Since the beginning of 2021, non-fungible (or nft) tokens continues to increase its value. It took six months for NFT to reach USD 2.47 billion, but the NFT platform produced USD 1 billion in just seven days. Hackers and scammers follow their example because of increased liquidity on the market. This is the essence of all businesses. We saw there were several case of scam that had happened to NFT.
DeFi scams resulted in USD 474 million in losses in 2021. This includes USD 113 million for “Pull The Carpet” and USD 361,000,000 in fake coins. Despite its success, the NFT scam contributed significantly to the total amount of funds lost by DeFi hackers. A fake NFT Banksy is sold for $300,000. Then, someone storms “EverydaysBeeple”. These are just a few examples of NFT scams that you need to avoid.
I know we are all excited because this new industry seems to be making a lot of people rich by making/buying/selling NFT. However, to make money you need to learn how to protect it. We will be discussing the types and ways to avoid NFT scams in this article.
1. Fake websites/wallets
Another scam involving NFT is the sudden appearance online of fake NFT websites or copy shops. Although the site appears identical to the original, it has some minor differences that are often overlooked. Once you log in with your credentials, however, the hacker can start working. They will be able to access your phone and credit card information, as well as withdraw all of your money.
A hacker gained access to the Metamask wallet of an NFT fan and he lost 5 NFTs. This year has seen a 300% increase in suspicious domain name registrations, which indicates an increase in fraud websites. Domain names that contain “nft crypto”, or “nft trading” are often used by duplicate NFT websites. This is because hackers are eager to launch a cyberattack.
Hackers can also use fake NFT shops to launch NFT scams. These websites don’t usually use the correct logo, and they sell NFT that isn’t on the blockchain. These websites will sell fake NFTs by hackers using NFT explosions or user negligence.
You should therefore always check the domain name for typographical or spelling errors. Before entering any details, please ensure that you carefully review the website. Please do your research thoroughly and as extensively as you can.
2. NFT Recasting Burning
NFT casting is another popular NFT scam. Smart contracts are not perfect. People can still use NFT even after they have burn. Hackers then claim to be authentic. But discard the NFT duplicates they have created. More than 4000 NFTs were reprinted and then sold again on the secondary marketplace.
One thing is certain from the discussion. For the most recent security updates, you should always be attentive to official social media channels from the NFT project. This can be done by listening to the warnings. Keep safe and informed according to your conscience.
3. Rug Pull
The popular NFT scam saw the NFT developers abandon the project at half-way and disappear with investors’ funds. This is common in the DeFi World because malicious developers often use untrusted, permissionless platforms.
NFT developers are eager to use social media channels such as Telegram and Twitter to pull the carpet. They not only highly evaluate the potential and prospects for the tokens but also inject liquidity which gives people a false sense success.
These tokens can sometimes go up 50 times in a single day. Fearful of missing out, reckless investors flock in to get these tokens. After many entry, the developer decides to take all the money they have invested and leave them.
Unnecessary hype, sudden spikes in crypto investing prices, and other signs that there is a lucrative market for these coins suggest the lure of the rich. You need to be aware of the liquidity pools to see if they have secured the token liquidity. To prevent carpet pulling, long-term projects lock in their liquidity for a certain time.