Although non fungible tokens can be a fantastic way to generate passive income streams, there are many people who have fallen victim of NFT scams.
There are many different types of NFT scams happening all the time.
The first type of NFT scam you can fall victim to is someone asking you for your wallet’s private key or seed phrase.
When you want to buy non fungible tokens, you will need a wallet such as a Metamask wallet. When you create a Metamask wallet, you will be given both a private key and a seed phrase. A private key is like a pin or secret number to secure your NFT token wallet, and should be kept private or else your assets stored in your wallet can be stolen. Only the person who has the private key can access and manage the wallet. Private keys represent the final control and ownership of digital assets.
A seed phrase is a list of words that can be used to recover access to your wallet should you forget the login details or access details. It is like the “master password” of your NFT token wallet. This is why if you ever receive a message or a pop up asking you for either your private key or seed phrase, make sure you don’t follow their prompts, and if you can, report it.
The second type of NFT scam you can fall victim to is buying blockchain NFTs from the wrong website. NFT token projects have an official website where you can purchase their non fungible tokens from, but sometimes, people buy very similar domain names, that just have one letter in the domain name that is different and then build the exact same website on that domain name. So it can be very easy for you to believe you are buying from the official website. For example, the NFT project Meta Triads has a website with the URL metatriads.com but another one has also been built with the url metatriades.com with an “e” added to the domain name.
So always check the spelling of the domain name before you buy an NFT.
A third NFT token scam you can fall victim to is rug pulls. A rug pull is when someone creates an NFT collection with the intention of making quick money by selling on Opensea their NFTs or listing them on other marketplaces and then quickly abandoning the entire project. You then end up with blockchain NFTs that are worthless. To avoid this from happening, always make sure there is a solid team behind the project with a good reputation and experience in the web 3.0 industry or Cryptocurrency industry and that they have partnerships with good brands and there are articles in the media that are positive. If there’s been a lot of media attention around an NFT project, the chances of them doing a rug pull are quite small.
A fourth NFT scam you might fall victim to is buying an NFT because a celebrity or influencer have endorsed the NFT project. A lot of times, some celebrities or influencers get paid to advertise blockchain NFTs and what they say sound more like an endorsement than an advertisement so it can be quite tempting to purchase an NFT as a result of an ad. But what usually tends to happen is the NFT will go up in value quickly but then fall in value soon after. So if you come across an NFT project because it has been endorsed by a celebrity and influencer, do your due diligence and research the project further before buying an NFT.
A fifth NFT scam to watch out for is when only very few buyers own the NFT collection. So if there are 10,000 blockchain NFTs under a collection but only 40 owners and none of them are under any pressure to sell their assets, it drives the price up. This is why it’s important to make sure there are many buyers for an NFT project because their value won’t be manipulated. You can check how many buyers there are by visiting their Opensea NFT market account.
On the Opensea NFT market, you can see how many owners there are for an NFT project. If on average, an owner owns up to 10 NFTs for a collection of 10,000 NFTs it is a good sign. To find out how many blockchain NFTs are owned on average by a buyer, simply find out how many NFTs are under a collection and divide the number by the number of owners.
A sixth NFT scam you might fall victim to is buying a fake NFT. Someone has simply taken a picture of the NFT and then created a fake account on the Opensea NFT marketplace to sell it. So make sure you always buy from the official website or from their official Opensea NFT market account. Usually, if it is an established and reputable NFT project, they will have been verified on the Opensea NFT marketplace before selling on Opensea their NFTs, and have a blue tick next to their account name.
A true verified account displays a blue tick on the border of the profile image, not on the inside.
A seventh NFT scam to avoid is when you receive messages on Twitter or Discord saying that you’ve been whitelisted to buy an NFT at a discount before pre-launch. With the excitement that comes with being whitelisted we can be quick to go on the link to buy the discounted NFT, but a lot of times it is just fake messages. The best way to find out if you have truly been whitelisted is by going to the official website of the NFT project, connecting your Metamask wallet and then trying to buy the NFT during the pre-sale period straight from their website. If you haven’t been whitelisted, a message will appear saying you can’t complete the transaction because you are not whitelisted.
An eighth common NFT scam is bidding NFT scams. If you own an NFT and decide selling on Opensea your NFT or on any other secondary NFT marketplace, bidders can switch the currency. Instead of bidding in Ethereum, they might bid in another Cryptocurrency and if you accept the bid without paying attention to the currency, you might end up receiving a few dollars instead of a few hundred or a few thousand dollars for your NFT.
So there you have it, the eighth most common NFT scams to avoid.