TL;DR - Watch the video at the end of this article!
We all witnessed the NFT boom that happened this year and saw even the largest media outlets in the world cover this phenomenon! All the hype around digital art, memes, generative art, and other collectible pieces that live in the blockchain, attracted not only artists and investors to this space, but also, unfortunately, scammers. Yeah…not everything is rainbows and roses, right?
Now, more than ever, it is very important to protect yourself, and stay as far as you can from any potential danger; and this is why I decided to make this article to tell you how to identify scams, while also giving you a few safety tips.
Are NFTs scams?
Before we start, I’d just like to make it clear that unlike what many people have been saying on social media, blog posts and even on large vehicles, NFTs in general are NOT scams!
There have been many debates on this topic and I’d just like to emphasize that, as I am, there are many artists and creators minting and selling legit pieces of art and collectibles as NFTs. There are also a lot of developers working on new protocols, marketplaces and tech improvements in the space. Saying that all these people are scammers and the technology they have been building is trash, is false and not nice…to say the least.
So are NFTs scams? NO! The right question should be: are there scams in NFTs? And the answer to this question is a resounding YES!
Now that we got this outta the way, let’s get into the main topic of this article which is identifying the most common scams.
Scam #1
The 1st and one of the most common scams are fake websites and store fronts.
If you look for places to buy NFTs on google, you might encounter a few fake NFT trending websites in your search results. Sometimes it’s very hard to tell the difference, as they look EXACTLY like the genuine website, having most of the time just a very minimal spelling error on its domain name that gets overlooked by us.
There are 2 main concerns here:
If you make a purchase on one of these fake websites, you are most likely going to get a fake and valueless NFT. You’d basically throw your money away…
Scammers can record all the credentials you submit on the sites. They may request the seed phrase of your Ethereum wallet (which is the master key to your crypto wallet) and use it to hack into your wallet and steal all your crypto.
So how can you be sure that you are actually navigating on a legit NFT marketplace website, and that these things are not gonna happen to you?
Well, first of all, check for any spelling errors in the website you are on. Secondly, if it is an unknown NFT marketplace that you’ve never heard of before, make sure to do some research and due diligence to be confident that the store front is legit and reliable. Thirdly, keep in mind that fake NFT stores will host unverified buyers. On official stores, larger sellers will have a blue verification tick next to their usernames, like the ones you'd see on Instagram or Twitter.
It's also EXTREMELY important to do your research on the NFT project you're interested in. On a lot of scam sites, NFTs that usually go for hundreds of thousands will be shown at a fraction of their worth.
Bear in mind that there are also fake social media accounts that impersonate large NFT marketplaces. Be sure to check if that account is verified first, before doing ANYTHING else.
Scam #2
The second and very common scam is fake offers, which usually come to your email.
The scammer sends a fake email claiming that someone has made an offer for your NFT and they ask you to click on an embedded button. That button leads to a fake or phishing website where you’d most likely be asked to connect your wallet and submit your seed phrase. With this information in hand, the scammer can hack into your wallet and steal everything.
To make sure you won’t be a victim of this kind of scam, you can simply check the email address that’s sending you this offer alert. If you still can’t tell if that’s fake or not, don’t click on the button and log into your account directly in the Marketplace’s website. If the offer is legit, it will be showing there.
Scam #3
The 3rd common scam is technical support impersonation. This is particularly VERY common on discord, so beware and don’t trust every DM you get!
When you encounter a technical issue in a platform, you usually have 2 options: to write an email to their customer service, or send a message on the platform’s discord server (usually, they have a dedicated channel for that).
Especially on discord, as soon as you write a message, a scammer impersonating the customer support will DM you. This already happened to me, actually! I contacted OpenSea via discord and as soon as I pressed enter and the message was sent, 2 fake accounts contacted me pretending to be OpenSea’s support. In my case, I simply ignored the messages and blocked their accounts, but what usually happens when someone responds is: they ask you to share your screen to check what’s going on, making you reveal your crypto wallet’s credentials, or they redirect you to a website that looks like the official website and convince you to enter personal information there and…well, you may already know what will happen next. Don’t fall for it!
I always prefer to send an email directly to the customer support to avoid these kinds of situations, and when receiving the reply, to verify the email address. And never EVER send your seed phrase or private keys to anyone - EVER
Scam #4
The 4th most common scam is fake NFT projects (the famous rug pulls).
Unfortunately, ponzi schemes and rug-pulls exist in the NFT industry, and it's worth taking the time to educate yourself on the risks of investing.
A most notable case that happened recently was related to the Squid NFT project - a token collection inspired by the world-famous Netflix series Squid Game. After its price reached its peak, it turned out owners couldn’t sell their tokens. The developers sold their share of tokens and fled, sending the price plummeting to a near-worthless value. In such schemes, the only ones who profit are the creators of the NFTs.
The Squid NFT project case is just one of many examples of rug-pulls and fake projects. It’s really sad, but this happens way too often. Most of the time, they don’t make the headlines, but it’s extremely important to be aware of the risks involved.
A few tips to avoid getting trapped in a fake project are:
Verify who’s pumping this NFT project. Are these people trustworthy? How long have they been involved in the NFT community? What’s their reputation?
Make sure you know the team behind the project, or the artist behind a specific artwork. Have they delivered other NFT projects or art pieces already? What do previous buyers from these NFTs have to say?
If the NFT drop has already happened and you are looking to buy that NFT in the secondary market, make sure the project and the smart contract are verified. This can be checked and verified very easily on some Marketplaces (like OpenSea) with their verification badges.
Scam #5
Finally, the 5th most common scam is fake giveaways.
With this particular scam, a fake account will message you, usually on Twitter, Instagram or Discord, telling you that you’ve won an NFT. This fake account will then give you a link to a fake NFT website, which will ask you to connect your crypto wallet and enter their seed phrase.
The general rule here is: if the offer seems too good to be true, it’s because it most likely is! Just ignore those messages and move on. No one will randomly give you valuable NFTs…don’t fall for it!
Extra safety tips
Besides all the tips already given in this article, there are few more things you can do to ensure that you are running near 0 risks:
Be smart with your wallet credentials and NEVER share your seed phrase (or recovery phrase)
Use legitimate wallet apps and browser extensions to avoid phishing.
Use strong passwords and enable two-factor authentication (2FA) to protect your accounts.
On the NFT website, check the contract address. It should specify where the NFT was minted. You can check the creator’s website to make sure the information is genuine.
Final thoughts
I know it's a little scary to even think about just how many different scams you can fall for these days. Unfortunately, NFTs have attracted many Cybercriminals’ attention, and they are becoming increasingly innovative in finding new ways to trick people every other week.
All I can say is, if you stay vigilant, apply all the tips I just gave you, and keep doing your own research, you’ll most likely stay aware of what scams are out there, and know how to recognize them. By doing that, you'll surely keep yourself safe when delving into the wonderful and extremely promising world of NFTs.