Non-fungible Tokens (NFTs) have taken the online digital world by storm. Due to the rising popularity in the online market, people have started making more money by trading these digital assets. NFTs have developed into a multibillion dollars domain of the crypto industry in a very short period of time. Owning a NFT may bring one a membership ticket to online clubs, gaming sector, chat rooms and interactive experiences.
It is all pleasant in theory but practically NFTs are a little complicated and messy to deal with. Though blockchain experts consider them a remarkable opportunity, NFTs provide a safer platform to the cybercriminals to scam the buyers. Here is the way out to escape the deceit of the scammers.
What are NFTs?
Non-fungible Token is a distinctive form of digital asset on a blockchain. It is one of its kind images of an object that can later be duplicated a number of times. NFTs are also called as crypto tokens. They actually exist on a blockchain exclusively belonging to its owner. They are not replaceable unlike other kinds of cryptocurrencies.
In addition to, trading and creating NFTs in marketplaces, businesses also utilize NFTs for customer promotion and loyalty programs, real estate transactions, for identification and documentation process etc. NFT could be an image, virtual real estate, file or a trading card. Each NFT type is one of its kind and cannot be restored.
Despite being new, NFTs are already gaining a huge profit. NFTs are sold for millions of dollars. A digital artist once sold a piece of NFT artwork worth $69 million. Prices of NFTs could deviate as people start piling up these digital assets hoping that their value may increase. The most expensive NFT till date is “The Merge” that was bought worth $90 million by a group of 30 thousand collectors. NFT market earned $17.6 billion in sales in the year 2021.
Are NFTs a scam?
NFTs are not a scam but they are more vulnerable to be stolen. With the rising popularity of NFTs among the masses the number of hackers is multiplying and the technological techniques used by them are also getting advanced.
As NFTs have a broad range of applications in digital market such as drug development, supply chain, gated communities but the most commonly known is its application in digital art trade and in every phenomenon involving trade and money transactions the risk of scams always awaits.
There is more news about NFT scams as scammers and the cyber criminals hacked the users from Nifty Gateway an year ago and took home abundant NFTs. They even utilized the credit cards of the people who had not activated any security measures such as two factor authentication to further buy NFTs almost up to worth $10 million per account.
How does NFT scam operate?
Experts are of the opinion that NFT loss or gain entirely depends upon speculation. Initially attracted towards these assets results in price hike, but one cannot predict the long term value. The hackers are lured by the capital generated through the digital assets therefore they manipulate the technological techniques to deceive the users in order to break into their crypto accounts.
The users become the victims of NFT scams due to their ignorance and lack of information and the scammers succeed in their attempt because they appear totally natural to be believed. Therefore, educating oneself and acquiring the security guidance related to cryptocurrency and NFTs is mandatory.
TYPES OF NFC SCAMS:
As the crypto market is gaining momentum and NFTs are becoming a common trend in the online digital world, the scamming risks are also getting pace. Here are some common traps laid by the cybercriminals to lure the NFT buyers.
- Phishing Scams and Suspicious Pop Ups
Though an antique technique, phishing scam is still popular in the online digital world. It uses a pop-up link or an email redirecting the users to a fake website where the hackers could easily decode the credentials of the user to get an access to his digital wallet. The email may look reliable, but it takes you to a fake NFT platform that requests the private wallet keys and once the hackers get hold of the information, they can easily deplete any cryptocurrency or NFT assets in the user’s wallet.
Recently, an Ethereum named MetaMask’s users were targeted in a phishing scam that contained advertisement asking for users’ private wallet keys. Moreover, there are some fake pop ups operating via Telegram, Discord etc. linked to the abundantly logged-in and popular websites.
Using the social media, the scammers attract the users towards NFT giveaways and usually offer a free NFT as a reward of promoting this offer in their social circle. Such giveaways are also known as airdrop scams. At the final moment of granting the giveaway prize, they acquire the account details of the user’s crypto wallet and break into the wallet as soon as they gain access to the wallet.
