How to Protect Yourself from NFT Scams
In recent years, there has been a fast expansion of the cryptocurrency ecosystem, with "non-fungible tokens" (NFTs) rising from a niche technology to a bustling market for digital collectibles. This development has enabled and democratized the creative economy. NTFs illustrate not just a compelling mainstream use-case for blockchain technology, such as NBA Top Shot and Bored Apes, but they also symbolize a new age for artists in the digital arena, one that is spreading through art, music, and sports. Examples of NTFs include Bored Apes and NBA Top Shot.
But the development of NFTs brings the risk of fraud, scams, and theft, in addition to the potentially rich opportunities presented by digital collectibles.
Here are some types of NFT scams:
Unregulated spaces include cryptocurrencies and NFTs. Criminals can use gaps to commit fraud. That's why the news has covered NFT Ponzi schemes, OpenSea frauds, and NFT art financing scams. Some well-known NFT scams are:
1. Impersonation
There are third-party markets like OpenSea that support NFT transactions and guarantee the security that underpins every sale. To trick users, however, fraudsters might create fake markets with identical URLs. The visible component of a non-fungible token consists of an easily-copied picture and some plaintext information, thus these websites can resemble authentic markets in appearance.
2. Phishing scams
Before purchasing an NFT, you must create a crypto wallet. Typically, NFT phishing schemes target clients with bogus advertisements — such as on Discord, Telegram, and other public forums – that request their private wallet keys and 12-word security phrase. Or, criminals may imitate MetaMask and send you bogus alert emails claiming that your wallet will be suspended due to security problems and requesting that you click a link to authenticate your account. The goal of an NFT phishing scam is to get your personal information and deplete your digital wallet.
3. Bidding scams
When investors wish to resell their bought NFTs on a secondary market, bidding schemes occur. After you post your NFT sales, bidders may replace your preferred currency with lower-valued cryptocurrencies without your knowledge. If the seller does not double-check the currency before agreeing to the deal, they may incur losses.
4. Rug Pulls
A rug pull is a fraud in which the proponents of a scheme use social media to artificially inflate the price. Once they have obtained investors' funds, they cease backing the asset, causing its value to plummet and investors to experience losses. A variant on this subject occurs when the authors of an NFT remove the option to sell the token by implementing programming that forbids this, leaving purchasers with an asset that cannot be sold.
5. Customer support scams
Similar to phishing, hackers masquerade as technical or customer support personnel for blockchain markets and contact unsuspecting targets over Telegram or Discord. Under the pretense of seeking to fix concerns, the fraudsters email links to bogus but official-looking websites in an attempt to get access to personal data and cryptocurrency wallets. Alternatively, they may request that you share your screen to remedy the issue; in truth, they want to view and screenshot the passwords for your bitcoin wallet.
6. NFT giveaway or NFT airdrop scams
On social media, fraudsters might act as legitimate NFT trading platforms to advertise NFT freebies. Typically, they provide a free NFT if you spread their message and register on their website. After registering, you will be required to link your wallet credentials to collect your 'reward'. Once they have your credentials, they can steal from your account.
How to Avoid NFT scams?
Do your Research
Before consenting to a deal, examine its particulars. Is the online market you're utilizing reliable and well-known? Can the transaction history of a buyer or seller be viewed? Examine the ratings and the amount of participation of the creators to see if there have been prior complaints about their transactions. Verify the legitimacy of the project's developers before investing.
Don’t open files from senders you don’t know well
Viruses designed by hackers specifically target bitcoin wallets. Links in unsolicited emails may also lead to bogus exchange sites. Never open links or attachments from untrustworthy sources.
Never share the private key or seed phrase to your crypto wallet with anyone
Safeguard your private key and seed phrase. If someone knows these credentials, they may enter your wallet and remove any NFTs or cryptocurrencies without leaving a trace. Utilize robust passcodes for your bitcoin wallet and other NFT accounts. Use two-factor authentication wherever possible for all your NFT accounts.
Verify the creator behind the project
Obtain and verify contact information for the NFT author you intend to purchase from before transmitting funds. Verify if the developers of the initiative are forthcoming and truthful about their identities. This is a red signal if you cannot obtain clear information on the entities behind a project.
Avoid browsing unreliable websites
It's simple to misspell words, but occasionally entering a URL incorrectly by one or two letters will lead you to the wrong website. In the field of NFT, fraudulent websites may be exceedingly hazardous. Always double-check the URL to confirm that you are viewing the proper website, and avoid doing anything that makes you uncomfortable. Keep in mind that if anything appears to be too good to be true, it generally is.
Examine the verification markings
On OpenSea and other NFT marketplaces, the majority of authentic NFT vendors will have a blue checkmark next to their usernames, and the collection's attributes will be mentioned explicitly. Verify that the artist's account has been validated and that they are the actual artist. Find the artist on social media platforms or their website. You may choose to ask them personally if the piece of art you wish to purchase is theirs and if you have the proper user profile.
Use official websites
Never use links or pop-ups to enter your wallet's essential information; instead, navigate straight to websites that have been validated. Resist the temptation of so-called deals, which may lead you to dubious blockchain networks.
To sum it up:
Now you have a general understanding of several frequent NFT scams and how to avoid them. When entering the NFT market for the first time, it is essential to exercise prudence. Never reveal your seed phrases or private keys, and stay away from unidentified NFT markets and questionable websites.
Numerous fundamental cybersecurity measures apply to the NFT industry. Maintain vigilance and be on the lookout for cyber attacks. Your NFTs and other digital assets should be safe so long as you exercise prudence and defend yourself with the most advanced cybersecurity tools.
SO, WHAT'S NEXT?
Hi, I'm Pao aka IJWBAA. I'm a digital artist, painter, and a book author from the Philippines. If you enjoyed reading this you might like to read also:
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