In the ever-changing internet, everything changes fast, and the trends come and go more often than the seasons. NFTs (Non-fungible tokens) are among the latest developments in the digital industry that have quickly become a craze among netizens. Consequently, this popularity has also attracted negative attention, exposing users to various NFT-related scams and frauds.
Some NFTs out there look like nothing special, something anybody could have produced with Photoshop in a few minutes. But that is not preventing collectors and NFT artists from making a good deal of money transacting with these items.
However, this new environment is also one of the favorite new places to work for cybercriminals, as it’s also happened with digital currencies and other valuable digital assets. Wherever there’s value to trade, criminals will show up to make a profit.
Are you an NFT trader already? Or maybe you intend to look at this new environment to see how the game goes? Whatever the degree of involvement you currently have (or mean to have) with the NFT market, you need to know that risks exist. Keep reading as we tell you all about what NFTs are, the risks they can involve, and the most frequent scams you should be aware of so you can stay safe from them.
NFTs: What are they?
We all know that NFT stands for “Non-Fungible Token.” The critical bit is “fungible.” What does it mean? A non-fungible item cannot be duplicated. Star Trek fans can think of Latinum, the liquid that serves as currency because replicators can’t handle it.
NFTs are closely related to blockchain technology because each is equivalent to a token in a particular position of a blockchain. So think of a blockchain whose associated cryptocurrency is not a digital coin, like Bitcoin, but one of these NFTs. Typically, NFTs come in the form of digital media such as video games, videos, music, or pieces of digital art.
So you need to understand the concept of “blockchain” to get NFTs because these relatively new objects are elements in a blockchain ecosystem. A blockchain is a decentralized system that keeps a transaction ledger. Each NFT is a line in the log.
While digital art items are currently getting most of the attention as NFTs, you can make almost anything an NFT –any physical object, from a toy to a piece of real estate.
NFTs are new kids in the crypto block. But that hasn’t stopped the NFT market from attracting vast amounts of money. For example, Dexerto reports that a single item collected almost 92 million USD after thirty thousand collectors came together to provide the funds.
However, NFTs remain a largely speculative asset. As a result, many investors are trying to jump in the NFT wagon early, hoping their purchases will grow in value dramatically. This is no surprise, as the whole cryptocurrency universe remains fueled by speculative forces.
The risks involved in NFTs
NFTs are kept in cryptocurrency digital wallets. Their trade happens through blockchain operations. NFTs are essentially a cryptocurrency in which the token is not a digital token or coin but an associated object that is unique and can’t be replicated. And since both environments are closely related, the risks behind the NFT trade are the same as with cryptocurrency.
In February 2022, a successful phishing attack happened against OpenSea.The hackers went away with almost 2 million USD in NFTs after the attack. Then, in March 2022, Axie Infinity, an NTF gaming system that has sold more than 4 billion USD, suffered a security breach. It led to Ronin, a service processing Axie Infinity’s transactions through the Ethereum blockchain, to a 600 USD million loss.
Blockchains are among the most secure digital systems ever devised. However, in every scenario, other factors can become security risks and fall prey to malware, phishing, and other problems. For example, NFT platforms can be vulnerable to hackers, and NFT wallets can be hacked.
Awareness is the first step in any digital security strategy. So let’s get started by showing you the most frequent NFT scams out there so you can read the writing on the wall (when it’s there) and be ready to fight them.
The most frequent NFT scams
The cryptocurrency and NFT ecosystems are more extensive than ever today. And as they keep growing, the same sentence will remain true next week or next year. But, unfortunately, the increased value and activity in both markets bring about an undesired but unavoidable consequence: scams involving digital assets are also more frequent today than ever. And their frequency will keep growing along with the momentum in both environments.
So let’s see what the typical threats you can find nowadays are.