Common NFT Scams and Safety Precautions

NFTs have surged in popularity, causing disruptions not only in the art world but also in various industries. While crypto enthusiasts view this as a positive sign of growing crypto adoption, distinguishing between reliable creators and bad actors within this new domain can be challenging.

The surging interest in NFTs among the general public has exposed numerous communities associated with popular NFT projects to phishing attacks. Consequently, conversations about safeguarding NFT assets have gained traction. Given the nascent state of the NFT landscape, staying informed about prevalent scam strategies and the latest in NFT safety measures is crucial.

Read on to discover how you can identify warning signs and ensure the security of your NFT holdings.

NFTs Garner Interest, Attract Scammers Too

 With the versatile applications of NFTs expanding significantly, these digital assets point toward a novel era in the digital realm. The allure of NFT potential has captured the attention of tech giants and celebrities alike.

However, due to the NFT sector's comparably early stage, the underlying framework remains susceptible to malicious actors seeking to capitalize on novel trends and emerging technologies.

Yet, what underpins NFT value? Although investing substantial sums in a JPEG image might seem excessive, the value of NFTs lies in their uniqueness and utility. NFTs fundamentally establish an indelible digital record of exclusive ownership on the blockchain, thereby guaranteeing authenticity.

For some, owning a digitally tokenized artwork can grant access to exclusive online communities, chat rooms, and interactive experiences.

Nonetheless, several prevalent scams warrant awareness:

The 7 Most Common NFT Scams

1. Deceptive Marketplaces 

When contemplating your inaugural NFT investment, the initial step involves locating a reputable platform for buying and selling NFTs. While a quick online search yields numerous results, it's regrettable that many fraudulent NFT marketplaces exist among them. These counterfeit platforms lack legitimate NFTs. Purchasing from these sites exposes your transaction details, including credentials. Moreover, these sites might request your private keys or 12-word security seed phrases, using this information to drain your digital wallet.

To evade these scams, consistently opt for authentic NFT platforms such as the Endemic NFT marketplace. Never input your details into links, pop-ups, or emails. 

As a general guideline, only use your seed phrase for generating a hardware backup of your crypto wallet or when recovering it.

2. Fictitious Offers

 NFT scammers often masquerade as genuine NFT trading platforms, dispatching fraudulent emails asserting that someone has tendered an offer for your NFT. These phishing emails intend to lead you to a counterfeit NFT marketplace via an embedded link.

Just like other phishing schemes, the button directs you to a counterfeit page, prompting you to link your digital wallet and furnish your seed phrase, allowing malevolent actors to compromise your wallet.

To elude such NFT scams, always validate the sender address of emails originating from NFT trading platforms.

3. False Technical Support 

Another prevalent scam involves bogus customer service representatives or technical support messages. Picture a scenario where you encounter technical difficulties on a well-known NFT marketplace and seek aid on a public platform like Discord. Someone purporting to represent the platform volunteers assistance.

The fraudulent support agent might urge you to share your screen to diagnose the issue, unwittingly exposing your cryptocurrency wallet credentials. Subsequently, they capture screenshots of your seed phrase or linked QR code. The scammer might also redirect you to a nearly identical imitation of the authentic website. They then persuade you to input your personal details, including your seed phrase, compromising your digital wallet security.

To evade such scams and safeguard your NFTs, solely seek assistance from the official NFT marketplace. Always double-check the site's domain. Some scammers may dispatch counterfeit security alerts regarding your account or NFT collection, yet their tactics remain comparable. Refrain from clicking on anything until you confirm its legitimacy.

4. Fraudulent Giveaways

 Posing as staff from popular NFT trading platforms, scammers might contact you through social media, luring you to join their NFT giveaway campaign. They pledge a free NFT upon fulfilling the condition of sharing the giveaway and registering on their website—a phishing site.

After successfully persuading you to connect your digital wallet credentials for receiving your reward, they monitor your inputs, gain entry to your account, and potentially pilfer your collection of NFTs.

