In the past few years, the NFT environment has undergone significant transformation, and it is now very obvious that this digital art form is here to stay.
5 Ways To Avoid an NFT Scam
1. Make sure you’re buying an original NFT, not a duplicate.
2. Confirm your NFT purchase has reliable Web 2.0 backing.
3. Check your NFT’s secondary market before you buy.
4. Buy NFTs that are useful and beautiful.
5. Remember that on-chain NFTs are more secure than off-chain NFTs.
NFTs, as opposed to collectibles, are a respectable asset class for investors. The S&P 500 will eventually have its own version, in my opinion. Buyers should exercise caution because, as is the case with any other asset class, NFTs attract con artists, impostors and rogues looking to make a quick buck. Here are five ways to avoid NFT scams.
Make Sure You’re Buying the Right Original NFT
And do it before you transfer money. One of the most prevalent scams on NFT marketplaces is the duplication of original NFTs.
Scammers, who are prevalent on networks like Telegram and Discord, forge duplicate NFTs based on an artist’s original creation. The marketplace then lists these plagiarized or stolen NFTs for additional bids. The scam copies are so expertly planned and carried out that one can easily be duped into thinking they are purchasing the genuine NFT. This occurred with our Lovely Humans collection, released in October 2022. Prior to our launch date, it was replicated four times on an NFT marketplace.
Another instance of duplication involves the development of a second line or sequel collection to a well-known NFT collection. Investors are misled into thinking that this phony collection is an expansion of the original collection.
Several NFT marketplaces have taken steps to curtail this activity, according to a November 2022 Verge feature.
Confirm Your NFT Has Reliable Backing
Owner names are frequently concealed, making it nearly impossible to determine who owns an NFT in any of the marketplaces, with the exception of those NFTs that are built on thriving communities and Web 2.0 companies. This is significant if something goes wrong or if you purchased an NFT with a utility. Keep track of the Telegram and Discord communities for the NFTs you’re thinking about buying.
More and more Web 2.0 companies are coming to the conclusion that Web3 is an essential channel for their business’s distribution. To benefit from early adopters, entities like Porsche and Gary Vaynerchuk have established NFT projects. NFTs enable businesses to connect with their audience in new ways by offering privileged value and experiences they previously wouldn’t have been able to offer.
More and more Web 2.0 companies are beginning to realize this. For this reason, before investing in an NFT creator or collection, confirm that it has a reliable Web 2.0 backing. The acquisition is immediately de-risked.
Scammers frequently create false social media accounts and customer support pages that look real in the name of community building, which can easily mislead an eager NFT buyer. Scammers may ask you for private information, for example your seed phrase or private key, in order to repair any issue you may be experiencing if you connect to one of these phony customer service servers rather than the real one.
Check the NFT’s Resale Market
Despite the fact that Bored Apes’ prices have dropped drastically, you can fairly likely assume that a Bored Ape NFT still has some worth. A fantastic technique to determine value and stay away from frauds is to check the resale market on NFTs.
Buy NFTs That are Useful and Beautiful
Art is a subjective endeavor in both the actual and NFT worlds.
NFTs should be connected to a utility if they’re to survive past the hoopla. Membership and access, events, quality time spent with someone, as is the case of our Lovely Humans NFT, are just a few examples of NFTs with utility.
A legitimate signal — real use-cases that were previously impractical with existing technology — is hidden amid this wave of speculative NFT noise. NFTs must be created to improve our lives in some way. Companies must come up with strategies for integrating NFTs into our everyday lives and addressing genuine consumer issues if they want to see NFTs enter the next stage of general acceptance.
This NFT utility can help us become carbon neutral. Blockchain-based machine-to-machine communication will enable decentralized machine-to-machine communication that will enable automated vehicles to communicate with each other to go faster or slower in exchange for paying parking fees for the day, automated appliances in our homes will power up and down based on consumption limits, and human beings will become their own SEO machines.
Pay Attention to Your NFT’s Blockchain
Even though blockchain technology is secure and decentralized, not every network is made equal. Blockchains vary in their susceptibility to hacking. Additionally, some of these NFTs are not kept on-chain. This effectively means that the NFT is connected to the blockchain and stored on a centralized server. Therefore, compared to on-chain NFTs, off-chain NFTs are simpler to hack and steal.
Discord has emerged as the go-to platform for NFT traders to discuss current trends, discover new ventures to invest in, and more. But because of this, con artists target it frequently.
Twitch cofounder Justin Kan lost more than $150,000 when his NFT Discord server was infiltrated. The lesson: It’s wise to balance your portfolio’s risk and asset allocation.
NFTs are here to stay. Even though there are many scams in the NFT arena, the advice above will help you outwit even the craftiest con artists.