Blockchain currencies have taken the global economy by storm since their inception. Although popularized more recently, only some NFTs are created equally. An increasing number of people now see this as a viable investment option.
However, as with any financial transaction, there is also a high risk of getting scammed. Although the levels of encryption have been enhanced, scammers are just slightly behind in sophistication.
To prevent you from falling prey to such scams, we enlist here 5 NFT scams and the red flags you should look out for before investing in these NFTs.
The Popularity of NFTs is Attracting too much Attention, Including Scammers:
If you are new to NFTs, a quick google search will reveal hundreds of results for marketplaces. The fake marketplace websites may look as original as they come. The way these fake markets work is to enlist your transaction details and provide you with a 12-word security seed phrase. Unbeknownst to you, this will gradually drain away your digital wallet.
Refrain from entering your financial details in popups, links from unmarked sources, or sketchy emails, and choose legitimate platforms. It is vital to remember that the 12-word security phrase is required only if you need a physical backup of your assets or for wallet recovery.
Scammers may mimic certain legitimate NFT trading platforms and ask for your financial details over them. They use old-school phishing emails, usually containing links to their fake trading platforms. There may also be offers made to you, which may seem too lucrative to be true.
Once your details have been entered, you will lose your digital assets. More sophisticated scammers may also ask for your 12-word security phrase and gain access to your NFT assets.
To avoid being scammed by such phishing emails, always be aware to check the source of such emails before entering your financial details.
Fake Technical Support:
Imagine you have problems with your NFT account and post it on a forum to ask for help. Scammers monitor these forums closely and may pick you as their next target. They could pose as someone from the technical support of the marketplace and offer technical assistance. They could do this either by cold calls or email support.
Once you take their word and either share your screen or are redirected to a website that mimics the original, the scammers can easily compromise your security and access your digital wallet. Always double-check the website where you enter your transaction details to avoid scammers gaining access to your digital assets.
Bogus giveaways are also another way that scammers work to trick you. The idea is to trigger your greed and take advantage of it. Scammers pose as employees of NFT marketplaces and offer you certain freebies. They often ask you to share a fake website link with other users.
Furthermore, they would use software to record whatever you type on your system and get ahold of your financial information. Essentially, this scam works two ways, scamming you and making you spread their phishing link to other users you may know. The simplest way to avoid this is by thoroughly checking the credentials of the person who promised you such a giveaway.
If you mint an NFT for yourself, it neither makes it your property nor gives you any other claim. It gets added to your blockchain and attracts scammers who list a fake version of your NFT and accept bids from other users.
Once discovered as fake, your original minted NFT becomes worthless once the community flags it as counterfeit. This is where you lose all your money, and there is no hope of recovery. To avoid such a situation, check the seller’s information thoroughly on any social media you have access to before bidding.
Although ethically and legally considered a crime, the scamming industry has seen a fair expansion, especially with the digital age. As developers add more layers of encryption, it only increases the scammers’ desperation, leading to further sophistication. Thus to avoid being scammed, check all credentials before entering your financial information.