7 NFT scams to avoid in 7 easy steps

by James · May 9, 2023

Table of Contents

As NFT scams are increasing daily, we have compiled some simple steps to avoid the different types of NFT scams.

Have you ever wanted to turn your paintings into a priceless piece of art? Or sell your dance moves for a million worth? Well, wake up and smell blockchain technologymy friend, who NFT is here to make your wildest dreams come true! With NFTs, you can own a unique digital asset that can be traded in exchange for money, cryptocurrencies or other NFTs. Although NFTs have been present in obscure parts of the internet since 2014, they have gained massive popularity in the last two years, turning them into multi-billion dollar businesses. But as the market has grown, it has also resulted in increase in NFT fraud. In this article we will discuss the different types NFT fraud and how avoid NFT scams. But first let’s understand what NFT is.

What is NFT?

NFTs or Non-Fungible Tokens are unique digital assets that belong solely to their owner, existing on a blockchain. The word “fungible” basically means “replaceable.” For example, since you can exchange one bitcoin for another while maintaining the same value, bitcoins are fungible. Due to its nature and inability to be directly replaced by another NFT, an NFT is non-fungible. Digital media such as photos, movies, audio files and more can all be used as NFTs.

Depending on the value that the market and the owners have assigned to NFTs, they can be traded or exchanged for cash, cryptocurrencies or other NFTs. For example, you can use an exchange to develop a symbol for an image. NFT can fetch millions for some buyers while others are considered pointless.

NFTs have become a booming business in the last two years. Billionaires, celebrities and influencers have started investing in NFT, making it this year’s trendsetter. As a result, it has also attracted various NFT scams. So if you want to join this crazy trend, here are the different types of NFT scams and how to avoid them.

7 Types of NFT Scams and How to Avoid Them:

Phishing can take the form of fake emails, advertisements and pop-ups that link to malicious websites where NFTs and cryptocurrency can be exploited. Direct messages on social sites such as Discord should be avoided. For example, many scammers will tell you that you have won free NFTs. If they manage to get hold of your private information, they can steal all the cryptocurrency in your digital wallet.

How to avoid phishing scams?

Usually, you need your seed phrase to make a physical backup of your crypto wallet or to restore it. Never enter information in a pop-up window.

Never use links, pop-ups or emails to enter your information while trading cryptocurrencies; always go straight to the verified site.

Sometimes scammers can use social media to advertise NFT giveaways, luring users to share their NFT or register on their website in exchange for a free NFT. When it’s time to claim the gift, the fraudulent parties will ask for the victim’s cryptocurrency wallet and hack their account to take NFTs and cryptocurrency.

How to Avoid Giveaway Scams?

You should always be wary of such giveaways in social media. If someone asks for your cryptocurrency wallet, never share any details related to it.

Fake personas/catfishing scams

It is easy to fall victim to phishing because NFT sales take place digitally and all marketing takes place via social media. To get customers to buy fake NFTs, fraudsters would create fake social media accounts and related spam websites. These profiles mostly copy actual artists. The scammer may send messages asking for account details in an attempt to help the victim before stealing their login information.

How to Avoid Catfishing Scams?

Never respond to a direct message from someone identifying themselves as a founder, celebrity, or influencer. It is highly unlikely that they will send you a DM. It’s like your parents saying you should never accept gifts from strangers when you were young.

The term describes the process where a group of individuals buys many NFTs or currency and artificially increases the demand. When the scam is effective, the perpetrators take advantage of high prices to extract money, leaving others who were not involved with worthless assets.

How to avoid pump and dump schemes?

Research the background and financials of any project you are considering. The transparency of blockchain technology is very helpful in this situation. View the volume of transactions and buyers for the NFT collection on OpenSea or another NFT marketplace.

When you buy your NFT and want to resell it to the highest bidder on the secondary market, this is when most bid scams take place. Once your NFT is up for sale, potential buyers can change their chosen cryptocurrency without informing you. You can earn $5 for your preferred NFT instead of 5 ETH (roughly $15,000-$20,000).

How to avoid bid fraud?

Always confirm the currency used twice and never accept a bid that is less than what you want.

Criminals forge designs and offer fake NFTs for sale in respected online stores. By the time victims learn the truth after purchasing a fake or stolen NFT, it is often too late.

How to avoid fake NFT scams?

Do your research and make sure the artwork you’re buying is from a verified account before buying an NFT from any marketplace.

Unreliable storage locations:

This is more of a morally ambiguous situation than a scam. NFTs may disappear after they are purchased. This is so because the NFT, the contract that resides on the blockchain, is different from the original artwork.