Besides the ridiculous money involved, NFTs bring incredible value to our world. They pave new ways to transact, forge communities and reinvent the way we approach ownership. But they also attract some of the smartest criminals around.
Their goal? Come up with the most cunning and creative ways to con people out of their hard-earned cash.
Techniques like rugpulling or airdropping see unsuspecting people lose huge amounts of their earnings and NFTs in an instant. So if you’re planning on heading into the NFT space or have already invested in them, then be on the lookout for these scams.
What Are NFTs?
The word NFT stands for ‘non-fungible token’. They’re essentially assets that act as a digital representation of real-life objects. Think music, art, videos and gaming items.
And they’ve been amassing huge value in the real world.
An NFT, or digital, version of the very first tweet was sold for over £2 million. Highly pixelated 8-bit cartoon images of what are known as CryptoPunks, sell for upwards of £9 million. And a collage of over 5000 pieces of work, known as Everyday’s The First 5000 Days sold for roughly £52 million.
To trade or buy NFTs, you generally have to go through online cryptocurrencies. Being that they operate with the same underlying code as cryptocurrency, buying an NFT will store it in an online personal wallet.
One of the most powerful features of NFTs is that it allows for every item to be unique. As long as it is sold as an NFT, it has a unique signature. So no matter how many times the music or video is shared or viewed, the owner retains the unique piece.
Scams To Be On The Lookout For
Having huge amounts of money flowing into any space attracts huge opportunities.
And like a pack of starving hyenas, swindlers can smell opportunity from a distance away.
Like real-world scams, crypto scams leave people shattered. Often leaving them with nothing, these web3.0 con-artists can wipe away entire fortunes and disappear without a trace.
With crypto scams becoming increasingly sophisticated, it’s essential that people take cautionary measures within this new, decentralized ecosystem.
Airdrops
While an airdrop isn’t necessarily a bad thing, scammers find opportunity wherever they can.
Airdrops are a way to distribute cryptocurrency, tokens, or NFTs to a web3 wallet address for free. They are generally used to provide extra value or to draw attention to a brand. Whether it’s for promotion, or as added value, it’s wise to keep an eye on what lands in your wallet.
In September of 2021, Twitter user AJ (@babbler_dabbler) tweeted that his wallet was stolen and high-value NFT works were lost. According to him, by simply interacting with the NFTs that suddenly appeared in his account, he ended up losing a lot of money. Just one of his stolen NFTs lost him 13.75 ETH (about £31,000).
Rugpulls
A rugpull is essentially a promise of future value that never gets delivered on.
It’s when a person creates a set of NFTs as a precursor to bigger growth and a promising future, pumps it with all of the right marketing, gets backing, and then disappears.
They pull the proverbial rug from unsuspecting victims. Underneath, no tiles, or carpet, rather dirt and gravel.
Influencers are guilty of fueling this culture, too.
Rapper 6ix9ine was recently involved in an NFT scam, where he backed a brand behind a set of NFTs. After a certain amount was sold (under what was promised), the brand stopped producing them and ran off. 6ix9ine who acted as an ambassador, removed all of the images, posts and associations that he had to the brand.
Plenty More Scams In The NFT Space
With more and more creative ways to con people out of their money and digital assets, it’s critical that you are aware of the many different techniques that they use.
NFTs have brought, and are still bringing, tremendous value to the world that we live in. Rather than being fearful and missing out on the potentialities, be cautious and aware. Keep an eye on your activities, transactions and passwords.
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