- NFTs have become a popular choice among artists and investors, making them part of the trend.
- However, such popularity and value also make it a honeypot inviting all types of flies to scrape off your money.
Although Non-Fungible Tokens (NFTs) have been around for quite some time, they were initially limited to a few creators and enthusiastic buyers. The year 2021 can be credited as the spotlight that brought NFTs to general attention and started the madness around them.
NFTs represent a unique proof of ownership and various art forms like paintings, digital art, texts, pictures, audio, video, and others, can be minted into an NFT and made immutable. Due to these unique features and the hype created by celebrities, NFTs have gained popularity among users.
Many artists have chosen NFTs for the exposure and wealth associated with them. The NFT marketplace is filled with scams and cyberattacks, with malicious players trying to create false desires and promises, among people and rip off their money.
As an investor, a person should be aware of the popular methods used by hackers to attract their potential prey. We will discuss some of the means which have been done in the past, and how you can protect yourself from falling into the trap.
Beware of These NFT Scams
Rugpulls
These are quite popular, where developers of a project create false hype. They use the fear of missing out (FOMO) greed among users who want to be an early part of the next big thing in blockchain and often invest without proper research. The developers engage in false promises and unique features which attract investors and raise the value of the NFT.
Suddenly, the developers leave the project and make profits, leaving other investors falling hard on the ground. They may also make specific changes in the code after investments, which prevent the buyers from selling them and listing them on markets.
To avoid rugpulls, people should not give in to their feelings and conduct proper research about developers, community support, and whether the promises are legitimate or not. Legitimate projects often have good reviews on social media and have a credible history.
Phishing attacks
Hackers often send fake emails with malicious links, pop-ups, and bogus advertisements. These can direct you to a fake website that is a replica of the original. Upon entering private keys and seed phrases, the information is leaked to the hackers who may gain possession of your NFTs.
Also, the crypto space is filled with links to malicious discord and telegram accounts that can access your private keys once you click on them.
To avoid phishing attacks, private keys should never be shared on websites directed by clicking on pop-ups and other prompts. Visit only official websites, starting with https, to engage in NFT trade.
Impersonation and Airdrops
Hackers have gone further to utilize social media as most youth are present there. They may create fake accounts of the artist behind a popular NFT and promote false airdrops and they can ask you for private keys to access the airdrop NFTs and people may share seeing the credibility of the artist.
They can also target celebrities like Kim Kardashian, Tom Brady, and others and promoting malicious projects through their accounts. Fake tech support accounts are also popular, which claim to provide customer support but steal your information.
To avoid falling for impersonation and airdrop scams, always visit a social media page through the official website. If the website shows no link, then the platform might not be present on social media. Although the number of followers may make people trust the account, it is easy to get a blue tick and buy followers.
Conclusion
The NFT space, being lucrative for investments, is also a honeypot for scammers. Pump and dump, bidding scams, counterfeit NFTs, and others are also possible ways to make you a victim. Most of the hacks aim to seize your private key and seed phrases.
Users should remember to never share such sensitive information with anyone and double-check the authenticity of the asking party. It is best to enable two-factor authentication and other advanced security features. Investors should not hurry to pour money into any project without thorough research and background check.