it’s getting harder to protect yourself. Here, we talk about different types of NFT scams, so you can avoid losing your digital assets.
The popularity of crypto can be seen as a sign of growing adoption. However, it can be difficult to distinguish from who is a trustworthy creator and who is a scammer when dealing with this form of digital currency.
The rise in mainstream interest in blockchain projects’ sensitive information has led to a surge of phishing attacks called “NFT minefields.” These communities are now known for their fast, active discussions on how to best protect your valuable NFT assets.
Remember to always be on the lookout for scams, and don’t forget to report any suspicious activity or scam attempts when you see them. There still might be many unknown risks which need to be considered too.
Many like to buy NFTs, but scammers might also join in on the rush.
Many users are turning to NFTs to engage in digital transactions, proving they have a lot of potential and that they will be relevant as the landscape evolves. Growing interest from tech giants and celebrities is only furthering the potential for these assets.
However, the NFT space is still in its ICO stage and can be easily exploited by bad actors. It’s important to stay aware of what opportunities there are for both good and bad actors to try to exploit new technology to accumulate wealth.
NFTs are worth more than just their material value because they serve a permanent, immutable digital record of ownership on the blockchain. It might seem like a lot to drop $5,000+ on an NFT, but the other benefits that they provide could make it worth while.
For some, owning a digital tokenized artwork can serve as the key to exclusive online communities, chat rooms and interactive experiences.
Most common NFT scams:
1. Fake Marketplaces
When looking to buy or sell your first NFT token, it’s important to do a little bit of research ahead of time. There are many fraudulent marketplaces out there, so be sure to find one with some reliable reviews. A quick google search will garner millions of result pages, but unfortunately some of them are fake. These fake sites don’t have legitimate NFTs, so if you buy one, the site will record down your credentials from your transaction details. Moreover, these sites may even ask for your private keys or 12-word security seed phrases and use it to drain you.
To avoid these high risk scams, always use legitimate trading platforms like Binance NFT marketplace and never enter the information in links, pop-ups or emails.
In general, you only need to use your seed phrase when setting up a backup of your crypto wallet or recovering your wallet
2. Fake Offers
NFT scammers often misrepresent legitimate NFT platforms and send you fake emails that claim someone has made an offer for your NFT. The email links to a fake site, which takes you to a phishing page where the last thing you want is happening: an offer of your NFT for sale.
Additionally, these scam sites exist solely to steal your information and without fail will ask you to link your digital wallet to send them money.
Avoiding any form of crypto fraud like NFT scams is a good idea even if it means spending some extra time checking emails. One way to get an email address confirmed is to contact the company and ask them, just make sure to check the sender’s address.
3. Fake Technical Support
Another common scam is fake customer service representatives or technical support messages. Imagine you’ve run into trouble on a popular NFT marketplace and are looking for help in a public forum. Sometimes, someone who is representing the marketplace (and don’t seem to be affiliated with it) responds to your post.
In this scenario, the fake support agent might ask to view your phone’s screens. The hacker could then see what they need to know to take over your wallet.
You might get redirected to a website that looks somewhat similar to the genuine one. You’ll also be asked to perform a seed phrase/QR code scan or enter other details. The scammer could steal your information and use it for identity theft purposes. After that, they might even ask you to input your seed phrase. This will store your personal information in an insecure location and leave your digital wallet vulnerable to theft.
How do you avoid these types of scams and keep your nonfungible tokens safe? The best way is by only asking for help from the official NFT marketplace and doubling check the site domain. Be aware that scammers might send you fake security alerts about your account or NFT collection. It is important to verify the legitimacy of messages before clicking on anything.
4. Fake Giveaways
Scammers want you to join a giveaway campaign and gain your trust before asking for your private information like bank details and social media. They may also pretend to be employees from popular NFT trading platforms and contact you via social media.
Some users have had experiences where they linked their wallet IDs to receive a prize, but then they later found that someone else got access to their account and stole all of their NFTs. Please be sure to carefully read the TOS guidelines before doing this.
