COMMON NFT SCAM AND HOW TO AVOID THEM
Non-fungible tokens, or NFTs, have sold for millions of dollars in recent months. Be it Jack Dorsey's $2.3 million tweet or a dog's photo that sold for more than $4.3 million. Whether you agree with the concept of NFTs or not, digital collectibles such as art, GIFs, videos, music, and so on cannot be ignored. However, NFTs are not immune to scams. Every day, it appears, an NFT collector is either defrauded or the victim of theft.
Staying alert is not enough to protect oneself from internet scams. It is critical to comprehend the dynamics of these con artists and how they adapt to each new environment as it emerges.In the following few paragraphs, we will reveal some popular NFT scam tricks to watch out for and the corresponding preventive strategies.
Phishing attacks
Newbies must create a wallet compatible with the Ethereum blockchain that includes Metamask. Recently, Metamask has become the primary target of phishing attacks. Scammers use malicious pop-ups to get users' private wallet keys or passphrases. Also, public forums susceptible to NFT theft include Telegram and Discord.
Preventive strategy
Do not give out private information to suspicious pop-ups. A passphrase is necessary during the recovery of a wallet or when creating a hardware backup. Always perform transactions through official websites. Don't allow third-party access to your private keys or passphrase.
Fake NFT communities
NFT trade is a digital activity which involves social media promotion. It is easy for collectors to fall prey to scammers since most creators pay social media influencers to promote their NFT community. This makes it hard to distinguish authentic projects from scam projects.
Preventive strategy
Don't respond to a direct message from someone with a suspicious profile. According to the business ethics in the crypto world, senior-level employees will never reach out first unless there has been a prior agreement on a public forum like Twitter ,Telegram or Discord.
Pump and dump systems
Pump and dump are becoming the order of the day. Some investors buy collections of NFTs to boost their demand. Once they achieve this, they pull out their funds while victims are trapped with valueless assets. Also, traders should be wary of projects with low liquidity. It is advisable to invest in projects with more buyers and high liquidity.
Preventive strategy
Always check the transaction records of the projects you intend to invest your money in. Thanks to blockchain transparency, Etherscan will make it possible to verify all transactions performed on the Ethereum blockchain. Also, follow the project on social platforms to get first-hand information.
Suspicious offer
NFT auction requires selling to the highest bidder. After listing an NFT for sale, prospective buyers might switch the bid price without the seller's knowledge.
Preventive strategy
Always cross-check the bid price and reject an offer lower than the stated price.
Copycat and Phony collections
Scammers can steal other artists' artwork, make some slight modifications, and list it on any marketplace for sale. That will render the original digital art worthless and cause a great loss for the original artist.
Preventive strategy
Always conduct thorough research and purchase NFTs from only official accounts. Confirm the verified symbol on the artist's profile. Alternatively, you can search for the artist on social media and enquire if they own the artwork. Besides, you can confirm on the project's public forums like their Discord server. Furthermore, avoid fake verified symbols. Real accounts display a blue tick on the border of the profile. Anything contrary to that is phony.
To wrap up, always acquire NFTs in JPEG, MP3, or PDF files immediately after payment. Indulge in self-education and stay up-to-date. Also, make friends with fellow NFT enthusiasts and experienced collectors.
Due to the anonymity afforded by blockchain, it is difficult to track down scammers, and reputable NFT stores can only cancel sales that have been reported. These flaws are fundamentally woven into the fabric of decentralization.
Until then, investors and artists have to constantly be on the watch to avoid being victims of these scams.
