September 24, 2023

5 Biggest NFT Scams Exist You Won’t Believe, Would You?

As scams based on crypto become complex, it’s becoming easier to fall prey to these scams. Here’s how you can protect your NFTs.

In reality, NFTs are still new and somewhat messy. Although blockchain experts consider them an exciting sign that the mainstream adoption of crypto is in the works and NFTs provide attractive opportunities to scammers due to the sheer amount of money that is exchanged. Scams do include phishing pop-ups, false persona, FOMOs, and schemes.

We’ll review the most frequent NFT scams, the best way to avoid them, and why they’re getting more frequent.

The most common NFT scams (and ways to avoid these)

Phishing scams and pop-ups

For the first time to purchase an NFT first, you’ll have to register to a wallet that operates via the Ethereum blockchain. MetaMask MetaMask is possibly the most well-known Ethereum wallet among NFT collectors. But, MetaMask customers were recently affected by a phishing scam with fake advertisements asking for the user’s private wallet passwords or 12-word phrases for security (a major red warning). Additionally, there are fake malicious pop-ups that operate via Discord, Telegram, and other public forums that point to login pages that look normal, for example, MetaMask or other well-known websites.

How to stay clear of phishing scams

As a principle, you’ll only require the seed phrase in creating a hardware backup to your cryptocurrency wallet or when you need to recover your wallet. Please don’t enter any information into the MetaMask pop-up or similar pop-up while you’re doing it. Always visit the verified website for cryptocurrency transactions, and never use pop-ups, links, or even your email address to input your details. Note down your seed phrase on paper, and do not divulge it to anyone. Don’t even save a photograph of it on your smartphone.

False personas and catfishing

Since NFT sales are conducted virtually, and the entire marketing process is carried out via platforms like Facebook, it’s not difficult to be snagged. The most popular NFT communities typically use celebrities and influencers to endorse them, making it hard to discern whether they are genuine.

How can you avoid false persona NFT scams?

Do not respond if you receive an email claiming to belong to a creator, celebrity, or influencer, do not respond. It’s a common courtesy within the NFT world that staff at the C level won’t ever contact you unless you make them aware of the message or reach an agreement in an open Twitter message or Discord channel. It’s like when you were younger, and your parents instructed you not to provide details to a telemarketer who visited your home. Similar principles apply to the NFT world. If you get a message from someone who DMs, you do not click on the links or reveal any secret information.

Pump-and-dump schemes

Pump-and-dump scams are now more and more predictable in the cryptocurrency as well as NFT worlds. The term refers to the time when groups of people pick an assortment of NFTs or currency and then boosts demand. When they’re successful, the scammers take their money out when prices are high and abandon those who were not in the game with no assets.

How can you avoid scheme NFT scams?

Review the wallet and history of the idea you’d like to learn more about. This is where the transparency of blockchain can be extremely beneficial. In OpenSea and the other NFT marketplace, you can view the number of transactions and buyers of each NFT collection. Through EtherScan, you can view all the incoming or outgoing transactions of Ethereum. Ethereum blockchain.

Follow these projects as well on Twitter as well as join the Discord channel. To ensure a project has adequate liquidity and a long-lasting community or artistic value, it should have a significant amount of invested collectors and investors and an active community in which people can interact, communicate and give details.

Bidding frauds

Bidding scams are often found in the secondary market once you’ve bought your NFT and are looking to sell it to the most expensive bidder. When you put up your NFT to sell, the bidders could alter the currency they use without notifying you.

How can you avoid bidding NFT scams?

Check the currency you use and do not accept a lower price than you desire.

Counterfeit or plagiarized NFTs

It’s important to note that minting an art as an NFT isn’t the same as being intellectual property (IP) ownership over it. With the help of user-friendly software, anyone can convert any image or photograph into an NFT regardless of whether or not they have rights to the IP. Fraudsters and scammers can easily take an artist’s work and create an unauthentic OpenSea account to list counterfeit artwork for sale. This will render your NFT worthless after the community discovers this scammer’s activities – as there’s nothing to claim the money.

How to stay clear of such scam

Before purchasing an NFT on any marketplace:

  1. Do your homework to ensure that the artwork you buy comes from an authentic account.
  2. Find the blue checkmark on the artist’s picture at OpenSea and other NFT marketplaces.
  3. Request directly from them to confirm that they own the piece you’d like to purchase and if you’ve got the correct profile.
  4. Check whether they or the NFT project has an official Discord channel, and then ask other members on the channel.

Beware of counterfeit blue checks. True verified accounts show an image of a blue check along the outside of your profile picture, not inside.

Untrustworthy storage sites

This is a different ethical gray area but not as much of a fraud. NFTs may disappear after they are purchased.

A smart contract will be what is created by the blockchain. However, the file you upload (aka the content and metadata) is a separate file. This may sound abstract, but remember that NFTs are primarily about the ownership of assets; however, the asset could mean anything.

If you decide to store the house deed, artwork, or any other digital information included in the smart contract on a central platform, be sure you are using a trusted platform. Don’t purchase an NFT that connects to a URL that contains an image. 

Bottom line

If you decide to purchase an NFT, ensure that you also get the digital or tangible assets (in JPEG MP3 and PDF files) in full.

The best way to stay clear of NFT scams

New scams are constantly sweeping the NFT scene, and that’s why you shouldn’t be on your own. The best method to stay clear of the latest and upcoming NFT frauds is to remain up-to-date, and this is where meeting other NFT users is essential.

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