- Social Media Impersonation
It is also a commonly used technique by the scammers where they imitate the original social media accounts of owners to trap the users. Using the real details of a website, the cybercriminals create a fake online profile that contains a real NFT holder’s credentials to make it appear true to the users. Once the users are convinced about the credibility of a profile, they sell them phony NFT assets.
- Pump and Dump Scheme
The pump and dump scam involves increasing the value of cryptocurrency to ridiculously high levels in a short space of time and disappearing at the last moment. This happens when the scammers drive up the price of an asset only to ditch at the last moment, leaving you to pay a highly inflated price with no other option left. When a group buys multiple NFTs or currency, the hackers artificially increase the price demand and once they are done, they cash out and sell it to the highest bidder leaving the ones who were not involved in it with worthless assets.
Pump and dump schemes are usually regulated by malicious groups and unfortunately this practice is at rise in the crypto world.
- Plagiarized NFTs
The scammers use minting to deceive the users. They plagiarize the real NFT owner’s work and create a counterfeit account on a trading platform presenting the NFT work as authentic one, they then sell it to the highest bidder. Once the buyer realizes the truth, the asset has already lost its value. The buyers should always keep in mind that minting a digital file does not make it a new authentic asset.
- Deceitful Storage Sites
NFTs can disappear and be lost once you purchase them. It may sound abstract but as NFTs are all about possessing an asset but the asset itself could be anything. The contract that is present on the blockchain is entirely different from the real artwork. When a user buys a file uploaded from an original platform he bids and pays the owner that creates a record of ownership known as smart contract. The smart contract is minted on the blockchain but the file uploaded in actual is a separate entity.
- Bidding Scams
Bidding scam usually happens in the secondary market where one tries to resell their NFT. Once you enlist the NFT for sale, while bidding for it, the highest bidder who is actually a scammer suddenly switches the crypto currency used without informing. Apparently, it is the highest price but the worth of cryptocurrency reduces.
- Investor Scams
While trading NFTs, people hide their actual identity that provides them an opportunity to produce investment scams. The actors propose an attractive project for the buyers to invest in and after collecting the investment money, they disappear from the scene entirely.
- Rug Pull Scams
The scammers lure the users by attracting them towards a fake NFT project or asset collection and giving them high hopes about earning a large capital. They promote this campaign on social media to pull the public. Once the NFT project or collection is purchased, they disappear leaving behind their unfulfilled promises and false hopes with the investors. This results in decrease of the worth of the asset, destroying its future repute.
- Malicious NFT Market Places
In NFT marketplace, the cybercriminals usually set up fake trading platforms to get an access to the crypto wallets of the users. If someone mistakenly opens a fake website and types all his wallet details, the wallet could get depleted in minutes.
- Impersonating Customer Support
The ridiculous customer support service of some NFT and crypto platforms is also a threat to user’s wallet. Acquiring help on the public forums such as Twitter, Telegram or Discord may expose the customer for cyber-attacks. Deceiving users as customer support service to resolve their queries, they might get access to their wallet details and their wallets.
WAYS TO AVOID NFT SCAMS
The crypto assets could be secured by following the below mentioned security steps.
- Enable Two Factor Authentication
Enable two factor authentication to keep a check on your NFT wallet activities such as transaction of funds or any external log in so that you could be alarmed if anyone tries to access your wallet. A reputable crypto wallet always offers a protocol to safeguard your assets and to be safe from phishing attacks. One can also enable fingerprints or facial recognition passwords for their wallets to ensure maximum protection.
- Protect Your Wallets with Strong Passwords
A strong composite password is mandatory for crypto wallet protection. Never use the same pin for any of your two accounts repeatedly. Limit the vulnerability of your NFT and crypto wallets by using a complex password.
It is the best practice to ‘leetify’ your password as leetified passwords are difficult and challenging to be cracked. This can avoid the scammers to get their hands on the user’s NFT collectables.
