The cryptocurrency world is riddled with scams, and NFTs are no exception. It's perhaps the reason why investing in crypto and NFTs comes with a ton of risks. But that's not to say that it's a totally lost cause - just that you must be even more careful.
There've been a handful of complaints from artists who had their work minted into NFTs by posers. This happens even in the most popular platforms, i.e., OpenSea and Rarible. But minting other people's work is just one of the many trickeries in the NFT ecosystem.
It's disheartening to see attempts at creating scam accounts on a wide range of social media networks and marketplaces, and what's more, it's becoming increasingly common. These people are putting everyone at risk of losing money, whether crypto, fiat currency, or even digital assets.
But arguably, the most ludicrous scam involving NFTs is that of impersonation. This occurs when someone impersonates a firm that hosts NFTs on their site or claims to be a vendor and then collects money from people who want to acquire NFTs with them.
Some of these scammers even go as far as creating fake accounts that look identical to those of well-established and reputable marketplaces and social media outlets and asking people to deposit their funds for the purchase of an NFT.
Social Media Serves as a Hotbed for NFT Scams
Scams are everywhere, even in non-NFT platforms. This problem is evident on social media, where people are vulnerable since they are not obligated to perform ID checks.
When it comes to blockchain technology, there are only a few different ways to identify each other. One is through social media networks, where people interact with their real names and information about them, which can be used in cross-referencing or double-checking transactions and identifying particular address owners.
But it's not just the blockchain technology that allows impersonators to easily blend in with the crowd and pass off as somebody else - social media sites make it easy for people who want to commit scams or crimes and then escape unscathed.
Protecting Your NFT Interests
But if you're to stay safe from scams, avoiding social media is probably not a viable course of action. So, what other options do you have?
Since the anonymity factor is one of the most attractive aspects of blockchain technology, it's impossible to curb all scam attempts because there are always people who want to use this feature. However, there are a few things that can be done:
1 - Perform a background check.
Check for the online reputation of the service or market where you're going to conduct your transactions and do some digging. This should give you a fair idea of whether it's legit or not.
You also must learn how to figure out a replica site. These fake sites don't require much work to create, so the only thing that's needed is a convincing domain name. Seek help if you're clueless on how to detect fake websites that mimic legitimate ones.
2 - Get help from other users.
Most reliable marketplaces and trading platforms have customer support teams that can assist you with a problem. Also, if you're not sure about the authenticity of a specific NFT company or platform, find out if it has a presence on social media or any other community forum and see what people have to say about them.
3 - Watch out for the warning signs.
Some of the giveaway signs that scamming is indeed happening will include a demand to transfer money before you initiate your NFT transaction, messages and emails from services or marketplaces that demand additional fees to complete a deal, and requests for personal data such as photos, IDs, and scans of bills.
4 – Be wary with ICOs as they're not always safe.
If you've been following news related to cryptocurrencies and blockchains, then you would know that most scams are perpetrated through ICOs. To be on the safe side, you need to know the history of the company or platform that's issuing an NFT token or coin.
5 - Consider partnering with third-party services.
The best way to protect your interests is by entrusting a third party with your transactions. Examples include escrow platforms that have been in this business for a long time.
6 - Be informed.
Knowing and understanding the different kinds of scams and how these scams work can help you determine what's legit and what's not. Scammers prey on people who don't know enough; unfortunately, about half of those who engage themselves in NFTs are clueless about what they're doing.
7 - Put your NFTs on a cold storage wallet offline.
This is a viable option for anyone very serious about their NFT investments. The more time your tokens are offline, the better since scammers hunt their victims online.
8 - Watch out for "too good to be true" deals.
Scammers often put up enticing deals that seem unbelievable - especially when they know so much about you. If they know stuff about you, i.e., email address, phone number, then that's a very dangerous sign.
Some people sell items that they claim to be extremely rare and valuable but can be purchased on marketplaces for less than the price they're asking for. Often, these people will play it off as a mix-up or mistake.
As much as you hate the idea of having to go through a lot of hoops before engaging in NFT transactions, you must be sure that your interests are protected. The last thing you want is to be fully invested in it and then lose everything just because you weren't careful enough.
The NFT ecosystem remains a potentially lucrative investment, yet the risks won't go away. It's still possible to have a good experience with NFTs without being scammed but do keep in mind that these scams will be there, regardless of what kind of platform or marketplace you're using.