What are the top 3 scams in the NFT space?

Scammers suck. As technology becomes more and more advanced, scammers figure out new and innovative ways to steal from unsuspecting people. Sadly, NFTs are no exception.

Even the simplest mistake can drain your digital wallet (including your NFTs) and ultimately cause you to lose your hard earned money.

Recently, I researched the top 3 scams to watch out for while investing in NFTs and here’s what I found.

1. Fake NFT projects: One of the most common scams in the NFT space is the creation of fake projects. Scammers will even go as far as creating a website for a “new” NFT project, (or even blatantly copy a known NFT project) and market it on social media as their own to attract unsuspecting investors.

Scammers will then disappear after they’ve raised enough money through the sale of their fake NFTs. (This is also  known as a rug pull). Personally, I’m always leery of a new project that doesn’t show any actual art, while offering a “reveal” only after they sell out. That’s definitely a red flag for me.

2. Phishing scams: Phishing scams involve scammers tricking users into clicking on a malicious link, or giving up their wallet’s private key phrase. This can happen through fake promotions via fraudulent websites, emails and social media accounts.

If you connect your wallet to a scammer’s website and sign a malicious transaction, scammers can then take whatever you have stored in your digital wallet.

For example, watch out for free giveaways, or a sudden air drop offer (even from an NFT project you already own). One of the best ways to protect your new NFT assets are to join (your legitimate NFT project’s) Discord channel.

The Discord channel is intended as a communication hub. There, your legitimate NFT project creator will communicate properly about any new giveaways with ONLY official links listed on their channel.

If you get a random offer for a free NFT, or air drop on Twitter, don’t just click on the link in haste. First, double check the Discord channel and if that same information and / or link is not mentioned in Discord, that tweet is likely a scam.

Also let the project owner know (via the Discord) if there are fake accounts trying to scam everyone so they can work on warning the rest of their investors. Remember, when you buy an NFT you are part of a community. And you can also help protect other community members from scams.

3. Pump-and-dump schemes: Pump-and-dump schemes involve falsely inflating the value of an NFT, and then selling it off for profit.

Many times the scammer owns a majority of the NFTs they are pumping which is definitely a red flag.

They will typically use marketing channels (like social media) to promote the NFT project in order to generate “hype” with the intention to eventually sell their own holdings.

Once the price has reached their desired sell-off level, they cash out their NFTs (sometimes even selling them at a lower price than the current floor price) which drives the overall value of the project back down.

One way to avoid this is to always know what you own. Does the NFT have a proper use-case? Does it offer bonus content, or something that is of value to you?

If not, (and someone is pumping the project in a way that makes no sense to you), do not FOMO into the project. Only collect NFTs that you truly believe in (rather than) what someone else is saying that you don’t necessarily agree with. Whenever possible, avoid buying at all time highs.

To avoid falling victim to these particular scams, it is important to do your own research before investing in any NFT project. This includes checking the credentials of the creators (ie: making sure they are fully doxxed), and reviewing the project's whitepaper and website.

Only use trusted and well known NFT platforms (like Opensea or Rarible) and and be extremely wary of unsolicited messages. And last but not least, no one should ever request your private information (especially your wallet's private keys). Always be vigilant and protect yourself and your assets at all times.

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