Cryptocurrencies have reached a point where they are taking over the global financial system and reshaping the digital economy, becoming a necessity for any average investor. This shift towards non-traditional payment methods is supported by innovative and unique digital assets such as Non-Fungible Tokens (NFT).
In the early days, NFTs were adopted by a specific target audience, mostly millennials interested in cryptocurrencies and art, until 2017, when they became mainstream monuments to ordinary investors. The main idea behind NFT is to allow creatives to make money by trading digital assets such as art, images, GIFs, music, video game items, collectibles, memes and virtual fashion.
The first major catalyst that accelerated mass interest in NFTs was the COVID-19 pandemic, which forced many people to become digitally educated and connect on many platforms such as Twitter. The second most important turning point was artist Beeple, who became an NFT pioneer. He became the first creator to sell an NFT at a major auction house. Now that they are finally being recognized as must-have digital assets, more and more investors, financial experts, and giants like Coca-Cola, Taco Bell, and Visa are creating NFTs and incorporating them into their crypto strategies, recognizing them Revolutionize the potential of digitalization. NFT market The offer is still being explored and could reach $80 billion by 2025, with great opportunities for future profits. However, this dynamic market, while offering many profit opportunities, also attracts high-profile scammers.
How to buy NFTs and where to find them
In order to develop a defense strategy, you must understand the basic steps involved in purchasing an NFT. To own an NFT, you first need to choose a digital wallet that is compatible with NFTs, such as MetaMask or Trust Wallet. Your next step is to purchase some NFT-enabled cryptocurrency, usually Ethereum, making sure to choose a reliable cryptocurrency exchange such as Coinbase or Binance, and then transfer the assets to your wallet.
The next step is to choose your NFT provider, usually you have to choose between two types of NFT providers. One of them is to use Reliable Cryptocurrency Exchangethese are platforms where you can buy, sell, and trade cryptocurrencies, and they often have integrated NFT markets. Another option for trading NFTs are various NFT marketplaces such as OpenSea, Rarible, where you can build, buy or sell NFTs. Remember, the platform you use must be well-known and certified. The last step is to connect your wallet and make transactions.
Most popular scams
Transactions are always accompanied by possible cyberattacks, and the NFT market is not immune to possible scams. Therefore, to protect your finances, it is important to know what you are dealing with when buying or selling NFTs on cryptocurrency exchanges or NFT markets. Here are the most common NFT scams that need to be avoided at all costs.
carpet pull scam
This type of scam occurs when a promoter generates buzz about a project on social media, thereby getting new investors keen to invest in that particular project. Once the price rises, the project is abandoned and investors’ money is wiped out. This unexpected exit caused NFT prices to plummet, causing investors involved to suffer huge losses.
How to stay safe: Conduct thorough research on the development team to ensure they are known and reputable within the crypto community. Also, accounts with thousands of followers and zero interaction are probably fake, so consider that. Another tip we recommend is using a disposable wallet to protect your assets.
Phishing Scam
Phishing Scam Usually involves fake websites and pop-ups. Hackers send fake links via social media and email to collect information about your private wallet keys. Once they obtain your personal information, your assets are at high risk.
How to stay safe: Always use verified websites for NFT transactions and never share your wallet keys if you doubt a website’s reputation. Also don’t share data on pop-ups.
bid fraud
This is a common type of scam when investors resell NFTs. Once you participate in a sales transaction, be sure to double-check the cryptocurrency used to pay for the NFT. It’s not uncommon for buyers to swap it for a less valuable cryptocurrency before sealing a deal.
How to stay safe: Double check that the sale meets the predetermined conditions.
Counterfeit NFT
NFTs are designed to create unique value, be aware that scammers can copy an artist’s work and sell fakes on the NFT market. Once it is determined that the NFT is fake, their value drops to zero and you my friend have lost your money.
How to stay safe: Be sure to check if the seller’s account has a blue check mark. Check their social media platforms to see if it is their own art and not plagiarized.
pump dump plan
In these scams, a group of scammers increases demand for NFTs by buying them in bulk. Following in their footsteps, less experienced investors have increased demand for these NFTs, causing market prices to rise. When prices reach their peak, scammers sell their holdings and make large profits, causing prices to plummet and render other investors’ assets worthless.
How to stay safe: Check the NFT’s transaction history and verify the creator’s contact information.
customer support mockup
Another well-known scam is where hackers introduce themselves as 24/7 customer support and contact you about your account and some possible issues. To help you, they will usually try to get the keys to your wallet.
How to stay safe: Always communicate through official channels and verified social media pages.
final thoughts
Yes, NFTs do provide a great opportunity to own unique items of great value, but like any other digital asset, they are vulnerable to cyberattacks. By understanding possible scams, you can receive much-needed education and learn how to stay safe when trading NFTs.
Becoming a successful investor requires a lot of research, so be sure to follow our How to Stay Safe tips and keep your money safe when engaging in buy or sell transactions.
