Crypto success stories are highly enticing. But follow these 4 rules on how to spot a fake NFT for safe investing.
When it comes to crypto market, regulation is the black sheep among the factors that make it. This is an uncharted territory that lacks any authority to overlook scams and phishing simply because, it is not possible technically. And this is what has led to exponential increase of fraudulent trade in the market, especially with the current craze of investors, NFT.
OpenSea, one of the leading NFT marketplace, revealed on Thursday, “80% of the items created with this tool were plagiarized works, fake collections, and spam.”
Following the stat, the company announced amendment to its policy of unlimited NFT creation for registered users, caping the number of free NFTs per user to 50. Almost all the free NFTs on the platform were either plagiarized or fake.
And it is not really shocking. On one hand, creators are selling NFTs for thousands and millions of dollars because of a simple price mechanism of this DeFi commodity- demand and supply. Demand for NFTs is on historic rise which explains meteoric rise in their prices. Amid all this, if a creator is selling an NFT for free or dirt cheap prices, the deal is highly likely too good to be true.
So if you too are planning to jump on to the bandwagon, there are a few things you need to know about how to spot a fake NFT.
How to Spot a Fake NFT?
The idea of owning a digital artwork is actually a favourable choice given the market sentiments. NFTs have a solid future and one would not regret an investment made today. However, if you put your money in fake NFT, odds of which are high if you’re a novice, then you might never want to invest in crypto market again.
It is really important to distinguish bonafide work from the pool of fake NFTs if you do not want to loose on your hard-earned money. Having said that, here are a few must-avoid trends of market that will teach you how to spot a fake NFT.
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Fraudulent Support Team of Marketplaces
Has it ever happened to you while scrolling through NFT threads on Discord or other similar platform, a support executive claiming to be from a certified NFT marketplace shoots you a message? What follows later is not difficult to guess. They usually ask the user to send their security phrase of the crypto wallet and other important credentials and steal the money. Needless to mention, these are not from the marketplaces that they mention, in fact, individual hackers and cons.
What to do if you encounter a similar situation?
- Do not fall for such scams. Keep your credentials safe and report the accounts reaching out to you.
- If you are willing to, go an extra mile and write to the support team of the concerned marketplace, informing them about the scammers using their name.
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Fake NFT websites
When selecting the right marketplace to trade NFTs, make sure to only go for certified names. This industry is still at a nascent stage and one can come across hundreds of websites offering attractive benefits to buy and sell NFT. Unless the site is a renowned name, it is more likely a platform created by hackers to dupe you into giving your credentials and other sensitive wallet details.
One can even spot these websites as pop ups offering great discounts while you are browsing a certified platform. The motive of these hackers is only to steal money off your wallet.
Here are some tips on how to spot a fake NFT website for your safety:
- There are certain tools that you can use to confirm the authenticity of NFT websites like ScamAdviser and Trend Micro Check.
- Always check the contact adress of the NFT. If it does not matched the one mentioned on the website where NFT is listed, run!
- Always avoid feeding any information to third party pop ups. It is always wise to ignore these.
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Watch out for Bidding scam while selling your NFT
So you want to sell your NFT? Here is the most common way sellers fall to fraud during this process. In this case, the bidder on the secondary marketplace changes the acceptable form of currency without your information to the one that holds lower value than the currency you listed originally.
How to avoid this situation?
- Stick to your bid, accept only the amount that you expect. Don’t accept the deal that pays you lesser than what you list for, instead, wait for the right bid.
- Always cross check the currency that you choose while listing your NFT for sale.
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Pump and Dump Scam
This is another form of scam that most crypto investors fall for. Under pump and dump process, the scamsters promote and hype a new NFT project to pump up investments in either the project or the crypto. Once it draws considerable investments and the prices rise exponentially, these scamsters cash out all their money and even shut down the project in some cases to walk off with money.
How to avoid being scammed into pump and dump scheme?
- It is extremely important to do in-depth research about a project before putting in money. This involves scanning the past graph of the project, how old it is, and what is its wallet record like.
- Talk to expert investors, especially someone who has invested in the project.
- Scan through the official social media channels of the project before investing. Try to become the part of conversation surrounding it on Twitter and Discord and figure out how real the people talking about it are.
NFT market is still in nascent stage. And given the jaw-dropping success stories surrounding them, it is easy to get excited about investing in non-fungible tokens. However, right research and expert advise is always cautioned to not fall for any trap that dupe you off your money.
