How to Avoid the Top NFT Scams

Shielding Yourself from NFT Scams: Essential Tips to Steer Clear of Common Pitfalls.

February 4, 2023


The scammers are just as active in the NFT field as the influential leaders and their supporters. There is no exemption when it comes to non-fungible tokens; con artists go where the money is.

We all work hard for our money, so whatever we can do to protect it by avoiding scams and warning others about the dangers will help the NFT community thrive in the long run. So, how can you protect yourself from fraud when working with NFTs?

Here are some recommendations for avoiding fraud while working with NFTs.

  1.  Do not divulge your secret phrase.
  2. Avoid going to sites that are not reliable.
  3. Constantly conduct your own research.
  4. Beware of pump-and-dump situations.
  5. Stay away from greed.
  6. Deal only with persons you can trust.
  7. Be cautious of fake NFTs.
  8. Stay away from brand imitators.

1. Do not divulge your secret phrase.

Giving out your secret phrase requires the same level of caution as giving out your social security number. Your crypto wallet and the digital assets inside are completely under the control of your secret word. Someone might quickly move all of your funds to another wallet address if they were to get their hands on your phrase, leaving you with nothing.

Your secret phrase should only ever be required if you want to import your wallet. Normally, you would only need to do this if you have deleted the extension from your computer or the app from your phone. It's quite likely that the website you're on is a scam if it asks you to input the secret phrase for your wallet.

It is important to securely store your secret phrase because many individuals are unaware of how important it is to maintain security.

2. Avoid going to sites that are not reliable.

Scammers prefer to prey on universal human nature. We misspell words occasionally as humans, which directs us to the wrong website. These fraudulent websites can be very harmful in the NFT sector. Unaware individuals may become targets of a cyberattack when scammers develop websites that are an exact duplicate of a real site.

Scammers will have full access to your wallet and all of the assets inside if they manage to get their hands on your secret phrase or even take over your desktop. Never enter your secret phrase—especially at a site's request—and steer clear of anything you don't feel 100 percent comfortable doing. Always double-check the URL to make sure the address you are viewing is correct. Remember that everything that appears too wonderful to be true certainly is.

3. Constantly conduct your own research.

To guarantee that all of your assets, including your money, are secure, it is essential to conduct your own research on any digital asset you are thinking about investing in. An NFT fraud known as a "Rug Pull" is quite typical. A rug pull is an exit scam in which creators create a lot of publicity over a product or brand, and then, after money starts flowing into the project, they withdraw the money, leaving customers with nothing.

When evaluating a possible investment, it's important to check that the project's creators are totally honest and transparent about who they are as people. If there is little to no information available about the real person behind a project—someone who is willing to risk their reputation—this should raise serious concerns. In addition to rug pulls, there are a number of additional scams to be aware of. You'll be able to make the greatest choice possible when considering your next digital investment opportunity if you conduct your own study.

4. Beware of pump-and-dump situations

One of the most deceptive strategies in the NFT space is the traditional pump and dump approach. When someone or a group of people buys a lot of digital assets to boost demand and price, this is known as a pump and dump. Scammers sell off all of their assets once the pump raises value and liquidity for a tidy profit.

Examining an NFT's transaction history is one of the simplest ways to spot a pump and dump strategy. Depending on the quantity of assets available, it is typical to witness a gradual increase in value with a variety of purchasers. A pump and dump technique may be present if you observe the same two or three individuals buying and then reselling for a higher price.

It is best to leave a pump and dump project as soon as you can, ideally without losing any of your money, if you find yourself in one. To completely avoid the problem by conducting your own study is an even simpler strategy to prevent losing money as a result of a pump and dump operation.

5. Stay away from greed

The simplest way to lose everything you have is to be greedy. There are many different types of greed, but in the NFT industry, there are a lot of people that are only interested in making the most profit possible.

If you're not careful, being greedy when purchasing and selling NFTs might quickly backfire. Some of the most typical ways people abuse digital assets out of greed are as follows:

  • Overspending on a single digital asset

It might be exceedingly dangerous to buy a lot of the same asset. You might lose everything if the value of your investment falls to zero. Anybody could have a tragic experience like this.

  • Attempting to obtain something that seems unattainable.

Avoid at all costs any communication informing you that you have won anything and only need to send money for the transaction. Some individuals find it difficult to resist a good offer, but occasionally a deal isn't as wonderful as it first appears.

Even though there are fewer instances of greed when dealing with non-fungibles, these are nevertheless very real circumstances that could have disastrous results. Keep your avarice to a minimum and focus on keeping people informed.

6. Be cautious of fake NFTs

Since NFTs are meant to be one-of-a-kind, irreplaceable, and non-interchangeable, nobody loves a fake.

People have bought fake NFTs even though they thought they were getting the real thing. Examining the transaction data and determining who issued it and when might help you quickly determine whether something is a copy. After that, you can verify its authenticity by comparing it to what you already know about the person who created the NFT.

These imitation NFTs often have the same appearance as the genuine article, but it's all about the metadata and the time the token was actually issued on the blockchain, so keep that in mind. Do not authenticate an NFT based just on appearance.

7. Stay away from brand imitators

In general, brands and startup businesses are quite engaged on social media. Brands are everywhere online, from Twitter to Discord, therefore if you want to purchase an NFT from a particular brand, you must be aware of its exact name and emblem. Typically, the brand's official social media profiles have a reliable connection. Additional words or characters in the name are a typical sign of brand imitation. For instance, to make an account seem confirmed, scammers may add the terms Official, Authentic, or even add a checkmark. Contact the company directly or a member of the community you know and trust if you have any questions about the authenticity of the brand. Additionally, brand impersonators are known to get in touch with users via their Direct Messages (DM) on social media and other platforms and serve as customer support agents or community moderators. A brand should never get in touch with you directly to ask for your seed phrase, solicit money, or make any other unwelcome requests.

It is advised to ignore brands or any of their representatives if you are unsure of them until you have time to conduct your own research and authenticate who you are speaking with.

Final Words

NFT frauds happen frequently every day over a variety of sites. Scammers are waiting to take advantage of you on Discord, social media, and other online platforms. Learning about the different frauds that are being used is the greatest approach to avoid NFT scams.

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