The world of NFTs is new, exciting, and growing in popularity. However, as with any new technology, scams and bad actors seek to take advantage of unsuspecting users. Let’s discuss NFTs and why you need to protect yourself from scams in this growing digital asset class.
What are NFTs?
NFTs (Non-fungible tokens) are digital assets that exist on a blockchain. They represent virtual assets and real-world objects like artwork or collectibles, with the market and demand affecting their value. Even though they are traded via blockchain technology, NFTs are not a form of cryptocurrencies. NFTs are unique and can only have one owner at a time, with the complete transaction history of previous owners publicly available on the blockchain.
The popularity of NFTs
NFTs are popular because they offer several advantages over traditional assets. For example, NFTs can be stored securely and transferred on a blockchain. They are also useful in the digital world through games, marketplaces, or unlocking areas of digital environments (metaverse). NFTs also provide greater transparency as proofs of ownership are stored and accessible on the blockchain.
Why you need to protect yourself from NFT scams
Despite the advantages of NFTs, there are also some risks associated with this new asset class. One of the most significant risks with NFTs is scams. These scams usually involve projects offering fake and counterfeit assets or projects that don’t deliver the promised community utility. Many scams target NFT investors, and it is crucial to recognize these threats before investing in NFTs.
The 6 most common NFT scams
1. Exit scam – The most common NFT scam is the “exit scam.” In an exit scam, the developers of an NFT project disappear with the funds raised from investors. This scam is particularly prevalent in the NFT space, as many projects launch with little to no transparency.
2. Pump and dump scam – Another common NFT scam is the “pump and dump.” In a pump and dump, traders artificially inflate the price of an NFT by buying large volumes. Once the price increases, the traders sell their NFTs at a profit, leaving investors with worthless assets.
3. Scam websites – Fake NFT stores are popping up all over the internet with domain registrations similar to reputable NFT marketplaces like OpenSea and Rarible. However, these websites are replicas that dupe investors into buying fake NFTs.
4. Fake crypto influencer scam – Celebrity endorsement for NFTs is common, leading scammers to impersonate them on social media. The scammers create the buzz around a false celebrity endorsement to get investor interest. The truth may eventually come out that the endorsement is fake, but the scammers would be long gone.
5. Direct message scam – Social media sites like Twitter, Discord, and Telegram are popular sources of information on NFTs. They are teeming with scammers too. If you receive a DM (direct message) from someone asking for money or an “announcement” from an NFT project, assume it is a scam.
6. Giveaways – Sometimes, it may seem like everyone wants to give you free money and make you rich in the crypto world. However, if it’s too good to be true, it probably is. Beware of messages containing the word “free.” These airdrop messages from fake accounts on Discord will often pop up in your DMs. It is the equivalent of winning a lottery that you didn’t enter.
Shield your NFTs with REV3AL
REV3AL technology’s multiple layers of encrypted protection can help keep you safe from scams. With REV3AL’s incorporation of blockchain and non-blockchain measures, you can confirm the authenticity of an NFT through a simple multi-factor process via physical interaction on your device and the REV3AL platform. REV3AL gives users the peace of mind to authenticate digital assets in the real world.
Other ways to avoid NFT scams
Do your research before investing in any project. Only invest in reputable projects with solid track records. You should also avoid investing in projects with little transparency. Stay vigilant and be aware of the current scams schemes to stay ahead of the scammers.
If you are an NFT investor, consider a hardware wallet, known as a cold wallet or cold storage. A hardware wallet is a physical device, similar to a USB drive, that stores your private keys and NFTs offline. This is a great way to protect your NFTs from online theft and fraud.
The future of blockchain technology is now, and as it continues to evolve and NFTs become more prevalent, it is paramount to be aware of the risks associated with NFTs, especially scams. Protect yourself from NFT scams by researching before investing in any project, verifying that marketplace websites are legitimate, using a hardware wallet, and taking advantage of multi-factor authentication whenever possible.