To avert falling victim to this type of NFT scam, scrutinize the individual's social media accounts and verify that the link received aligns with the company's authentic domain name.

5. Rug Pull Scams 

Rug pull scams transpire when individuals or groups introduce an initial set of NFTs to inaugurate a more expansive project incorporating elements like games, merchandise, or events. A rug pull occurs when these entities abscond with the amassed funds before implementing the promised features. This can transpire rapidly or manifest as gradual abandonment, featuring scant updates and limited progress.

Thwarting rug pull scams entails performing your research (DYOR). Probe into the project team's background and assess their long-term strategic plans.

Monitoring the project via Twitter, Discord, or other public forums is vital. A robust and engaged investor community is essential for enduring liquidity or artistic value within an NFT project.

To gain further insights into evaluating NFT projects, consult our article on 6 Key Indicators to Evaluate NFT Projects.

6. Counterfeit NFTs

 Transforming a digital file into an NFT doesn't confer new intellectual property status or ownership. Instead, this process merely adapts a digital file for blockchain storage.

Scammers can easily appropriate a digital creator's work, create an account on an NFT marketplace, and list the counterfeit piece for auction. If you procure such a counterfeit NFT, its value disintegrates upon the community's realization of its inauthenticity, leaving you without recourse to reclaim your funds.

To evade this ruse, verify the seller's Discord or social media profile for verification indicators that enhance credibility.

Furthermore, rather than directly seeking collections on NFT marketplaces, access the official link via the creator's social media account. Bookmark the page to avoid phishing attempts. Neglecting due diligence exposes you to a multitude of potential pitfalls, as evident from various cautionary tales.

7. Pump and Dump Schemes 

Another concern involves pump and dump schemes. This term refers to instances where individuals or groups aggressively amass numerous NFTs to artificially inflate demand.

They execute this tactic swiftly to simulate heightened NFT popularity. Once the NFT garners attention, they exit when the selling price satisfies their expectations, leaving subsequent bidders with worthless assets.

Consequently, reviewing the transaction history of the targeted NFT is paramount. Multiple transactions executed within a similar timeframe might indicate a pump and dump scheme.

Safety Tips

Safeguarding Against NFT Scams Having outlined some prevalent NFT scams, consider these five recommendations for fortifying the security of your online NFT collection:

• Exercise Caution with Clicks: Avoid clicking on links or attachments from unknown sources. When seeking assistance regarding NFT platform issues, always consult the official customer service of legitimate NFT trading sites. Remain skeptical of individuals reaching out via alternative platforms like social media.

• DYOR on NFT Projects: Conduct a thorough assessment of the project's website, roadmap, social media channels, and creators' profiles before committing to NFT investments. Gauge the investment's long-term potential.

• Examine Contact Details: Verify the specific address where the NFT was minted. When in doubt, confirm the information through the creator's official website to ensure authenticity.

• Exercise Prudent Wallet Management: Store your seed phrase in a secure location and abstain from sharing it or capturing images on your device. Utilize strong passwords and activate two-factor authentication (2FA) to enhance account security.

• Utilize Genuine Wallet Apps and Extensions: Numerous malicious apps mimic official counterparts. Download wallet apps or browser extensions exclusively from legitimate, official sources to sidestep phishing attempts.

In Conclusion

While the technology underpinning NFTs possesses the potential to revolutionize the digital domain, the NFT landscape remains relatively fledgling. Amidst the hype, differentiating between reliable creators and malicious actors can prove challenging. Hence, maintain vigilance and always DYOR.

With this awareness, you're now equipped to embark on a secure journey into the NFT realm. Discover a rich assortment of NFTs on our exclusive high-end art marketplace. Stay updated on fresh releases, exciting giveaways, and exclusive deals by connecting with us on X, joining our Telegram channel, and actively participating in our dynamic Discord community. Your NFT voyage begins here!