What are NFTs?
NFT is an abbreviated form for Non-Fungible Tokens. They are a type of digital token that allows investors to preserve unique objects such as artwork, videos, games, and music on a blockchain. At the same time, NFTs are not interchangeable with other units in a series.
It means that they are non-fungible and used to store a unique set of data or information. NFTs allow investors to purchase a unique item in a digital manner. When NFTs are passed from one buyer to another, the details are inscribed on the blockchain regarding all its previous owners.
What is an NFT Scam?
NFTs digitally record all purchases and sale records on the blockchain. It means that by possessing a particular NFT, the owner can access various features attached to it such as media files, art, or other information.
However, scammers can make an attempt to access an NFT using various techniques such as phishing and tricking people to give up their log-in details such as private keys.
How does an NFT Scam Work?
NFT scams can happen in many forms and shapes. With phishing scams the potential target can receive emails from scammers that claim to be legitimate NFT platforms. In this manner, the investors are directed to send their private keys to scammers to complete a fraudulent transaction or illegal account log-ins.
As soon as the scammers gain access to an account, they can transfer an NFT or funds out of its holdings to their wallets before individual are able to take preventive measures.
Therefore, it is best for the consumers to ensure they do not share their private keys with anyone at any place. In case, the scammers have managed to break in an account, it becomes impossible to recover a stolen NFT.
Types of NFT Scams
Here are some of the most common types of NFT scams:
Rug-pulls are scams where the investors purchase new coins from a blockchain startup with promise of massive returns. However, scammers abandon the project halfway and the value of its native coin drops to zero.
Phishing is a common method that hackers use and sent spiked emails to a user account. In this manner, the target ends up clicking on an affected link that leads to transfer of personal information to the scammers such as private keys.
Bidding scams take place on NFT marketplaces or secondary markets. Threat actors can change the token used during the process without the knowledge of the bidders. In this manner, the participants can end up with worthless cryptocurrencies and no NFTs.
Pump-and-dump schemes are marketing technique where scammers create hype around a given token. In this manner, more investors come forward to participate in that coin. However, once the prices are inflated enough the scammers’ cash out their holdings and everyone else is left with losses.
There are some cases, where investors end up purchasing duplicate, plagiarized, and counterfeited NFT material. OpenSea data indicates that around 80% of NFTs minted on the platform are not original.
Airdrops are giveaway events where investors can receive free NFTs in their wallet accounts in exchange for performing a task. To avoid this, the investors should refrain from responding to arbitrary investment offers and conduct detailed research before participating in an airdrop event.
Investment scams are opportunities to invest in fake NFT projects.
Scammers can pose as Customer Support Agents for an NFT collection. In this manner, they can frame the target to share personal credentials regarding their NFT products to steal.
NFT marketplaces are scam sites that appear as real but operate with intent to trick users for buying fake NFTs.
Scammers may also pose as fake influencers using profile pictures of celebrities and internet personalities to dupe investors.
NFT scams are becoming more commonplace. Investors can use preventive methods such as VPN and refrain from sharing their private keys.