Today’s digital economy is raving about the NFT, and this craze will not settle down soon. These digital assets are an excellent way for artists, brands, and developers to showcase their talent and gain money on the blockchain.
But as investing in NFT art creates mass popularity, it’s becoming vulnerable to several scams that you can avoid with proper awareness.
8 NFT Scams to Avoid
As the crypto world is taking a power stride towards achieving popularity every day, crypto-based scams are becoming more common than usual. It’s also becoming harder to differentiate between real and fake.
Here are some tricks you can use to avoid some common NFT scams:
1. Discord DMs
- Scam: The more you expand your discord network, the more likely you will receive fake invites. Impersonating famous artists, brands, or NFT influencers is common on this network.
- How to avoid: Avoid clicking on links. No matter how genuine they look, they are most probably a way of scamming. Don’t reply to DMs from “friends” asking for money. Don’t answer new announcements from NFT projects received in DMs unless you’ve verified it in your NFT group. Double-check the user handle if you’ve received a sketchy message from someone you know.
2. Fake Twitter Personas
- Scam: As someone’s popularity grows, impersonation becomes a common occurrence. Even NFT influencers and brands go through this at some point. These fake profiles will pretend they need some advice and ask for money.
- How to avoid: Be observant. If you pay attention to minute details, you’ll be able to spot minor mistakes in someone’s Twitter ID. If you’re new to Twitter, the chances of you falling for this scam increase. But as you spend more time, you’ll spot the difference between real and fake more quickly and accurately. Fake profiles will usually have fewer followers as compared to their following list, there will be plenty of copy-pasted tweets, too many retweets with no original tweets from the account, and other such sketchy things.
3. Rug Pulls
- Scam: This scam consists of promoters who hype projects through social media, suddenly stop backing them, and take the investor’s money once the prices soar high. As a result of this, the prices of the NFT drop drastically and leads to severe loss for the investor. Another variety of the rug pull scam includes developers. Here, the developers of an NFT will remove the ability to sell it, and hence, the people who’ve purchased it cannot sell it anymore.
- How to avoid: One way to avoid this scam is by checking the authenticity of the developer of the NFT you want to purchase. Check their reviews on social media. Moreover, if they’ve a huge following with an almost negligible engagement rate, it’s one sign to stay clear. You can use burner wallets where you’ll have the ability to limit funds you want to commit to a particular crypto purchase.
4. Phishing Scams and Suspicious Pop-Ups
- Scam: Any phony advertisements or pop-ups through fake websites are a phishing scam. With this scam, they’ll ask users for private wallet keys or security seed phrases. Once they get a hold of these details, scammers will hack into your wallet and drain your stored crypto and NFT collection. Malicious pop-ups operate through Telegram, Discord, and other public channels that look like normal login pages.
- How to avoid: The first thing is to spot the skeptical thing. Whenever you see a MetaMask pop-up asking for your seed phrase, it’s likely a scam. You’ll only need your seed phrase when creating a hardware backup of your crypto wallet. Always go to the verified website for crypto transactions. Don’t log in through pop-ups or links. Moreover, never store a photo of your seed phrase in your phone. Write it down on paper and never hand it over to anyone.
5. Pump-and-Dump Schemes
- Scam: In this scam, a group buys an NFT, artificially driving its demand. It results in investors joining the auction believing this NFT is of high value. And once the bids are high, scammers sell the NFT off, leaving investors with useless assets.
- How to avoid: Check the history and wallet record of the project you’re willing to invest in. Check the creator’s contact information. If you notice transaction history centered around one day, it’s likely a pump-and-dump scheme.
6. NFT Giveaways or Airdrop Scams
- Scam: Scammers are getting smarter and starting to take advantage of the airdrop feature in the crypto world. Here, scammers pose as a legit NFT trading platform on NFT and promote NFT giveaway campaigns on social media channels. They’ll offer you free tokens if you sign up on their website and spread their message. Once you do this, they’ll ask you to link your MetaMask wallet credentials to receive the prize.
- How to avoid: Be aware of a random person airdropping you something. It’s likely to be a scam or might contain something malicious. Check the sender’s social media page to ensure the link sent matches the company’s URL.
7. Bidding Scams
- Scam: These scams happen mostly in the secondary market. Once you’ve purchased an NFT and want to resell it to the highest bidder, the bidder might switch up their cryptocurrency without informing you. So instead of receiving 5 ETH (roughly $15,000 to $20,000), you only get $5.
- How to avoid: Always check the transaction currency and don’t accept any bid lesser than you want.
8. Plagiarized NFTs or Counterfeit
- Scam: Several scammers steal an artist’s work and auction it under their fake profile. Many unsuspecting buyers fall for this trap and make an NFT purchase that has no real value.
- How to avoid: Do your research before investing! Ensure you don’t fall for this scam by researching and verifying the person you’re buying the artwork from. Look for a blue tick mark next to the artist’s name on an NFT marketplace. Scroll through their social media channels and judge whether they’re fake or real. Check whether they’ve a Discord channel and ask others in your community.
The article is not meant to scare you away from investing in NFT but rather to make you aware of the several scams in the community. Stay alert and do proper research before investing in any NFT marketplace.
Remember never to share your password or seed phrase with anyone. And always recheck the link you’re going to click!