NFT 101: How To Spot a Fake NFT Collection
Main Takeaways
NFT scams often take advantage of new users in the market and their lack of blockchain knowledge.
Fight counterfeits. Carefully checking the details of the NFT itself, its website, and the creator’s profile is a great way to find telltale signs of dodgy NFTs and unscrupulous sellers.
Stay safe when buying NFTs with our top tips for spotting fake collections. With just a little research, you can significantly reduce your chances of ending up with counterfeit NFTs.
With the rise in NFTs’ popularity, the question of NFT collections’ authenticity has come front and center. How do you spot a fake NFT? What is a fake NFT anyway? Understanding how to check an NFT’s authenticity before you invest money in a digital collectible should become a must.
The space is new, and scammers have begun to take advantage of users’ lack of understanding. The best way to protect yourself in this situation is to ensure that you have the basic knowledge on how to check an NFT’s authenticity yourself to understand exactly what you’re purchasing.
Are NFT Scams Common?
In a word: yes! The meteoric rise of the popularity of NFTs and the metaverse in 2020 and 2021 has made the market attractive for scammers who nab unsuspecting victims through fraud and plagiarism. For many new investors, blockchain and NFT technology can also be challenging to understand. These two factors create the perfect storm for fraudsters to take advantage of inexperienced NFT investors.
There’s also a low barrier to entry to creating NFTs. This is great for creatives, artists, and NFT visionaries, but it also means that bad actors can crank out fake NFTs quickly and at a low cost. However, it’s not all doom and gloom. The tips below are a great start for you to identify suspicious NFTs. Like in any other domain of investment, committing time, patience, and a bit of research go a long way to help keep your money safe.
Top Tips for Checking an NFT’s Authenticity
1. Check the NFT artist or seller’s identity
If you believe you're purchasing an NFT directly from the artist, check their website and social links to verify the place of the sale. Make sure you’re looking at an official account and not a fraudulent one set up by an imposter.
It’s always good to cross-check the information on different social media platforms and official websites. If you’re struggling to find a legitimate source of information, it’s likely a bad sign. Another option is to ask for help and context in reliable NFT communities. Again, make sure you’re using trusted sources and don’t take just a single person’s word.
If you’re purchasing a collectible on the secondary market, you can check the seller’s wallet address and the NFT’s on-chain ID to trace where it has come from. Extra caution is warranted if the marketplace doesn’t let you see the seller’s wallet address.
2. Check the NFT’s website carefully
It’s not unheard of for fraudsters to duplicate entire websites. So while the NFT website may look legitimate, you could have the wrong URL. A fake website typically will have missing details, low-quality text, and other signs of fabrication that are visible if you look closely enough.
You should also never connect your wallet to a site before knowing if it’s legitimate or not. Once you’ve connected your wallet to a fraudulent website, its operators can have easy access to your funds.
3. Verify the NFT’s Contract Address
Along with the seller's wallet and the NFT’s on-chain data, another key piece of information to check is the NFT’s contract address. You should be able to find, from a legitimate source, the exact contract address of the collection. If it differs, the NFT isn’t authentic.
4. Check the NFT’s Sales Volume
If you’re purchasing an NFT from a particularly popular series, there’s a good chance that the NFT has been traded previously. You can check this by looking at the NFT on a blockchain explorer or NFT marketplace aggregator. If the NFT has never been sold before, it’s worth investigating more in-depth.
Even if there have been enough sales, double-check the activity history to ensure these transactions don’t feature the same or a small number of wallets. This could be a fraudster buying and selling their own fake NFTs to manipulate sales volume and even the price.
5. Look at the NFT's price
If the price looks too good to be true, it likely is. You can check the floor price of the whole series to see how it compares to the asking price of the NFT of interest. For example, if you find a CryptoPunk on sale for only $5,000, it’s extremely unlikely to be legitimate. As mentioned before, even if the price looks legitimate, you should also check to make sure it hasn’t been manipulated by a small number of wallets.
6. Use an NFT reverse image search
While you may think you’re buying an original piece of NFT art, that may not be the case. By reverse-searching the NFT’s image, you can see other instances of where it appears online. Some of these may be legitimate, but you could find that another artist has previously created the image and not licensed it for an NFT. You may also simply have a duplicate of an NFT and not the original you’re expecting.
Stay Safe When Trading NFTs
Even when using trusted exchanges like the Binance NFT Marketplace, you need to keep your wits about you. The tips above are a great start and should, in most cases, help you get to the bottom of whether you’re buying something authentic. Remember, all blockchain transactions are final. If you feel something doesn’t look quite right, trust your gut and don’t rush in to purchase anything.
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