What is NFTs? Why NFTs Scam is Rising?
NFT stands for Non-Fungible Tokens. Non-fungible means anything unique that cannot be replaced. For example, bitcoin is fungible as we can sell one bitcoin for another one.
But NFTs are usually the only one of their kind or at least one of a limited number and have unique identification codes.
Anything that can be digitized can be NFTs. All your drawings, photos, videos, GIFs, music, in-game items, selfie and even tweet can be NFT, which can be sold online using cryptocurrency.
NFTs is not a new phenomenon it has existed since 2014 but recently it gains popularity as a way of buying and selling digital artwork.
Terra Nulius is Ethereum’s first NFT blockchain, although this project is just an idea that is only allowed to customize the short message that is part of the blockchain. Then came Curio Cards, CryptoPunks and CryptoCats in 2017, before the NFTS gradually became known to the public, then expanded to mainstream adoption in early 2021.
NFT revenues jumped to $ 25 billion in 2021 as cryptocurrencies explode in popularity, driven by growing interest among celebrities and technology evangelists, according to market monitoring data analyst DappRadar.
The best-selling NFT of 2021 was The First 5000 Days by digital artist Beeple, which sold for $ 69.3 million.
How NFT is different from other digital forms?
NFT is unique from other digital forms in that they are supported and backed by Blockchain technology. Blockchain is a distributed ledger where all transactions are recorded.
It’s like your bank card book, except that all your transactions are transparent and visible to everyone and can’t be changed or modified once recorded.
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How do NFTs work? What are NFTs used for?
As explained above NFT works on a blockchain, therefore, it gives users full ownership of a digital asset. For example, if you are a content creator and you convert your digital asset to NFT, you will receive proof of ownership based on Blockchain technology.
Blockchain and NFT technologies give people a unique opportunity to monetize their sales. For example, artists no longer have to rely on galleries or auction rooms to sell their art.
However, the artist can sell it directly to consumers as an NFT, with whom he can also save considerable income. In addition, artists can program royalties to earn a percentage of the sale each time they sell their art to a new owner.
How to Sell?
- Select the a right NFT market place and mint an NFT. For instance, OpenSea currently boasts the largest and most diverse market of NFTs. Other popular market place are Rarible, Foundation etc.
- List your NFT for sale. The marketplace will charge ‘gas fees’ which is nothing but Ethereum blockchain network’s fees for recording transactions. Gas fess aren’t refundable.
- Manage and promote your NFTs to potential patron via your website or social media.
How to Buy NFTs?
- Before starting your digital collection, you need to get a digital wallet where you can store NFTs and cryptocurrencies.
- You’ll need to purchase some cryptocurrency, like Ether, depending on what currencies NFT provider accepts.
Why are people spending millions on something they can easily view or download?
Only because NFT allows the buyer to have the original item. It also includes built-in authentication that serves as proof of ownership. Collectors value these “digital creations” almost more than the thing itself.
NFTs Scams are Real
As any technology become a trend, many unscrupulous people try to cheat people using the same.
We have seen after the exponential rise of cryptocurrency after 2016, scammers launched myriad websites and platforms to offer the best way to invest, buy and sell cryptocurrencies but 99% of them turned out to be scams. The same is happening with NFTs.
Some Scam Example
First, rug pulls are more common in the NFT case. Rug pulls mean when developers of crypto- or virtual asset projects manipulate the perceived value token and then leave the project – bringing in investor money.
In October 2021 a collection of 10K “Evolved Apes” launched on the OpenSea NFT marketplace. The project described itself as “a collection of 10K unique NFTs trapped inside a lawless land”.
The project is said to raise funding for NFT based games. However, after a week of its launch, the developer vanished with 798 Ether (approx. $2.7million).
Another case happened when the scammers took inspiration from the Netflix Original Series Squid Game and develop the SQUID token. The scammers cheat $3.3 million dollars worth of cryptocurrency in this case. They deleted all their social media handles as well as a website within a week.
How to prevent yourself from NFT Scams?
In the crypto world, scammers try to get access to people’s crypto wallets. It means if you don’t provide your wallet info then the chances of your getting scammed is very low.
Discord Hacking emerged as the new threat to NFT buyers.
- Always check the marketplace beforehand to list your NFTS. Many marketplace has been launched that offer less gas fees and also claim to rank your NFT at top, in return they demand to connect the crypto wallet. Once the wallet is connected then game is over.
- Trade only from trusted marketplaces like OpenSea, Rarible, and Foundation. Never download DApp that claims to be an NFT marketplace.
- As said earlier, hackers or scammers are behind your crypto wallets. Therefore, do not click on any links and never share your seed phrases (recovery phases) with anyone.
- Be aware of free giveaways. It is because in this method genuine market place also participate. It would make hard to distinguish between genuine or bad marketplace giveaways. The key here is ‘too good to be true’. Any offer that doesn’t sound realistic never use that place.
Related article:
How to detect or spot online Scams?
EndNote
NFTs is a young concept that is in evolving phase. How will it grow and spread nobody can predict?
NFT which is based on Blockchain Technology is relatively unregulated. This gives a lot of potentials for hackers and cybercriminals to exploit it. Therefore, becoming aware of scammers’ work is the only key to safe yourself from scams.
Stay Safe! Be Happy! Be Healthy!