How to avoid being scammed on NFT in 2022

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NFTs radically changed the industry and the art world beyond. Despite its growth, discerning reliable NFT creators and NFT scams are challenging. So, how to avoid being scammed on NFT? To avoid NFT scams, this article will provide you with guidelines.

The growing popularity of NFTs resulted in famous NFT project groups being vulnerable to a phishing scams. This ignited an action to talk about ways to protect our NFT assets. Let’s get to know how to detect red flags and keep our NFTs secured.

Non-Fungible Token (NFT) Explained

NFT stands for Non-fungible Token. fungible simply means interchangeable. It is a wholly unique (digital) commodity. NFTs are cryptographic assets found on the “blockchain”. This blockchain has special identification (codes) and metadata.

In contrast to Cryptocurrencies, NFTs can’t be traded nor exchanged at equality. This varies from (fungible) tokens like cryptocurrencies that are uniform to each other. So, they can use as a way for profitable transactions.

Each NFT is designed uniquely and has the capability for numerous use cases. Examples are the perfect vehicle to digitally act as physical assets like artwork and real estate. NFTs are based on blockchains. so, they can work to get rid of intermediaries. NFTs can link artists with viewers or for self-management.

NFT’s Effect In Our World

Today, NFT popularity rose. Blockchain evangelists said that NFT and cryptocurrencies will revolutionize the internet’s construction.

NFTs will also change how we transfer money and how we pay. It can also change how we interact in the multiverse.

Some people say that NFTs will probably change art, music, fashion, and more. However, scam comes into the picture in every commerce.

NFT Scam Expounded

NFT scams when we succeed in exchanging digital art. This happens by making us believe we successfully bought or sold a legitimate NFT. It can also happen by stealing the cryptocurrency wallet login credentials.

Cybercriminals and online hackers are involved in the huge monetary value joint to digital assets. To steal NFTs, they adapt their methods of scamming. This is to contain phishing and social engineering. This can also use for entering into crypto users’ accounts.

Origin of NFT Scam Traced

Some NFT scammers are also NFT creators themselves. We call them rug pull scams. They have become widespread in the crypto world.

The first technique seen in the market is when a newly introduced product was publicized. This product was publicized by reliable figures and sold costly. The creator will abandon it with instant gain. He will leave the buyers keeping an empty investment.

Common NFT Scams

Currently, NFT is growing but it is also vulnerable to scammers. Scammers scam easily due to purely money transaction operations.

Let’s take a look at the most common NFT scams.

  1. Fake NFT Websites – Cybercriminals can copy NFT marketplaces and NFT websites. This is to prove to users that they are reliable websites. Also, to make them compromise their account information.
    NFT scams result in people spending a lot on fake digital artwork. Also, it becomes worthless on the NFT market. Before we log in, let’s confirm the NFT marketplace URL first.
  2. Phishing scam – This involves fooling users to give their personal information willingly. When purchasing our first NFT, we need to sign up for a crypto wallet. This transacts on a blockchain such as Ethereum.
    Phoney ads are included in a phishing scam. It asks for the user’s twelve-word security phrase.
  3. Fake NFT giveaways – Fake NFT trading platform makes NFT holders do an NFT giveaway campaign. In return, they’ll assure a free NFT for promoting and encouraging to sign up.
    When trying to get the NFT prize, scammers will have our information. Then, they will steal our NFTs upon entering our accounts.
  4. Social media impersonation – this is one of the trending NFT scams recently. Scammers will make a profile similar to the real NFT owner. This will convince people of their reliability. After that, they will sell counterfeit NFT collectibles.
  5. Customer Support Impersonation – Hackers will make a fake customer support page. They will use NFT owners’ questions being asked on Twitter, Telegram, or Discord.
    Fake servers will be used to connect and ask for personal details to resolve the said issue. Through this, they will be having an access to our crypto wallet.

Other NFT scams

It is essential to know more about NFT scams. This way, we’ll know how to avoid being scammed.

  1. Fake NFT projects – These are known as rug pull scams. NFT scammers will make a fake but looks legitimate NFT. They will attract people to buy but in the end, they cannot resell it.
  2. Counterfeit or plagiarized NFTs – NFT scammers make use of minting. They entice people, making them believe that they are purchasing a unique NFT. They plagiarize some NFT owners’ work.  Then, they will make an account to auction it to the highest bidder. They do this on a trading platform.
  3. Bidding scams – This happens when an NFT was resold. When interested buyers put their costly bid, normally, they shift to a lower-value cryptocurrency.
    Bidding scams occur basically with NFT keepers searching to auction their NFT. Usually, the secondary market offers this.
  4. Investor Scams – this occurs when capital is transacted. The case can be worse when trading with cryptocurrency.
    NFT scammers will create projects. It will be like a worthy investment. At the need, it will entirely vanish. This will be gone with the funds they got from investors when they paid.  
  5. Pump and dump schemes – Experienced NFT scammers make use of “pump and dump” schemes to increase the NFT price. The goal is to make a certain NFT popular for a moment. This is to make people feel fear of missing out. They’ll make several bids only for a moment.
    The scammer cashes out if it gets transactions and the selling price increases more than at first. Also, he will sell it to the highest bidder.

