Types Of NFT Scams

Crypto enthusiasts often hear people claiming “NFTs? That’s just a scam”. Before exploding in rage and explaining the many benefits of NFT technology, let’s take a step back. NFT critics do have half of a point. NFTs are not a fraud in general but the NFT market certainly has its fair share of issues with scammers. The sphere is relatively new and a lot of capital is poured into it, sadly that also means there are fraudsters willing to take advantage. 

Due to how new the market is, investors sometimes lack knowledge of standard business practices and end up buying a scam NFT. Furthermore the lack of regulatory clarity around NFTs and cryptocurrencies makes investors unprotected from scams. Here, the responsibility lies with the investors, because it's their job to avoid getting scammed with NFTs. That’s why in this article we will be exploring which NFT fraudulent schemes exist, how they work, and what you may do to spot them. 

Types of NFT scams 

When it comes to NFTs there are generally three most common scams to look out for. Let’s take a closer look at each type.

Phishing

Phishing is one of the easiest scams to fall for if one is not that familiar with crypto wallets and the internet in general. This scamming method consists in tricking investors to give up their private keys. Malicious actors often create fake pop-ups promising NFT wealth that links to a website where investors are asked to insert their private keys. Phishers can also pose as crypto investing consultants and request private keys while pretending to help, but before the victim knows the truth, his or her funds are gone.

This phishing scam isn’t that evident. Fraudsters create fake pop-ups to web pages looking normal at the first glance (for example, to crypto wallets). Also, when a newbie buyer faces problems making a transaction, he looks for a piece of advice and he finds it — scammers offer their help, and ask for personal data to “finish the deal” and then boom — investor’s assets are gone.  

Pump-and-dumps

Another very common NFT scam is the often mentioned pump-and-dumps. Scammers will intentionally higher the floor price of the NFT meaning the lowest price of the assets. This is usually done by releasing fake or exaggerated information that hypes up investors, artificially driving the asset price, Then when the price is at its peak, scammers will sell their NFT. The unfortunate investor soon later finds out that the price is not sustainable and can wave bye-bye to the hope of profits.  

Counterfeit NFTs

The third common scam is NFT counterfeit. Just like any artwork, NFTs are also intellectual property. However, way too often the countless hours artists spend creating their work are thrown down the drain by counterfeiters that copy and sell it without their permission. Buyers believe the counterfeited artist is offering their work and placing high bids, however unfortunately for them that’s not the case. 

Are all NFTs scam?

We hope that after reading this article you don’t think NFTs are a scam because actually it is a growing sector full of opportunity and real-world use cases. However, the NFT space has some issues with scammers. NFT investors are left quite vulnerable due to how new the technology is. Unavailable security is yet to be developed and regulatory clarity is still a long way ahead.

Crypto and NFTs excel at empowering the individual, however, it also means that your security is your responsibility. Scams are a real problem, however, if you know what to look out for, you can quite easily avoid them. Educate yourself on how to spot NFT and crypto scams and stay away from fishy “investment opportunities” found in pop-ups and Telegram or Discords chats. 

Conclusion

NFTs have the potential to change the way we enjoy media and the global economy in ways we can’t even dream of yet. The pros are huge, however, some marginal issues remain. The novelty of the concept means that scammers will try to find victims among some naive crypto newbies. However, with the right education and experience, you can learn to spot any scams. 

Stay tuned with SimpleSwap to investigate the Crypto World with all of its strengths and weaknesses!