This can be a sign that a NFT scam is taking place. Make sure you always look at the person’s social media accounts and check out that link they sent from their ‘legitimate domain name’ to make sure it matches the company’s official website.
5. Rug Pull Scams
Rug pull scams are when an individual or group of individuals release a preliminary collection of non-fungible tokens (NFTs) to kick off a bigger project that the project plans to unfold over time with an online game component, merch or event. The rug pull usually happens when any group makes a big commitment to an organization, such as taking a lot of money in return for future efforts. It’s much harder to turn away from these promises since they were made so publicly. There are also instances of slow project pulls where progress might be slower and updates are less frequent.
The best way to avoid falling for a rug pull scam is by investigating the team behind it. Look at their business plans and take the time to think about their long-term goals.
You can find links to the project on Twitter, Discord or other public forums. These parties allow you to market your project, while engaging in its development. You also have a good idea of whether or not it has an active community of followers and investors that might support it.
6. Counterfeit NFTs
Minting a digital file as an NFT doesn’t make it any different than any other digital file you may store on your blockchain. Encrypting your files & storing them on the blockchain is a popular way to ensure security, but there are many other ways to secure your data.
Digital creatives have many pressure points of security, including the ability to protect their work against the threat of counterfeiting. Scammers don’t even have to have access to an account or contain their own digital creations – when they steal someone else’s, they can list it on an NFT marketplace for a profit.
Counterfeit currency is illegal in all cases and can’t be refunded once the community has realized it’s fake. However, if you are confident in your decision of buying the NFT, you should go ahead with your purchase because as soon as a transaction is made and/or received, all transactions would be finalized.
Check the seller’s social media profile and Discord for a verification tick for added credibility. Remember the seller has to provide this before you bid on their NFT!
What creators have to say on their social media channels is the best place to monitor their progress and activities. Following them through their pages will provide you a level of security you won’t find anywhere else. By bookmarking “official” pages, you can avoid catching potential phishing scams
7. Pump and Dump Schemes
Another thing to watch out for is the term “pump and dump” schemes. In this case, it refers to when a deceptive group or person buys up a mass amount of NFTs to artificially increase the demand as they begin to sell off their new-found stockpile.
They do this in such a way to make it seem like their NFT is popular and make it look like they’re cashing out at a higher price, then allowing the highest bidders from that time period to fall victim to low prices.
It’s important to always know your company’s transaction history before you invest in any NFTs. Certain user transactions could be a sign of a possible pump and dump scheme.
Protect yourself from NFT scams by following these tips
If you own NFT figures, avoid these common scams that have been taking the community and cryptocurrency by storm. But don’t worry – we have five tips to help protect your collection.
You should never blindly click on a link from someone you don’t know, nor email a company’s customer service department about an issue with their product or website. Always look to the official customer service on official NFT trading sites for help instead of broadcasting a message out to someone you don’t know. They can provide you the help needed in safe and discrete manner.
DYOR on NFT Projects: It’s important to know that your investment will be worth it in the long run. A thorough research of the project’s website, roadmap, social media channels, and creators’ biography is a good start.
Check the contact address: If you’re not sure if the information on the creator’s website is genuine, check to make sure your address matches.
Be smart with your wallet credentials: The idea of secure passwords is a necessary requirement for all people, and it is important to keep them safe. In addition, two-factor authentication (2FA) will enhance the security of your accounts.
Use legitimate wallet apps and browser extensions: There are even malicious apps pretending to be official ones. Download them from the official sites indicated so that you don’t fall for a phishing scam.
While the technology behind NFTs (Nemo For The Trees) is so revolutionary and has incredible potential, the tech space is still in its infancy; with more research & development on their way it looks to be in for a great period of disruption. Digital content creators can have a lot of hype behind them, but unfortunately many are bad actors. So before investing in an asset, DYOR (do your own research) and just be careful.