As the market continues to expand and gather momentum, NFTs are becoming an increasingly popular target of scams and hack attacks.
A nonfungible token (NFT) is a distinct type of digital asset on a blockchain. These digital assets offer ownership authentication and are not transferable like other forms of cryptocurrency.
Each NFT is distinct and cannot be duplicated or replaced. NFTs are becoming increasingly popular among consumers and companies as a means of generating income, exchanging collectibles, and promoting products. Scammers, on the other hand, are advancing in their techniques to defraud individuals and businesses.
Knowing the many types of scams that have been used by hackers will help you recognize some NFT scams. In order to assist you to recognize potential scams and learn how to prevent frequent NFT hack assaults, we’ve put together a list of some of the most common NFT scams.
Common NFT scams
NFT scams either obtain credentials to access a person’s cryptocurrency wallet or outright defraud victims of their money. Here are some of the common NFT scams to be on the lookout for.
- Rug pull scams
- Phishing
- Airdrop and giveaway fraud
- Impersonation/catfishing
- Pump and dump scams
- Counterfeit/plagiarized NFTs
- Bidding scams
- Investors scam
Rug pull scam
A rug pull NFT scam occurs when scammers promote a phony NFT or developers hype up an NFT to obtain investor funds. Once they’ve received funding or purchased the NFT, the promises are either broken or the project is canceled entirely. This results in a sharp decline in value. Additionally, the scammers remove the option to sell this NFT.
Phishing
Phishing scams use false emails, pop-up windows, and adverts to direct users to a fraudulent website. The fake website then seeks users’ private wallet keys in order to get access to their digital wallets. Scammers can empty the digital wallet of any NFT collection or cryptocurrency once they have access to this secret information. For instance, many scammers would tell you that you have won free NFTs.
Airdrop and giveaway fraud
Sometimes, scammers will utilize social media to advertise NFT giveaways, enticing users to share their NFT or register on their website in return for a free NFT. When it’s time to claim the gift, the scammers will inquire about the victim’s cryptocurrency wallet and hack their account to take NFTs and cryptocurrency.
Impersonation/catfishing
To get customers to buy fake NFTs, scammers would set up fake social media accounts and related spam websites. These profiles frequently copy actual artists. Other scammers create fake tech support accounts. The scammer may send messages requesting account details in an effort to assist the victim before stealing their login information.
Pump and dump scams
The pump-and-dump scam happens when a lot of cryptocurrencies are bought by a group to boost demand and raise prices. When the price rises, they sell the assets and withdraw their money, leaving other people with losses.
Counterfeit/plagiarized NFTs
Criminals forge designs and offer fake NFTs for sale in reputable online stores. The victims frequently learn too late after purchasing the counterfeit NFT that the fake and stolen NFTs have no value.
Bidding scams
Bidding scams occur when a fraudster places the highest bid on an NFT, but when it comes time to pay, he or she substitutes a lower-value coin. Always verify what cryptocurrency the top bidder is paying with before accepting if you’re selling your NFT.
Investor scams
People remain anonymous when buying or selling NFTs, which facilitates the development of investment scams. Threat actors build a seemingly desirable project to invest in with investment fraud. Once they have collected the money, they vanish into thin air.
How to avoid NFT hack attacks
Below, we’ve highlighted some suggestions for preserving your NFT holdings.
- Secure your login information
- Use 2FA and a special, secure password to safeguard your wallet
- Use a cold storage wallet
- Do not respond to suspicious messages
- Examine the bids and verify NFT price ranges
- Protect your devices by using security toolsÂ
- Research sellers and websites before engaging
- Check the transaction history of the NFTÂ
- Use verified marketplace
Secure your login information
Never divulge the password of your cryptocurrency wallet to anyone. The confidentiality of these details and any recovery codes is required. These passcodes are completely unnecessary for anyone to know. A hacker can access your wallet and remove NFTs if they discover your seed phrase or private key. Think about saving your login information somewhere tangible, like a hard drive.
Use 2FA and a special, secure password to safeguard your wallet
You can detect attempts to access your accounts by using two-factor authentication. It is more challenging for someone to steal someone else’s identity when facial recognition or biometric login is used. Create secure passwords for your wallets and NFT accounts as well.
Use a cold storage wallet
Cold storage wallets are methods of storing cryptocurrencies that are not accessible online. After acquiring an NFT, it’s better to move it out of the marketplace account, which can be hacked by scammers, and into cold storage or hardware, such Trezor or Ledger. Options for cold storage are safer because all the important data is on the device itself and is more difficult for threat actors to access.
Do not respond to suspicious messages
By staying away from any strange emails, websites, texts, or messages, you can avoid coming into contact with hackers. These are probably phishing efforts to attempt to infect your device with malware or to steal your login details and sensitive data. The link could still be false even if it appears to lead to a legitimate website. It’s advisable to never click on any links and to always go directly to the website.
Examine the bids and verify NFT price rangesÂ
Verify the digital currency once more before accepting any bid. Never settle for less than you expect. Also, visit trade platforms like Axie Marketplace, Mintable, or OpenSea to compare prices before purchasing an NFT. It’s most likely a fraud if the price appears to be significantly higher or lower than those on these trustworthy trading websites.
Protect your devices by using security toolsÂ
In the event that you do choose to click on a bad link or piece of software, antivirus and anti-malware programs can safeguard your devices. A virtual private network (VPN) could be used to increase encryption security.
Research sellers and websites before engaging
Do your own research (DYOR). Be mindful of the website addresses, merchants, and applications you access. In addition to researching a seller’s social media profiles, other listings, and other listings from this seller, look for the blue check verification symbol next to their name.
Check the transaction history of the NFTÂ
View the history of previous NFT transactions. Cross-check pricing on other online markets to determine whether they are similar. NFTs with transactions all in one day should be avoided.
Use verified marketplace
Watch out for new markets with weak security. Offers that seem too good to be true should not be believed. There are numerous emerging markets that provide bare-bones security. Avoid rogue exchange marketplaces and stick to trustworthy ones like OpenSea, Rarible, Mintable, Foundation, MakersPlace, and Axie Marketplace.
Conclusion
In the NFT space, many fundamental cybersecurity measures are applicable. Hackers are becoming innovative with their tactics. It is crucial to take caution when first starting out in the NFT industry. Never reveal your private keys or seed phrases, and stay away from untrusted NFT marketplaces and shady websites.
Remain vigilant and make sure you’re keeping an eye out for cyber risks. Your NFTs and other digital assets should be secure as long as you use caution and safeguard yourself with the greatest cybersecurity software.
