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NFT Scams: How to avoid them

25 Jul 2022 By : Harshil Shah
Southeast Asia’s Lar

Consider earning profits by selling a meme, a GIF, or a JPEG image. Here we are in the world of non-fungible tokens, or NFTs. NFTs are digital assets that can be anything from a piece of digital artwork, a JPG picture, memes, or GIFs to music, films, and treasures from video games. They are transferred using cryptocurrencies.

NFTs sound fantastic as a result of two levels: It provides an outlet for the creators, such as artists, to market their creations. For consumers, collecting such assets that they are enthusiastic about as well as selling them for more money is also an option.

Also, read -How to make money using NFTs

With individuals producing money and selling these digital assets, non-fungible tokens are dominating the digital world. However, there are also many ways to scam people and businesses of their money.

The good thing is that by being aware of the most common NFT scams, you can avoid being taken advantage of. Read us as we examine the most typical schemes you should be aware of.

Common NFT Scams

You can't avoid every scam in the non-fungible token market when you're a regular NFT trader. Phishing, rug pulls, fake NFTs and pump-and-dump schemes are the most typical NFT frauds.

Rug pulls

A rug pull is a scam when the perpetrators purposefully overhype a deal on social media to raise the price. Once they obtain the money from investors, they quit backing it, which causes the asset's value to crash and causes investors to lose money. A twist on this issue is when the creators of an NFT make it impossible to sell the token by including code that forbids it, leaving the buyers with an asset that cannot be sold.

Pump-and-dump tactics

An intentional purchase of NFTs by a group to falsely inflate demand is known as a pump and dump strategy. Unaware buyers attend the auction and begin bidding because they think the NFTs are worth anything. As soon as the bids rise, the perpetrators sell the NFTs for a profit, leaving the purchasers with useless possessions.

NFT Phishing Scams

Scams including phishing have existed even before the NFTs were developed. However, nowadays con artists are utilizing them to target NFT owners by making false ads and requesting users to enter their private wallet keys through email, discord, telegram, and other open forums. Users who open the link are sent to a fake website where they are asked to provide sensitive data such as their wallet keys or security seed words.

Fake NFTs

An imposter steals another person's creation, mints it, and then sells it on the open market while posing as the original author. Plagiarized work or fake accounts promoting stolen content are examples of fake NFTs.

NFT Giveaways

While NFT giveaways do happen, they are extremely rare. Scammers start marketing giveaway promotions under the cover of legitimate websites. You are encouraged to share their message and register with them on those social media platforms and websites. They will send a message like To "get your prize,"  and want your wallet credentials. Once they have access to your account, they may take your library of NFTs and record anything you enter.

NFTs: Are they a Scam or Bubble?

NFTs are not fraudulent. Instead, they have a large, expanding business which leads to these scams. 

A sheet of paper can be used to both make and falsify a legal contract. The problem is with the malevolent users, not with the paper. An NFT is similar to a blank canvas that is awaiting a purpose. It is your responsibility to develop the ability to recognize risky and safe projects while making investing choices. 

Many individuals believe NFTs to be a bubble. NFTs don't always result in a bubble. But sooner or later, the value of some of the more publicized NFT collections is probably going to fluctuate downward.

Even when the bubble bursts, the NFT market seems to be here to stay.

In other words, NFTs are neither a scam nor a bubble, but scams and bubbles will inevitably appear.

How to Avoid these scams

Users are becoming more knowledgeable about the hazards of trading and safeguarding their NFTs. But it's crucial to understand how to prevent an NFT scam whether you currently own an NFT or are going to purchase one or more. As a user, you can put up some precautions to prevent the theft of your assets.

Conduct research

If you're investing in a project, be sure that the project's developers are genuine. Any transaction should be thoroughly reviewed before being approved. Is the online store you're buying from reliable and well-known? Is the transaction history of the buyer or seller available to view? Check reviews and creator engagement levels to check whether there have ever been complaints regarding a creator's transactions.

Beware of giveaways

Giveaways and "free drops" are not frequent in the NFT industry, however, they can frequently pose security issues. Because every NFT is bound by a contract that specifies what may be done with it, hackers can attach permissions to access your wallet, sell your holdings, and do other things. Never take an NFT from a stranger you don't know and trust.

Never open Phishing links

Viruses that specifically target cryptocurrency wallets have been developed by hackers. You should avoid opening links in spam emails since they may take you to scam exchange sites. Never open attachments or links from unknown sources.

Never share the crypto wallet's private key and seed phrase

Safeguard your private key and seed phrase. If someone obtains these credentials, they can enter your wallet and steal any cryptocurrencies or NFTs without leaving a trace. Use secure passwords for your cryptocurrency wallet and other NFT accounts. Use two-factor authentication whenever possible for all of your NFT accounts.

Conclusion

The NFT advancement is ongoing, yet for many individuals, the issue of NFT investments vs NFT scams is still up for debate. Many people would claim that NFTs are nothing more than extremely overpriced JPEG files, however, it is not true.

Additionally, hackers are becoming more inventive and technologically knowledgeable.

Due to the prevalence of well-known cartoon NFT profile photos and anonymous Twitter accounts, it can be difficult to distinguish between a reputable artist and a scammer in the NFT community.

Lastly, knowing what you're doing is crucial. It is wise to go into the transaction history of the NFT. Additionally, get the creator's contact information and do some research on them, only your research and precautions can prevent you from being the victim. Make sure you fully acquire ownership of the physical or digital item if you purchase an NFT.

There is a whole new world to discover if you take your safety precautions and monitor your steps.

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