Introduction

It comes as no surprise that malicious attackers are looking for a quick buck amid the NFT growth. 

NFTs first appeared in crypto-space around 2014. Still, the buzz surrounding the non-fungible digital assets didn't develop until recently as mainstream businesses, investors, and influencers entered the market.

While there is still a considerable demand for NFTs, security issues are also rising. But fortunately, if we are aware of these frauds, we may take steps to avoid them.

This article is going to do precisely that! 

Here, we are going to discuss seven different kinds of NFT Scams that we come across frequently but still lose control of them. Additionally, we will talk about a few ideas for managing these scams. 

Let’s Begin! 

7 Different Kinds of NFT Scams

Problems with NFT scams are that they are at an evolving stage, so there might be a new attack capturing NFT's vulnerabilities. But for now, we have seven common scams exploiting the NFT space. 

Rug Pulls

In the crypto-sphere and NFTs, a rug pull occurs when a development team abruptly drops a project and sells or eliminates all of its liquidity. It means to "take the rug out underneath someone" or to stop being a supporter abruptly.

It is usually accompanied by a developer creating hype around their NFT project. Often using social media to create a fanbase, only to pull out the investor's fund. 

One of the biggest NFT rug pull till-date, the Baller Ape NFT club, loses almost $2.6M worth of crypto-assets. 

Soon after the public sale completion, the developer deleted the website and social media posts of Baller Ape NFT, leaving no traces of the project. 

     2. Fake NFTs or Plagiarized NFTs

Replicating popular NFTs and marketplaces has been on the list of NFTs scams for some time now. Fake NFTs involve an imposter stealing another's creation, minting it, and then selling it in the market as the original author.

In January 2022, Opensea reported that more than 80% of NFTs produced with its minting tool were counterfeit.

     3. Phishing

Phishing isn't new; from making exploits in Web 2.0, it has entered into the Web3.0 domain as well. With NFTs, phishing is a significant cause of concern. 

Scammers use phishing techniques to access your NFT account details, often via fake emails and social media links. The fake links then request the user's private wallet key, giving them access to their wallets.  

     4. Bidding Scams

Bidding scams usually occur in the secondary crypto market when the NFT holders list their NFTs on sale. Obviously, you would want to sell your NFTs to the highest bidder, which in this case, is a scammer. They bid the highest amount in a specific cryptocurrency but then, without your knowledge, change the underlying currency to a lower valued one. 

For instance, the bidder promises you 100 BNB for your NFT but replaces the currency with 100 Polkadot, which is much lower priced. 

      5.  NFT Pumps-and-Dumps

Similar to the market manipulation technique, in NFT pumps-and-dumps a group buys a large number of nonfungible assets, creating a virtual hype in the price. The post price increase, these scammers sell off the NFTs leaving other investors with worthless assets. 

Typically, scammers create a craze around an NFT through social media and celebrity endorsements. They frequently invest large sums of money in the NFT, driving up the price and making it challenging for investors to ignore.

     6.  Fake Airdrop Scams

Airdrop has made its way from DeFi to the NFT sphere due to the soaring demand in this field. Airdrop in NFT refers to the free distribution of NFTs, usually utilized by creators to promote their work. But sometimes, scammers use high-valued NFTs airdrop to access your wallet information.

You need to link your wallet to a smart contract and sign a transaction in order to claim an airdrop. This method can expose your wallet to attacks if the smart contract is built with an evil purpose.

      7.  Malicious NFT minting contracts

The most typical NFT scams use platforms or URLs that incentivize to mint fresh NFTs. Scammers frequently utilize bogus minting contracts and verified project accounts to trick users into connecting their wallets to malicious contracts that steal money when a "hyped" project is ready to start an NFT.

How to avoid NFT scams?

The growing craze for NFTs and rising market cap attract scammers' interest as a new module for hacks. 2022, especially, has seen an exponential increase in the number of NFT heists. Here are a few simple steps that you can follow to prevent these scams. 

Always be attentive to the permissions you grant an NFT smart contract you are connecting your wallet to. Buy NFTs from the project's official website or check their Twitter account for information. Keep your wallet's private key safe and secret. Keep your eyes open for rug pulls and fake airdrops. Sudden hype around a digital asset can be misleading. Look for a smart contract audit attached to the project you are investing in. Verification by a third party gives an additional security certificate to the project. Prefer using cold wallets. It is often safer to store your NFTs in a cold wallet rather than a hot wallet. They are only online when plugged in. Hence, they are less vulnerable to theft and hacking.

Wrap Up:

Nobody wants to miss out on a ground-breaking concept. The reason why many individuals are intrigued by NFTs, including scammers.

Cybercriminals devise new schemes to deceive people frequently as they grow increasingly creative. But if you remain cautious and aware of the various scams and how to spot them, you'll undoubtedly keep yourself safe when exploring the fascinating world of NFTs.