We all know that you can bag a lot of money through NFTs. And, when there’s a lot of money, there’s a lot of scams. Theft and fraudulent activities are so common in the digital world. In fact, since July 2021, more than $100 worth of NFT got stolen. So, knowing how to avoid NFT scams is a must.
Before knowing how to avoid them, you should know what the signs indicating an NFT scam are. After all, you can’t run away from a threat if you don’t know what the threat is. So, make sure you know the top signs you should look out for in NFT scams.
But wait, what do NFT scams look like? Good question.
Most Common NFT Scams
NFT scams are literally everywhere and could affect anyone. No one’s safe here, besides you of course because I’ll give you a safety blanket. But first, let me show you some of the most common NFT scams. Buckle up for the ride.
1. Rug pull
A rug pull is a type of NFT scam when scammers attract victims by advertising a phony NFT project or collection and promising them high returns. They promote this item on social media and then disappear once you buy it, never to be seen again.
The result is a terrible price decline. The fraudsters also take away the NFT’s resale value. There are two distinct kinds of rug pulls, hard and soft.
Hard pull scams occur when developers have always intended to abandon a project. Liquidity pulls, in which token producers drain the liquidity pool to zero and destroy the NFT’s value, are a typical type of hard rug pull.
In a soft pull scenario, the token’s developers liquidate a significant number of tokens or sell them in smaller chunks. This causes the token’s value to plummet, leaving investors with worthless coins.
In contrast to a hard pull, a soft pull may occur over a longer period, making it more difficult to spot. This NFT scam is also even harder to prove. It’s a free market, so it’s not against the law for developers to sell their tokens. Knowing how to avoid this NFT scam, among others, is important.
2. Phishing
Although phishing has been around for a while, it’s still a common NFT scam to fall for. They typically contain fraudulent adverts, emails, and pop-ups leading users to a fake website. The fake website then seeks users’ secret wallet keys to gain access to their virtual wallets. If fraudsters get access to this information, they can steal all NFTs and crypto stored in the digital wallet.
Cons use phishing to try to gain personal information from you. These include your name, address, phone number, email address, and sometimes even your Social Security number.
The fraudster can use this data to commit identity theft or start fraudulent accounts using your name.
For example, a scammer pretending to be from a wallet service could contact you. They’ll typically ask for confirmation of your wallet’s private keys or password. Your keys and passphrases safeguard your crypto wallets. If someone obtains this personal data, they can read your wallet and take your digital assets.
3. Airdrop
An airdrop is a promotional method in which a company distributes free cryptocurrency or NFTs to customers, often to promote the launch of a new product or service. Remembering that airdrops are always free is the key to avoid this NFT scam. Someone asking for money before sending you an airdrop is trying to pull a fast one.
Airdrops are a form of free cryptocurrency distribution. They are sometimes given out in exchange for holding a certain coin, completing a job or scavenger hunt, or scanning a QR code. They should never be tied to any sort of payment or deposit.
A false Rarible site recently promoted an airdrop. They promised customers that if they sent anything from 500 to 25,000 RARI (Rarible’s native currency) to a certain location, they would get five times as much RARI in return. However, the participants were duped into sending money to the fraudster without ever seeing any return on their investment.
For an airdrop not to be an NFT scam, it should only demand your public key for your wallet to receive cryptocurrencies or an NFT. If the airdrop asks for your private key, run the other way.
4. Catfishing
While the phrase “catfishing” is most commonly associated with online dating, it isn’t confined to those who use fake profiles to find romantic partners. To steal cryptocurrency, NFT scam artists will frequently create bogus social media identities and then contact unsuspecting users in an attempt to get access to their private data.
They trick them into clicking on a dangerous link or convince them to provide their private wallet passphrase. Allegedly, catfishers are tricking victims into creating accounts on bogus cryptocurrency wallet websites by giving them links to those sites. At this point, the con artist has your money.
Con artists can employ fictitious courtship rituals to steal personal or financial information. It’s important to look out for telltale indicators of validity and not part with your money or wallet information to unverified entities.
How to Avoid NFT Scams
The main goal of most NFT scams is to either obtain private keys to a cryptocurrency wallet or to trick victims into buying a phony NFT. I’ll walk you through the steps to help you avoid falling for such scams.
Precautions to take to avoid NFT scams
- Be suspicious of attempts to obtain your wallet information.
Avoid divulging your passcodes to ANYONE seeking to know the details of your crypto wallet. You need to keep these keys, along with any recovery passcodes a secret as scammers use all kinds of tricks to try to get them. Do not share any of these codes with anybody. - Develop secure passcodes to avoid NFT scams.
Protect your NFT accounts and bitcoin wallets with powerful passwords. NFTs can also be protected by using two-factor authentication. Biometric methods like fingerprinting and facial recognition make identity theft more challenging. - Make use of dependable NFT trading platforms.
Whenever an offer seems too good to be true, you should probably avoid taking it. Many recently established markets provide only basic safety measures for their customers. OpenSea, Rarible, Mintable, Foundation, MakersPlace, and Axie Marketplace are just a few credible options for trading digital currency. - Use secure tools to protect your devices.
Make sure you have an anti-virus and anti-malware set on your devices. This can help if you click on any suspicious or scam links. You can also use a virtual private network, VPN, for increased security. - Consider Using Cold Storage to avoid NFT scams
To protect your newly acquired NFT from hackers, store it on cold storage or hardware rather than leave it in your exchange account. Because all the important data is stored on the device itself, it is more difficult for cybercriminals to access it. This makes cold storage a more secure alternative.
NFT Scams: Conclusion
NFT scams are populating the NFT marketplace. You can find them on Twitter, OpenSea, or even in your email inbox. Rest assured, you now know what to look out for and how to avoid NFT scams. However, if you’re still not convinced that NFT scams are real, check the biggest and most expensive NFT rug pull in non-fungible history!