News about NFT Scams

There’s a decreased trend with innovations connected to web3. It is because of the rampant fraud.

One of many cases is when hackers robbed NFTs with $2,200,000 million in January. This was from Todd Kramer, an art collector in New York. After a month at OpenSea, about 1.7 million value NFTs were taken. It was alleged a phishing scam.

Metamask (famous cryptocurrency wallet) users regularly testify about illegal transactions. Check Point Research said that during the last fall, users of Metamask lost $500k in a directed phishing attack.

How to Protect Yourself From NFT Scams

NFT has been growing and becoming famous. Along with these are the scam issues. So, it is important to know how to avoid scams.

  • Never click on suspicious links or attachments
    Do not click on the attachment if we are doubtful where it came from. Hackers usually use phishing emails. this is to make users settle their wallet credentials in Metamask.
  • Create strong passwords
    We should not only create a unique strong password for our cryptocurrency wallet. Our other NFT accounts also must have a unique strong password. This will avoid scammers from stealing our digital assets.
  • Enable two-factor authentication
    Two-factor authentication must be switched-on on all our NFT accounts. This will secure us from scammers accessing our valuables with their digital hands. Surely, using fingerprint and face recognition will make identity replication impossible.
  • Always crosscheck the NFTs price
    The price needs to be cross-checked first. We do this on a legitimate NFT trading platform. Examples of official trading platforms are Axie Marketplace, Mintable, and OpenSea. Most probably it is a scam if the price is lower than what these sites offer.
  • Verify NFT seller accounts
    Check the seller’s social media account or Discord to ensure their identity. See if there’s a blue checkmark on their account verifying their legitimacy.
  • Never share your seed/recovery phrase
    Just like how we don’t share our passwords, we must keep our seed to ourselves. This will make our NFT and Cryptocurrencies in our wallet safe.

Verifying More and Trusting Less

Verifying more in every area of getting into the NFT space is important. Let me give you three tips.

First, we should never give our secret phrase. Giving our secret phrase is like giving our social security number. Our secret phrase grips all the ability over our digital assets and crypto wallet.

If somebody got our phrase, they could move all our assets to a different wallet address. This will leave us with an empty wallet.

Second, let’s avoid visiting suspicious sites. misspelling things may lead us to harmful sites since scammers create replicated legit sites. So, it is important to double-check the NFT company’s URL. Make sure it is correct and don’t put your secret phrase.

Third and lastly, let’s do our research. Before investing, it is important to make some research. this will ensure that all our assets are safe. Take time to verify if the creator is honest and open about their identity.

It is challenging to discern what is true and fake in NFT space. However, some helpful guides and testimonies will help us.

Being Cautious With the Red Flags

Now we already know how these NFT scams work. This will help us buy and sell NFT safely.

There are a lot of red flags and NFT scammers everywhere. One crypto expert said that it is safe to assume that everyone is a scammer. Not until one has proven otherwise.

When there are red flags, one must be intuitive enough to be cautious. For example, when there are suspicious links, one must be aware of the possibility of an NFT scam.

So what is the bottom line here? When buying NFT, make sure it is in the form of JPEG, PDF file, or mp3. These are tangible assets that we can possess.

Interacting in the NFT Space With Care

While NFT space has a lot of benefits, there are also cons. Discord hacks have become prominent these days. they get administrator-level entry in the discord server. After that, a fake minting link will be posted.

Constantinou said that it will appear like it’s from a project organization. They will offer a really good deal. Hackers will look for sold-out collections to attract demand. When a collection was sold, some will never give a surprising mint of more NFTs.

Scammers usually DM us first when we ask for help. The project team, the legit team, will never DM us first.

Final Thoughts

NFT scams move in our reality. Good thing we already know the thing to look out for. This will help us avoid scams in this new revenue stream. It is best to be cautious and know how scammers work maliciously.

Also, check the transaction history to see if it’s legit. make sure you know the sender of a file and avoid clicking random links. If the offer is too good to be true, it is a scam.

However, if we are comfortable doing the risk, we can confidently and safely trade. Hopefully, these tips will help us how to avoid being scammed on NFT.

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