Non-fungible tokens are noninterchangeable crypto assets that represent something distinctive and collectibles by use of digital ledgers (blockchain technology). The NFTs are still at a very young phase yet they are gaining popularity at a very fast rate and since they are of very high value and are attracting more and more investors, scammers are everywhere to take advantage of every opportunity they get to get hold of these NFTs.
Newcomers are more susceptible to these NFTs scams as probably they may not be knowing the way around this ecosystem so they tend to grab or go with opportunities that are cost-friendly or opportunities that are just inciting not knowing that it’s scammers who come up with these cost-friendly opportunities just to get hold of their funds or NFTs. As a newcomer in this ecosystem or even if you’re more experienced in this field, one needs to do due diligence before diving headfirst into any investment opportunity.
Some popular NFT scams
1. fake personas
Celebrities and influencers are hired to promote the in-demand NFT Communities. Therefore it gets tricky to tell which one is real. However, we should always remember C-Level employees won’t ever DM you. Unless you both have an agreement through a discord channel or a Twitter thread or you first approached them through a DM.
2. Pump-and-dump schemes.
This is where some individuals come together to form a group then buy some currencies let’s say World Causecoin tokens or NFTs and escalate the demands high artificially. They then cash out since the prices will be high and those who were not part of the scheme are left behind with assets of low value.
3. Bidding scams
When reselling your purchased NFT to the highest bidder remember to often double-check the currency used. Scammers often trick users into buying and without the user’s awareness they change the cryptocurrency that they initially had in use.
These are just but a few scams that happen during NFTs minting and we will are going to look at some of the ways to avoid these scams.
Official project names with a verified badge.
Scammers will often imitate the names of legit projects. It is very easy to jump on a fake project and invest in one that is not of any value. To identify a legit project’s name, which you are not sure of, use Rarity.tools to check out the official name.
For example, if you are checking for the pudgy penguins project on Opensea.
Some projects do not have a verified badge or some will give a false impression of a verified badge. False badges tend to be inside the icon while verified badges are located outside the icon image of the project as shown in the image below
NFT marketplaces.
Scammers are everywhere, very alert, and very ready to take advantage of users, especially the newcomers, so when it comes to NFT marketplaces the rule is never to open a promotional link from your DMs. Scammers will try to mimic the projects, users are part of and users always tend to get confused and think the mimicked projects are the original ones. Legitimate projects cannot send their users announcements for drops, giveaways, or minting through DMs. Announcements are usually made in the project’s official channels, so users should just avoid responding to DMs
Unlike other applications such as email where the Gmail institution formulate products to protect its users, NFT marketplaces rely on the user’s security. It is the user’s responsibility to ensure they are secured from scammers.
Another way to protect yourself on these marketplaces is by changing your server privacy settings by turning off “Allow direct messages from server members” unless it is a community where actual people send messages directly to you. Scammers can access what the users are interested in through the server. You can change this setting by selecting ‘privacy settings’ from your server and ‘turn off’ the “allow direct messages from server members”
The seed phrase or private key.
A private key is a combination of characters that enables users to open assets connected to public addresses and to prove ownership. This enables users to decrypt transactions. The seed phrase is a series of words that connect to the user’s private keys. Scammers’ main goal is to acquire the user’s private keys and seed phrases and once they get this, they easily log into the user’s wallet and transfer all the NFTs and funds to their wallets. This results in significant losses as once transactions are made they cannot be reversed. They are permanent, this is made possible by Blockchain technology.
It is vital to never share your seed phrase or private key when undertaking any transaction. Always keep them secretly and store them in a secure place like on paper offline or on a secure capsule or a steel plate. Never make a mistake and store them on your computers as they are easily hacked.
Remember you will never be asked for your seed phrase or private key to complete any transaction from secure sites or persons. You will only need your seed phrase to create your crypto wallet hardware backup or to recover your wallet.
The number of floor prices, items, and volumes.
From the image above notice how the scammers will just try and entice a user into buying from them by lowering their floor prices to capture the user’s interest. Prices from scammers are usually too good for major projects. Some of these projects also tend to have low volume traded, which is usually the amount that victims paid, sadly.
Projects with less than 1,000 items are evidence of scams. Scammers are looking for quick and easy money so they don’t have the whole day and resources to create 10,000 NFTs.
You can also use the ‘properties’ tab on the project. Official and legit projects have a list of properties to describe each NFTs property. Scam projects do not have these properties as scammers do not have that much time as mentioned they are in for quick and easy money. Though some may have, it’s good to be cautious always when investing in NFTs.
Copied NFTs
Scammers may also copy pieces of artwork from other people on the internet and trick users into buying. Some of the ways to avoid buying copied NFTs are;
· Check the seller’s Twitter and Instagram linked accounts and see for how long they have been using these accounts.
· Use image.google.com for reference image searching to check if the art is stolen or not.
· You can also decide to strictly adhere to cautious officially curated websites such as Foundation where one needs to be invited by successful artists to be on the platform.
It is important to be cynical and do due diligence before buying. When you are rushed and you don’t have the mental energy to pay attention since you might be tired from checking out a thousand and one NFT projects you will tend to be susceptible to scams. Be-on-the-lookout, remember scammers are everywhere coming for anyone and everyone.