- Turn Off Your Discord DMs
In case you ever receive a DM from a public figure or influencer, never reveal your account credentials at the first place. It is a basic etiquette in the crypto world that a C- level staff member never sends you a message until you yourself consult them. The scammers usually get access to the administer level and post counterfeit minting links in the announcement channels. It is the best practice to consider everyone a cybercriminal until proven authentic.
- Verify NFT Seller Accounts
Before buying NFT, always check upon the retailer’s validity. Check his NFT marketplace account and the blue check verification mark. Verify his social media profiles and Discord. Also investigate the NFT’s blockchain authenticity to identify his ownership.
- Use a cold storage wallet
One should prefer choosing a cold storage device as it is safer for securing your assets offline. This can protect the wallet from being hacked or from digital attacks as only the owner could have the access to the wallet.
But having no connection to internet, one can also lose the collectables in case the device gets damaged or lost.
- Cross Check NFT Prices
While purchasing a NFT always cross check the market prices with the seller’s demand. Look for popular online trading platforms such as OpenSea, Mintable or Axie MarketPlace etc. to cross check the asset’s prices. If the demand of the seller is relatively higher or lower than those prices, then it is most probably a scam.
- Always Review NFT Transaction History
Beware of counterfeit NFTs. Always look for the NFT transaction history before purchasing. Never accept the requests to send free NFT assets to your crypto wallet as it could be a trap laid by the scammers to lead to your crypto wallet.
- Keep an Eye on The Bids
While bidding for a NFT keep a check over the crypto currency. Never accept anything worth lower than your demand. Always double check before finalizing as this is the point where scammers easily deceive the sellers.
- Consult Reputable NFT Markets
While buying NFT always look up to well-known trade markets to avoid being trapped at the hands of cybercriminals. Not every marketplace appearing on the site is authentic. Look for reputable marketplaces such as Rarible, Foundation, OpenSea, Mintable etc. to ensure safety and security of your crypto wallet.
- Avoid Opening Non-Credible Links and Websites
This is a normal practice in cyber-attacks to send concealed links to deceive people easily and get an access to their personal accounts and data. In crypto world one should totally avoid opening the skeptical links as they can be an easy access to your confidential data. So never click a link sent by any person unknown to you to secure your NFT wallets.
- Keep Your Wallet Credentials Private
Never trust anyone with your crypto wallet details. Sharing these credentials with others make your NFT and crypto wallets more prone to cyber-attacks. So, avoid sharing them with anyone at any cost. Keep your key phrases and recovery passwords private.
- Protect Your Gadgets with Cyber Security Software
The devices one use for accessing the NFT and crypto wallets should be safeguarded and protected in the best possible way. Many viruses and malicious websites have the capability to steal your personal data from the PC or other electronic gadgets. In order to avoid such mishappening one should always keep a trustworthy anti-virus installed in his devices to keep the crypto wallets safe and sound.
Are NFTS Worth it?
It is a bitter truth that the NFT scams have become a common practice in crypto world and with the escalating number of scams people consider NFT as only a scam ignoring the other side of the picture. People usually get scammed in the utter excitement of making millions of dollars in the NFT and crypto domain without taking all the prerequisite security measures.
There is always a risk involved when it comes to trade and investment in any domain and crypto currencies being different from the traditional ones involve a higher risk factor. But taking the right measures in the right direction could prove fruitful for one.
As in the present era where technology has turned every daily life venture just a click away, this advancement in technology has also put the human privacy and confidential details at a higher risk that could easily be accessed by the cyber criminals. Cryptocurrencies are not regulated or backed up by any official authority or organization and their functions are only related to the daily life. With the growing NFT trend in the crypto world, the hackers and cyber criminals have also become more active and have found advanced techniques and tools to trap the users and make money.
NFTs are not fraud but they could be stolen way easily and this practice will continue to rise with the escalating NFT market. Therefore, the cyber security precautions are of prime importance in the NFT trade market. One should ignore every suspicious activity popping up to grab his attention and always make sure that his digital security is as updated as it could be to ensure avoiding any mishappening.