By Akanksha Malik

Special to the Findependence Hub

Non-fungible tokens (NFTs) stepped into the limelight in 2021. As more people began putting their money into them, NFTs became part of our everyday vocabulary. NFT investments gained worldwide popularity to reach a market value of over US$40 billion. But like most financial assets, this new cryptographic asset also presents lucrative opportunities for scammers.

In this article, we’ll dive into the five most common NFT scams and how you can avoid NFT fraud.

1. Phishing scams

You need to sign up for a digital wallet to transact on the Ethereum blockchain. The most popular Ethereum wallet for NFT collectors is MetaMask, which was recently targeted in a phishing scam. The NFT scam involves fake advertisements asking users for their wallet keys or their security seed phrases. These fake pop-ups operate on social channels such as Telegram, Discord, and other forums redirecting users to a landing page that looks like MetaMask or other popular websites. A successful phishing attempt can wipe out all the cryptocurrency in your digital wallet.

How to avoid

• Write your seed phrase down on paper. Don’t store a photo of it on your phone, and never give it to anyone. 
• Always visit the verified website directly for all your crypto transactions – not through links, pop-ups, or emails.
• Never enter information into the MetaMask pop-up or any other pop-ups.

2. Pump and Dump NFT scams

Pump-and-dump schemes arise when a group of people buys a bunch of NFTs or currency to drive their demand up artificially. After successfully raising its worth, these experienced scammers cash out by selling their NFTs to the highest bidder.

How to avoid

• Monitor, track or follow the project on Twitter and join its Discord channel to see if it has a good number of engaged collectors and investors.
• Review the wallet records and transaction history of the desired NFT. If there are several transactions around one date, it can be a red flag.

 3. Catfishing 

Since NFTs are virtual investments, their marketing happens on social media, making them vulnerable to catfishing. Moreover, popular NFT communities hire social media influencers and celebrities to promote NFTs; this makes it difficult to tell the real NFTs from the fake ones.

How to avoid Continue Reading…