How to Avoid NFT Scams
Learn what types of NFT scams exist and how to avoid being scammed. This guide will help you to save money and propel the NFT community to continue flourishing.
Non-fungible tokens or NFTs have been raking in millions of dollars in sales lately. NFTs are digital collectibles in the form of art, GIFs, videos, music and enjoy high popularity. But NFTs are no exception to scams. Sadly, numerous people fell victim to the NFT scams yearly.
Alongside tons of people getting super excited about earning money with NFTs, scammers have also been getting excited – about the prospect of scamming lots of people with NFT-related scams. But you can learn how to spot a scam and stay safe.
What are NFTs?
NFT stands for ‘non-fungible token’. Fungible things are equivalent to, and can thus be exchanged. In contrast, a non-fungible token is a ‘one-of-a-kind’ item in digital form that cannot be exchanged for any other NFT.
Users transfer NFTs by means of blockchain technology, which creates a digital trail from the seller to buyer that verifies the transaction. This encodes the unique ownership rights to the buyer (new owner).
In the real world, you might have a certificate of ownership attesting to its authenticity. The NFT with its blockchain technology replaces the need for certificates of ownership.
NFTs especially became popular in 2021 though they’ve been around since 2014. Some online marketplaces such as rarity.tools or NFTcatcher.io distribute and sell NFTs. If you want to buy the digital asset and create an account on the marketplace you must have cryptocurrency.
NFTs are a new way for artists, companies, and celebrities to monetize their assets. The library of digital assets created by artists is marketed to a new wave of investors and collectors. Some NFTs are selling for thousands, even millions of dollars due to the celebrity brand identity.
NFTs and cryptocurrency are not the same. An NFT uses cryptocurrency to conduct the transaction. Unlike a cryptocurrency coin that can be traded or exchanged at equivalency, the NFT cannot. NFTs don’t trade equally, each one is set up with a unique identification code and metadata.
Investing in NFTs
For buying NFTs the investor or collector needs to first find NFTs that they feel are going to grow in value and that have an interest in collecting. There are various marketplaces where they hold sales and auctions of NFTs.
It is impossible to buy an NFT without a cryptocurrency account. Thus you first need to purchase the cryptocurrency needed for the transaction through a brokerage company such as Coinbase (NASDAQ: COIN) or Robinhood (NASDAQ: HOOD) and then link the cryptocurrency wallet on which you decide to make the NFT purchase.
Lots of people are getting super excited about owning a digital piece of art or virtual property, but they may lose their hard-earned money. Crypto scammers have started casting their nets wider to trap the investors in non-fungible tokens (NFTs). Here are the most common NFT scams:
1. Fake NFT Trading Websites
For investing in NFTs, first of all, you should find out WHERE you can buy and sell NFTs. There are many fake NFT trading websites when searching online. These scam websites often look extremely like the genuine ones and it becomes hard to tell.
When you purchase NFTs on scam sites, you are just throwing your money away. Your MetaMask wallet address is enough for making transactions, but scammers may request for the seed phrase of your Ethereum wallet (the master key to your cryptocurrency wallet) and use it to hack into your wallet and steal all your cryptocurrency.
The safest option is to choose legitimate NFT trading websites. As we know, there are various types of NFTs: relating to sports, video games, real estate, and lots more. Besides OpenSea – the most famous NFT trading platform, here are some other legitimate NFT marketplaces/NFT collectible websites:
NFTs for Art
NFTs for Sports
NFTs for Gaming
NFTs for Digital Real Estate
NFTs for Tweets
2. Getting Fake Offers
Sometimes scammers may impersonate famous NFT trading platforms and send you fake emails claiming that someone has made an offer for your NFT.
After clicking the button they prompt, you will appear on a phishing website. You will be asked to link your NFT wallet and submit your seed phrase/recovery phrase. After that scammers can record the credentials and hack into your wallet and steal everything you’ve got.
3. Fake Technical Support
Fake customer service/technical support is one of the most common scam tactics.
When you face some technical problems and seek help on Discord, a scammer who claims to be from OpenSea then comes to your rescue.
This scammer may ask you to share your screen to see what’s the problem, and in this way, they will take your cryptocurrency wallet’s credentials. They can also ask for the screenshots of your seed phrase (the recovery key to your wallet) or the QR code linked to it.
Sometimes you may get fake MetaMask security alert emails, saying your MetaMask wallet is going to be suspended for some security issues. You will be prompted to click on a link to retrieve your wallet.
After clicking on the embedded phishing link it will take you to a fake MetaMask website that looks like the genuine one. The legitimate domain of MetaMask should be metamask.io!
On getting your credentials scammers can hack into your MetaMask wallet and transfer your cryptocurrencies which would be nearly impossible to get back.
4. Getting Fake Giveaways
Scammers may introduce themselves as employees from famous NFT trading platforms. Very often scammers contact you via social media (e.g. Discord or Telegram), saying they are holding giveaway campaigns. Then they ask you to sign up for the campaigns through scam/phishing NFT websites promising you free NFTs. After that, they get your credentials when you try to link your MetaMask wallet.
5. Fake NFT Projects
Romance scammers may try to lure you into investing in some NFT projects. They might send you links to fake NFT websites not only via Tinder, Bumble or Hinge but also Instagram or Whatsapp. Be careful!
How to Protect Yourself From NFT Scams?
- Always be cautious. Purchase only when you are certain of the information to avoid scams. Research the project and make sure that you maintain the security of your information.
- Every aspect of a transaction is important. Make sure that it is being conducted on a reputable marketplace. Always check if the other party, seller or buyer, have a transaction history that you can view.
- Don’t open any files from unknown senders. There are so many viruses that explicitly target cryptocurrency wallets. Do not click any links from unknown sources, as they can lead to fake websites.
- Be careful with giveaways. Each NFT is based on a “contract” that determines what can be done with it, but unscrupulous hackers can load them with authorizations to access your wallet, sell your holdings, and more. Never accept an NFT from an unknown sender whom you don’t trust 100%.
- Never give your seed phrase or private key to your crypto wallet to anyone. Anybody can enter your wallet and untraceably remove any NFTs or cryptocurrency if you are a new participant in the space and not up to speed on the requirements of conducting transactions.
- Use Trend Micro Check to check if a website is secure (It’s free!). Using strong passwords and two-factor authentication (2FA) will protect your accounts. Using ID Security will help to monitor your personal information with ease.
- Trend Micro Maximum Security will add an extra layer of protection to your device. It includes Web Threat Protection, Ransomware Protection, Anti-phishing, and Anti-spam Protection to help you combat scams and cyberattacks.
- Always check the price. If the NFT price on a site is much lower than that on legitimate websites like OpenSea, it’s probably a scam.
- Don’t forget to check verification marks. Pay attention to the blue checkmark that most legitimate NFT sellers have beside their usernames, and the properties of the collection will be listed clearly.
- Check the contact address to see where the NFT was minted and to check if the information on the creator’s website is genuine.
- You should turn to the official customer service of the NFT trading sites when you need help instead of someone who contacted you via social media.
- Only legitimate wallet apps and browser extensions are safe. Nowadays there are lots of malicious apps that impersonate official ones.
Remember that NFT scams occur on a daily basis multiple times per day and on various platforms. Some online platforms, like Discord and social media, are lurking with scammers who are waiting to take advantage of you. Get educated on the types of scams taking place to avoid NFT scams.
Overall, don’t do anything that makes you uncomfortable, and if you find yourself in an uncomfortable situation get out of there as fast as you possibly can. Remember, you are in control. Don’t be fooled by these scammers.
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