NFT Scams: How to Keep Your Crypto Safe and Protect Your NFT
Next NFT Drop
NFT Scams: How to Keep Your Crypto Safe and Protect Your NFT

NFT Scams: How to Keep Your Crypto Safe and Protect Your NFT

NFT_Admin
Mar 29, 2022

Over the past year or so, non-fungible tokens – or NFTs – have had an unprecedented performance. These digital collectibles are disrupting the creative industry, bringing a decentralized way for artists to share their works with fans and collectors. The fast-growing community of NFT enthusiasts has attracted top celebrities, buying and even minting their own NFTs.
Despite the growing opportunities in the sector, NFTs have attracted fraudulent actors looking to steal NFT enthusiasts’ money or collectibles through scams. These NFT scams have become more complex by the day, exploiting the vulnerability of users in the relatively nascent technology. Creators and collectors collectively need to practice caution and implement cyber hygiene practices to alleviate exposures to such scams.

Let’s take a closer look at some common NFT scams and how to protect your NFTs and keep your crypto safe.

NFT Scams to Watch Out For

Although the NFT hype train has slowed down, the sector still processes millions of dollars in sales every day. These massive amounts have attracted new users and scammers alike. These con artists deploy NFT scams on unsuspecting users, aiming to defraud them of their cryptocurrencies, fiat, or NFTs. Common NFT scams in the industry include:

  1. Counterfeit NFTs

NFT art can be reproduced digitally, even simply by downloading the picture, video, or file online. Many scammers exploit this loophole to mint counterfeit NFTs, often copying unique art issued by reputable creators. The next step in these NFT art scams is listing the counterfeit collectibles on popular marketplaces for auction. Since the files can be visually or aurally similar, unsuspecting fans may pay big bucks to buy the valueless and copied NFT artworks.

  1. NFT Giveaway Scams

Another NFT scam format is through fake NFT airdrops or offers. In this scam, the fraudsters pose as authentic artists with an upcoming or ongoing NFT project. The scammers then promote their projects on social platforms popular to crypto enthusiasts, offering giveaways like free NFTs for sharing their projects or signing up. However, the scammers will suspiciously require you to link your crypto wallet to claim your free NFT. Alternatively, the scammers may demand that you send your crypto to their address to claim your reward. Either way, any NFT user may fall into the trap of these too-good-to-be-true offers and possibly lose their crypto assets.

  1. Rug Pull NFT Projects

As in other decentralized applications, scammers may develop NFT projects and promote them to seek funding from investors. Since NFTs run on blockchain technology, the NFT project developers stay anonymous through the investment period. These scammers collect up to millions of dollars from interested users only to fold the project and disappear with the stolen funds. In one such NFT game scam, pseudonymous developer Evil Ape disappeared with nearly $3 million in ETH from their rug pull NFT project known as Evolved Apes.

  1. NFT Bidding Scams

Aside from fake NFT scams, another common NFT fraud involves bidding on authentic NFTs. Here, the scammer targets an NFT owner reselling their NFT on a marketplace. The fraudster puts in the highest bid on the NFT then switches the cryptocurrency for one with less value. For instance, the scammer may bid 20 ETH ≈ $58,000 and pay $20 instead.

How to Keep Your Crypto and NFTs Safe

So, is it an NFT scam or not? Not all NFT games are scams. Taking necessary precautions while exploring the NFT space is critical to avoid being scammed. Here are some activities you should practice to avoid NFT scams:

  1. Verify Seller’s Profile

Always verify an NFT seller’s profile or identity. On NFT marketplaces, check that the seller has a blue checkmark or ‘verified’ badge on their profile. So, it is easier to detect impersonators who may attempt to scam you through fake giveaways or even counterfeit NFTs.

  1. Access Only Official Channels

Do not click on links attached to promotions or giveaways. Alternatively, search for the official websites of the NFT projects or marketplaces via your search engine. As a result, you avoid phishing attacks that may collect your crypto wallet login credentials. Also, ensure you verify the URLs of the NFT marketplaces you visit before making any NFT purchases.

  1. Use Blockchain Tools to Assess Developers Before Investing

Deploy blockchain explorers and rug pull detection tools to assess the account activities of anonymous developers before investing in their projects. These tools will flag irregular activities that indicate pump and dump or rug pull schemes.

  1. Cross-check Bidding Currency

If you are an NFT owner selling your collectible, set your sale to a single preferred cryptocurrency. Otherwise, if you accept bids in multiple currencies, ensure that you first confirm the currency of a bid.

FAQ

How do NFT scams work?

NFT scams work by luring users to give up their cryptocurrencies, NFTs, or even money through various tactics deployed by fraudsters. These tactics include selling counterfeit NFTs, fake offers and giveaways, rug pulls, and bidding scams. These NFT art finance scams could reach millions of dollars.

Are NFTs legit?

Yes, NFTs are legitimate. However, some collectibles are either plagiarized or counterfeited from original creators’ works. So, ensure you evaluate the authenticity of an NFT before buying. 

How do I know if my NFT is real?

To know if your NFT is real, first ensure that you buy from a verified or reputable seller. Check if the seller or creator is verified on the marketplace. Then, review the transaction history and previous owners of the NFT. Be careful to point out pump and dump schemes that may look like legitimate NFTs on the surface. 

 

 

U.S. President Joe Biden includes cryptocurrency to his newly signed executive order

U.S. President Joe Biden includes cryptocurrency to his newly signed executive order

James HillNov 03, 2022

Based on the fact sheet, 16% of Americans have invested, traded, and used cryptocurrencies. Hence U.S. President Joe Biden called out and said to investigate the said digital currently.  In...

TOP THREE REASONS WHY NFTs ARE VIABLE LONG TERM ASSETS

TOP THREE REASONS WHY NFTs ARE VIABLE LONG TERM ASSETS

James HillMay 18, 2022

[kc_row use_container=”yes” force=”no” column_align=”middle” video_mute=”no” _id=”325270″][kc_column width=”12/12″ video_mute=”no” _id=”284390″][kc_column_text] Introduction Non-fungible Tokens (NFTs) represent ownership of an object. Money is an example of a fungible asset where units can be...

Celebrities and NFTs: What’s all the hype about?

Celebrities and NFTs: What’s all the hype about?

Sarah MorganMay 18, 2022

More celebrities are joining the NFT world, making the topic of celebrities and NFTs an important one to explore. The main factor is drawing celebrities into NFTs in the quest...