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April 13, 2022

NFT Scams – 5 Ways of Dodging the latest blockchain bullet

So far, we have all witnessed the explosion of NFTs. Numerous individuals, ranging from high-profile celebrities to crypto aficionados, have dabbled in purchasing and selling these digital works of art. However, since the hot technical breakthrough is still in its infancy, it still has a few basic issues to work out.

To the astonishment of everyone, Web 1 and Web 2 hacks continue to operate on Web 3. In February 2022, prior to the modifications to the contract structure, an e-mail impersonating OpenSea informed customers that it was now time to move their NFTs. The individuals reportedly clicked on the link without verifying the sender, so providing the hackers with access to their wallets. Another notable scan was the Pranksy Rug Pull - the notorious NFT influencer/personality that many of us follow was scammed when minted a collection that turned out to be a fraud.

NFT Scams in the past

Well, here are 5 ways to ensure that all your NFT transactions will be seamless, and you will not end up a victim of scammers:

Conduct due diligence on the NFT projects in which you invest.

Always conduct sufficient research before investing: examine reviews, the amount of activity of creators, and any past complaints about their transactions. Always use caution and make transactions only after verifying the facts. Additionally, join the project's Discord channel and follow it on Twitter. To assess a project's liquidity and/or long-term communal or aesthetic value, it must attract a sufficient number of interested investors and collectors, as well as an active community where individuals may interact, participate, and exchange information.

One critical indicator to look for when evaluating a possible investment is that the project's developers are entirely candid and transparent about their humanity. If you discover little or no information on the real person behind a project, someone prepared to jeopardize their own reputation, this should raise a massive red flag.

Beware of plagiarized NFTs

Nobody appreciates a counterfeit, all the more so when NFTs are intended to be one-of-a-kind, irreplaceable, and non-fungible assets.  Individuals have acquired counterfeit NFTs under the mistaken belief that they were getting the real deal. One simple technique to determine whether a coin is a replica is to examine the transaction data and determine who issued it and when. Then you may compare this data to what you already know about the NFT author to verify that it is legitimate.

While these replica NFTs often seem similar to the genuine thing, it's all about the information and the date the token was really issued on the blockchain. Avoid identifying an NFT only on the basis of its appearance.

Avoid accessing dodgy websites

Scammers thrive on exploiting fundamental human nature. As humans, we sometimes misspell words, directing us to the incorrect website. These scam sites may be exceedingly harmful in the NFT realm. Scammers have been known to construct websites that are identical clones of real websites, exposing unwary people to cyber-attacks.

Most importantly, always double-check the URL to confirm the address you're viewing is accurate, never input your secret phrase—especially at the site's request—and avoid doing anything that makes you feel uneasy. Bear in mind that if anything seems to be too good to be true, it most often is.

Recognize pump & dump schemes

The basic pump and dump layout is one of the most deceptive plots in the NFT universe. A pump and dump transaction occurs when an individual or group of individuals purchases a significant quantity of digital assets to increase the demand for and price of the asset. Once the pump boosts the value and liquidity of the asset, fraudsters sell everything for a tidy profit. One of the simplest methods to identify a pump and dump strategy is to examine an NFT's transaction history. It is not uncommon to witness a gradual increase in value with a wide group of purchasers, depending on the number of accessible assets. If you see the same two or three individuals purchasing and reselling at a higher price, this might be a sign of a pump and dump operation.

Never share your seed phrase and beware of sharing your screen with strangers

Screen sharing is quite widespread in the business environment. People often share their displays to discuss presentations, technical concerns or to collaborate. However, this is not the case in the crypto and NFT worlds. Scammers may coerce you into sharing your secret recovery phrase, which undermines your crypto wallet and makes it possible for anybody to sell your valuables.

Utilize a hard wallet

Never believe that your tokens are completely secure in your hot wallet. Recent frauds demonstrate that software-based storage still poses significant security threats. And, of course, the last thing you want is to lose your precious possessions. As such, you should consider utilizing a hardware wallet – or cold wallet, as they are sometimes referred to – in conjunction with your hot wallet. These physical disks enable you to move your NFTs to offline storage, which is far less susceptible to hacking.

The transfer procedure is straightforward, particularly if you are familiar with how blockchain technology works: you purchase the drive, configure your wallet, and link it to MetaMask or other interfaces. If you're unsure what to do, you can always consult an online step-by-step tutorial — a short search will reveal a plethora of them.

New scams are constantly infiltrating the NFT industry, which is why you always have to keep your eyes wide open. However, don’t lose your courage to embark on the NFT adventure and remember that you have the upper hand!

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