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The most common NFT scams
When you’re an active NFT trader, you can’t avoid all the scams in the world of non-fungible tokens. The most common NFT scams are phishing, fake NFTs, and pump and dumps.
2021 was the year of breakthroughs for non-fungible tokens (NFTs). But when things like decentralized finance (DeFi) and the latest version of the web, called Web3, become popular, there are risks too.
Follow the money is advice you don’t have to give to hackers twice. Last year, hackers made $14 billion from crypto-related hacks, but cryptocurrency crime is still up 79% — and the risks are not over yet. But how can NFT traders protect themselves from scams? First, educate yourself. By understanding the most common NFT scams, you can get your tokens safely.
The most important thing to note is that NFT pumps and dumps are bad news. NFT scammers will take advantage of insincere information and drive up the reserve price (indicating the lowest price an item can go for, updated in real time) of the NFT you’re interested in. When their strategy is successful, they sell off their items, leaving others empty-handed. Additionally, a common trick is the tech support scam. When you’re a user of Telegram or Discord, you may see crypto scams happening right under your nose.
This phishing scam is not obvious at all. The scammer uses a fake pop-up window to link to a normal-looking page, like your wallet. Or, a first-time buyer who is struggling to complete a transaction accepts an offer to get help investing in NFTs. The digitally disguised scammer asks you for personal information, which he uses to steal all your assets.
The third common NFT scam is not new to the world of intellectual property. Artists work hard on their original designs. It takes a lot of time to build up a collection of NFTs, so when they are copied by someone else, it’s like biting into a sour apple. Scammers take the artist’s work and turn it into an NFT. Buyers will believe they are investing in an original work of art and bid high.
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Is NFT a scam?
NFTs are not a scam. Instead, they are a big, booming business.
NFTs can be collector’s items, like baseball cards back in the day, but they don’t have to be. NFTs can also be a form of digital entertainment or even a valuable piece of art. There are a lot of people who think this is a bubble that’s about to burst, and maybe it will eventually happen. But now is not the time to speculate because they are still thriving.
Since security and compliance are complex topics, NFTs are somewhat vulnerable to attacks. On top of that, cryptocurrencies, blockchains, and NFTs are like the new kid on the block and still not well understood by the rest of the community. Everything unknown involves additional risk. Earlier this year, users of the largest NFT marketplace (OpenSea) were ambushed by a phishing attack. At least 32 users had their NFTs stolen, with a total value of $1.7 million.
NFTs are not a scam, but they can sometimes be easy to steal, and as long as the NFT market continues to grow, the number of attacks will increase with it. Hackers will also become more and more creative and increase their technical know-how. There’s more NFT news about scams because a year ago, hackers robbed users from Nifty Gateway. They took home large amounts of NFTs and even used the credit cards of users who didn’t have two-factor authentication (2FA) enabled to buy more NFTs, up to $10,000 per account.
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How to avoid NFT scams?
To avoid NFT scams, it’s wise to keep a close eye on news reports. Also, optimize your digital security and don’t fall for suspicious contact requests and strange pop-ups.
Users are becoming increasingly familiar with the risks of trading and keeping their NFTs safe. However, when you already hold NFTs or plan to purchase one or more, it’s important to understand how to avoid NFT scams. As a user, there are several precautions you can take to protect your assets from being stolen.
First, it’s important to know what you’re doing. To avoid pump and dumps, it’s wise to look at the transaction history of the NFT you’re looking to buy. Also, look at the creator’s contact details and research them. If all transactions are made around one specific date, then the light should turn on.
While we’re talking about phishing scams, always remember that your personal information belongs to you! Never give out the keys to your wallet and never react to suspicious proposals or contact requests. Needless to say, always protect your accounts with 2FA; it’s the least you can do.
In the case of stolen art, sometimes there’s nothing you can do. Sure, you can verify the creator’s account, social media messages, and community. Like in any other case, do your research. Some NFT marketplaces are developing new tools that scan public blockchains for counterfeit NFTs. Finally, NFT scammers don’t have a blue checkmark next to their username.
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Are NFTs worth it?
NFTs are fine as an investment. If you count your steps and take safety measures, it’s a whole new world worth exploring.
We are in the middle of this roller coaster ride called NFTs, but for many people there is still a discussion about NFT investments vs NFT scams. With a total market cap of $40 billion, the success of non-fungible tokens needs no explanation. Many will tell you that NFTs are nothing more than overpriced PNG files and that they are a complete scam, but the opposite is true.
Yes, some NFTs are scams and some platforms aren’t as honest as you’d like them to be. But that doesn’t mean all NFTs are a scam. When you go to buy a car, you’re going to encounter some sketchy salespeople — that’s a risk in life. When you’re ready to invest in an NFT, it’s important to realize that the value isn’t in the image itself. It’s the value of the underlying asset that gives the NFT actual value.