Cryptocurrencies reached a point where they are taking over the financial systems globally and are reshaping the digital economy, becoming a necessity for any common investor. That shift towards non-traditional ways of payment has been supported by innovative and unique digital assets, such as Non-Fungible Tokens (NFTs).
In their early days NFTs were adopted by a specific targeted audience, mostly millennials interested in cryptocurrencies and arts and it was until 2017 when they became a mainstream monument for the average investor. The main idea behind NFTs was supporting creative individuals to earn money by trading digital assets like art, images, GIFs, music, video game items, collectibles, memes, and virtual fashion.
The first main catalyst that speed up the public interest in NFTs was COVID-19 pandemic which forced many people to get digitally educated and connect on many platforms such as Twitter, and the second most important turnpoint was the artist Beeple, who became NFT pioneer when he became the first creator to sell an NFT with a major auction house. Nowadays they are finally being acknowledge as a must have digital asset, with more investors, financial gurus and companies such as the giants Coca Cola, Taco Bell and Visa have created NFTs and are including them in their crypto strategies, recognizing their potential to revolutionize digital ownership and investment possibilities.The opportunities that NFTs marketplaces offer are still being explored, potentially reaching $80 billion by 2025, with high chances for future profits. However this dynamic market, even though it offers many profit opportunities, has also attracted high profile scammers.
How to Purchase NFTs and Where to Find Them
In order to create a defend strategy you must be aware of the basics steps included in the process of buying NFTs. Owning NFTs starts with choosing a digital wallet that is compatible with NFTs such as MetaMask or Trust Wallet. Your next move is to buy some cryptocurrency that supports NFTs, usually Ethereum and make sure to choose a reliable crypto exchange such as Coinbase or Binance, then transfer those assets to your wallet.
Next step is to choose your NFTs provider and usually you have to choose between two types of NFTs providers. One of them is by using reliable crypto exchanges, which are platforms where you can buy, sell, and trade cryptocurrencies, and they often have integrated NFT marketplaces. The other option for trading NFTs are various NFT marketplaces such as OpenSea, Rarible where you can create, buy or sell NFTs. Keep in mind that the platform you use must be well known and certified. The final step is to connect your wallet and make the transaction.
Most Popular Scams
Trading is always accompanied by possible cyber attacks and NFTs markets do not stay immune to possible frauds. So in order to protect your finances it is essential to know what you are dealing with, when buying or selling NFTs on crypto exchanges or on NFT marketplaces. Here are the most common NFTs scams that need to be avoided at any cost.
Rug Pull Scams
This type of scam happens when promoters create a buzz on social media over a project, making newly investors heated in investing in this particular project. Once the price goes up, the project gets abandoned and the investors’ funds are fully gone. This unexpected exit, makes a crash on the NFTs price leading to great losses for the investors involved in it.
How to stay safe: Conduct an all rounded research over the developing team, make sure they are well known and reputable in the crypto community. Also accounts with thousands of followers and zero interactions are probably fake, so take that into consideration. Another tip we recommend is to use burner wallets in order to protect your assets.
Phishing Scams
Phishing scams usually involve fake websites and pop-ups. Hackers send fake links through social media, email in order to collect information on your private wallet keys. After they get your personal data, your assets are at high risk.
How to stay safe: Always use verified websites for NFTs transactions, and if you suspect a website’s reputation, never share your wallet’s keys. Also do not share data on pop ups.
Bidding Scams
This is a common type of scam when investors are reselling NFTs. Once you become part of a selling transaction, make sure to double check the cryptocurrency used to pay for your NFTs. It’s not uncommon for buyers to change it for a cryptocurrency with lower value right before sealing the deal.
How to stay safe: Double check if the sales goes under predetermined conditions.
Counterfeit NFTs
NFTs are all about creating a unique value and be aware that scammers can copy an artist’s work and sell fakes on NFT marketplaces. After it is determined that the NFTs are fake their value will drop to zero, and you my friend lost your money.
How to stay safe: Always check the seller’s account for a blue checkmark. Take a look over their social media platforms to see if it’s their own art and is plagiarism free.
Pump-and-Dump Schemes
In these scams, a group of scammers boosts the demand for NFTs by making a purchase in bulk. Following their steps, less experienced investors also increase the demand for these NFTs which leads to higher market price. When the price reaches its peak, scammers sell their holdings and make a large amount of profits, extremely dropping the price and leaving other investors with worthless assets.
How to stay safe: Check the NFT’s transaction history and verify the creator’s contact details.
Customer Support Impersonation
Another well known scam is when hackers introduce themselves as 24/7 customer support staff, and are contacting you for your account and some possible issues. In order to help you they usually try to get your wallet’s keys.
How to stay safe: Always communicate through official channels and verified social media pages.
Final Thoughts
Yes, NFTs do offer the perfect opportunity for owning something unique with a great value, but as any other digital asset they are vulnerable to cyber attacks. By learning the possible scams you are arming yourself with a much needed education on how to stay safe while trading NFTs.
Being a successful investor requires a lot of research, so make sure to follow our “How to stay safe” tips when getting involved in purchasing or selling transactions, and keep your money safe.
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