NFTs, or non-fungible tokens, have grown in popularity in recent years, with NFT art pieces now fetching millions of dollars. However, when a business grows to this size, it’s only natural for con artists to try to take advantage of unsuspecting buyers. Here are some tips for keeping your NFTs safe.
5 Types of scams
1. Fake NFT Stores
If you want to invest in NFTs, the first step is to determine WHERE you can buy and sell them. When you search online, you’ll be bombarded with millions of results, yet many of them are phony NFT trading websites. It might be difficult to tell the difference between a scam website and a legitimate one because they sometimes appear very similar. These sites might appear to be nearly identical to the originals, fooling even the most experienced NFT buyer into spending enormous sums of money on a fake artwork that is worthless in fact.
How to avoid this scam?
To begin, learn everything you can about the NFT you’re interested in. NFTs that normally sell for thousands of dollars will be sold for a fraction of their true value on scam sites. On OpenSea’s official website, for example, the NFT known as CryptoSkull #43 is presently valued at 200 ETH. On a fake website, however, it may be offered for a fraction of 2 ETH. If you’re not sure how much this NFT is worth, you could be duped into believing you’re getting a good price when you’re actually paying a few hundred dollars for a false piece of art.
2. Fake offers and giveaways
Scammers send you fake emails saying that someone has made an offer for your NFT or claim to be running giveaway programs. impersonating well-known NFT trading sites. They direct you to a phishing website by asking you to click on an embedded button. You will be asked to link your wallet and provide your seed phrase/recovery phrase on the false website. Scammers can capture your credentials and gain access to your wallet, stealing everything you own!
How to avoid this scam?
So, while this may seem self-evident, do not click on any random links provided to you over social media or email. Also, check to determine if the account that gave you the message is real. And, if you’re dead set on clicking the link, make sure the URL matches that of the NFT company’s actual website. If it appears strange, stay away from it because you’re probably about to visit a phishing website.
3. Fake customer support
Scammers frequently use fake NFT customer service websites to obtain sensitive information from unwitting NFT owners. This is a rather typical occurrence on Discord. Scammers can ask for private information in order to ‘repair’ any problem you’re having if you connect to one of these bogus customer support servers instead of the legitimate one.
How to avoid this scam?
If you’re concerned, think about how you’re getting to these Discord servers. Rather than simply Google a server or looking for it on Discord, try going to the NFT creator’s official website or social media first. If you can’t reach the server this way, you should check how many followers it has, as a false server is unlikely to have thousands of followers.
4. Fake NFT projects
Every day, new NFT projects emerge, such as Squid, a new digital token for the internationally acclaimed Netflix series Squid Game. After its price peaked, however, it was discovered to be a “rug pull” scheme involving the production of an NFT that could not be distributed. Owners are unable to resell the tokens, causing their value to collapse in a short period of time. The only people who profit from such schemes are the people who created the digital tokens.
How to avoid this scam?
Check the project’s history and wallet records. This is where the transparency of the blockchain comes in helpful. View the number of transactions and buyers for the NFT collection on OpenSea or any other NFT marketplace. Join the project’s Discord channel and follow it on Twitter. There should be a good number of involved investors and collectors, as well as an active community where people discuss, engage, and share knowledge, for a project to have good liquidity and/or lasting communal or artistic value.
5. Plagiarised NFT’s
It’s important to realize that owning intellectual property (IP) ownership of a piece of artwork is not the same as having it minted as an NFT. Anyone, regardless of whether or not they own the rights to the IP, can convert any photo or image into an NFT using OpenSea’s user-friendly software. Scammers might simply take an artist’s work and use it to create a false OpenSea account to sell counterfeit artwork. Once the community discovers what the fraudster is up to, your NFT will be worthless, and there will be no way to get your money back.
How to avoid this scam?
Do your homework before purchasing an NFT from any marketplace to ensure that the artwork you’re purchasing is from a verified account. On OpenSea or other NFT markets, look for the blue checkmark next to the artist’s profile photo. If there isn’t one, look for the artist on Twitter, their website, or other social media platforms. Inquire directly with them if the artwork you wish to purchase is theirs and if you have the appropriate user profile. Also, see if the artist or NFT project has a Discord channel and ask around.
Closing thoughts
It’s a little frightening to consider how many various types of scams you may fall for these days. Every other week, cybercriminals become more inventive and come up with new techniques to deceive people.
However, if you remain cautious and informed of the types of scams that exist and how to spot them, you will be secure when exploring the amazing world of NFTs.