Do you want to invest in NFTs but you're not sure about security?
NFTs — or "non-fungible tokens" — are digital resources that can represent objects like art, music, videos, and microtransactions in games. They're bought and sold online, usually with cryptocurrency, over the blockchain.
While blockchain is usually a secure technology, there's still a problem that many NFT buyers face on the market: scams!
If you want to buy or sell NFTs, you'll need to look out for different types of scans and learn how to protect yourself from scammers.
What is an NFT scam?
An NFT scam happens when scammers create fake digital NFTs to sell to a buyer. The scammer's goal is to get access to the buyer's personal information such as (such as PayPal, Venmo, and Bitcoin).
There are many types of NFT scams.
The 3 most common are:
The Rug Pull Out Scam
In this type of scam, the seller creates a fake NFT, then pull out of the sale after receiving a certain amount of money from the buyer.
The Pump and Dump scam
This is when someone provides false information about an NFT to boost its price. This way, you end up purchasing an NFT for a much higher price than it's worth.
The Bidding Scam
In this scam, the buyer places the highest bid for your NFT but changes the purchasing cryptocurrency without your knowledge. This would leave you at a huge loss which could cost tens of thousands of dollars.
How to avoid getting scammed out of NFT's
There are many ways to avoid NFT scams:
Step 1: Never give out the password to your cryptocurrency wallet. This will help ensure that the scammers can't get into your account as easily.
Step 2: Avoid going on unverified marketplaces. Some marketplaces may be IP grabbers or account grabbers.
Step 3: Avoid rushing when it comes to purchasing in auctions. You should always look for the best prices and make sure that the NFT being auctioned off is real.
Step 4: Verify the authenticity of the buyer/seller prior to making a sale or purchase. Using reviews is the best way to verify because you could check their past sales.
Step 5: Verify NFTs through a website such as NFT API | QuickNode. This website verifies the contract, the owner of the NFT, and if the NFT is real.
Jacob is purchasing an NFT but wants to confirm if it's real. What should he do?