By Shubhangi Shah
What if you could sell a JPEG image, meme, or GIF for tens of thousands of dollars? Welcome to the world of irreplaceable tokens, well known as NFT. For beginners, NFT is a digital asset, anything from digital artwork, JPG images, memes, GIFs to music, video and video game merchandise. These are traded in cryptocurrencies. Therefore, NFTs sound good in two ways. For artists and other creators, NFTs provide a way to sell artwork. For buyers, they can not only collect assets that they are passionate about, but also sell them at higher prices, thereby profiting.
It’s beautiful. Yes, NFTs can be a great tool for sellers, buyers and NFT marketplaces to make money. But is there anything that makes money to attract scammers and scammers’ share? The same is true for NFTs. Recently, several NFT marketplaces have been attacked after customers have been sucked from their collection of NFTs and cryptocurrencies. In fact, the top NFT marketplace, OpenSea, was sued earlier this year for such issues.
Yes, investing in an NFT can be risky, but it can also be rewarding. Also, some awareness can protect you from fraud.
Common NFT scams
There are many different types of these, but some common NFT scams you need to avoid are:
Counterfeit NFT: As the name implies, a counterfeit NFT is not the original, but a duplicate or counterfeit version of the original NFT. Simply put, the artist creates the artwork, and the scammers copy it and put it up for sale on the NFT marketplace. Since there is no clear way to distinguish between the duplicate and the original, the buyer will bombard more than it is worth.
Phishing: Phishing is nothing new in the digital arena. This type of scam basically includes fake emails, pop-ups, or messages on WhatsApp or Telegram and takes you to a fake website. When you get there, you will be asked for the key to your private wallet. As soon as a scammer has access to it, it can be easily sucked from NFT collections and crypto collections. According to crypto expert Hitesh Malviya, phishing is one of the most common NFT scams. He says if there is a way to distinguish between the original work and the duplicate work. “Currently, it’s completely impossible to do that, but in the near future, rules may be introduced to make things more regular and make a difference.”
Wash Trading: Wash trading is a fraudulent act in which the value of an asset is artificially inflated by the seller. To understand that, imagine you are an NFT seller whose digital assets are worth $ 100. However, you are also a buyer and buy the same for $ 200, giving legitimate buyers the false impression that NFTs are actually worth $ 200, and NFTs bid more on the same. , Brings considerable profits to the seller. The buyer becomes an asset whose value is far less than what she paid.
Ragpur: Social media can play a major role in the NFT world, including the support of fraudsters. In what’s called rug pull, project creators create enough talk to raise the price of digital assets before they get full support, causing asset prices to plummet. Creators leave with a lot of digital money, but investors get nothing.
How to protect against fraud?
Yes, NFTs can be a dangerous game. But with care and attention, you can dodge scams. “Don’t click the link with the name of the NFT,” says Malviya. “Always double-check. Just looking at it gives you some idea of whether it’s a hoax,” he adds.
Always buy from legitimate markets and avoid falling into prizes from suspicious markets, Malviya advises. OpenSea, Nifty Gateway, Rarible and Foundation are markets to consider. Do the same when attending an NFT.
Similarly, buy from a confirmed seller. Most sellers have a blue checkmark next to their username.
Never share your private wallet key. “Remember the key or save it somewhere. Once you lose it, you lose your assets,” says Malviya. “Create a strong password for your crypto wallet and NFT account,” he adds. You can also consider a burner wallet. This limits the number of funds committed to one wallet and minimizes risk.
Do not download other apps that claim to be the NFT Marketplace.
Yes, NFT normalization is not very common at this time, which can make it difficult to control fraud. This is where digital education can play a role, says Malviya. “The NFT Marketplace can take steps to educate our users, some of which do,” he adds.
Apart from all of these, remember only one. If something is too good to be true, it’s a good idea to double-check.