The NFT industry has hit a $40 Billion market value and with that it has captured the attention of millions of people worldwide. As the popularity of NFTs grows, so does the number of “NFT scams” with online searches for the term hitting an all-time high in the first week of Jan 2022. Whilst Blockchain fans and enthusiasts see NFTs as a positive indicator that the use of cryptocurrencies is becoming more widespread, scammers see NFTs as a profitable opportunity due to the sheer volume of wealth involved.
What are some NFT scams and How to avoid them
Social Media Impersonation
One very popular NFTs scam is deceiving NFT owners on social media through impersonation. Scammers establish a social media profile to convince others of their legitimacy and sell them fraudulent NFT artworks. Some of these scams are very easy to spot, but others are very detailed operations and the fake artworks they advertise can appear almost identical to the legitimate version. If you suspect a social media page might belong to a scammer you should always look for the blue verification check mark next to the seller’s profile name. Even if the scammer’s profile name is identical to the legitimate one, only the real ones will have the blue verification mark.
2. Bidding Scams
Bidding scams usually occur after you’ve already purchased an NFT and wish to sell it on the secondary market. Scammers will pose as legitimate bidders but may change the cryptocurrency utilized for a sale without informing you. You may get $5 instead of 5 ETH (approx. $15’000 to $20’000) for your NFT sale. Always double check the currency (and its value) and never accept an offer that is less than what you want to sell your NFT for.
3. Discord DMs
Another very popular form of NFT fraud is Discord hacking. Hackers will steal administrator access to a Discord server and then poste false minting links in the announcements channel. The fraudulent communication will usually appear from a server administrator, making it look legitimate. The offer might sound something like this: “Due to demand, we are releasing 1’000 extra NFTs”. Because it is very easy to create demand for NFTs, scammers will frequently seek out already sold-out collections. The best way to avoid this scam is to turn off Discord DMs and report the server (or admin account) to the real administrators through a different social media platform.
Some NFT scammers create legitimacy for their fake products by pretending to have endorsements from influencers in the crypto space. Scammers will randomly airdrop tokens into an influencer’s crypto wallet. If a scammer has an operation where they sell both fake NFT collections and worthless tokens, airdropping these assets into an influencer’s wallet will make it look like they are backing the project thus making the scam seem legitimate.
Because the NFT industry is still in its early stages, new frauds will emerge all the time, mostly targeting newcomers or those who are poorly informed. If you’re just starting out in this space, don’t do it by yourself. Join online communities of fellow NFT fans to stay informed. This is the best way to avoid existing and future NFT scams.
Your NFT journey might start with self-education, but the crypto space can be very complicated so at some point you may get overwhelmed with information. That’s when turning to more seasoned collectors and NFT makers can be very helpful.
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