The blockchain revolution is well underway. The technology that powers the Bitcoin network has created an entirely new way to create assets and trade them online. It’s called non-fungible tokens (or “Non-Fungible Tokens” or “NFT“). But it’s not just about cryptocurrencies like Bitcoin anymore—the tech behind NFTs allows people to mint digital collectibles which can be traded like any other commodity.
A few years ago we covered how to spot cryptocurrency fakes, but now there’s another type of fraud emerging around this space. Watch these 5 Ways to Spot NFT Scams.
Scams have been targeting both beginners in crypto as well as seasoned veterans looking at investing in ICOs. I’ll cover 5 Ways to Spot NFT Scams
One common tactic is using images of celebrities endorsing products that don’t exist yet. This includes pulling from your favorite movie stars, athletes, musicians, and more. Here are some telltale signs and 5 Ways to Spot these NFT Scams.
1. Too much hype marketing
One thing to keep in mind when researching NFT companies is that most of them aren’t publicly listed. As such, they rely heavily on social media and influencers to spread awareness about their upcoming projects. Some may even pay popular YouTubers or TikTok creators millions of dollars to promote their latest project.
If someone offers you free merchandise, especially if it looks cool, chances are that company isn’t legitimate. Remember, anyone can post a tweet saying anything without backing up those claims with facts. If something feels too good to be true…it probably is!
Not only should you avoid making purchases immediately after seeing posts like these, but also check out the creator’s past work before committing. A quick Google search will reveal whether or not they’ve already ripped off others’ content before.
When searching for NFT rugs, look for brands who use authentic imagery and logos. Avoid sites that require personal information to get started. Legitimate NFT businesses usually won’t ask you for private details until later stages of development. Finally, make sure that you research each brand thoroughly before purchasing. There are plenty of fake reviews out there.
2. Blatant celebrity endorsement
Another method used by scammers involves blatantly copying famous personalities and slapping their names onto product packaging. In doing so, they hope to fool inexperienced buyers into thinking that the person themselves endorsed the product. For example, here’s what happened recently when actress Gal Gadot was seen wearing Nike sneakers she hadn’t actually designed herself.
While many celebs might endorse products through subtle means, you’ll typically find direct references to their name rather than vague phrases like “great shoes.” When buying things directly from celebrities, always remember that you could end up getting shortchanged.
In addition to spotting blatant imitations of real celebrities, you should take note of overly familiar branding. While some celebs do occasionally license their image for specific items, it doesn’t mean they approve of every single item made by said company. And while you shouldn’t expect complete anonymity either, you should still try to stay away from companies that demand large amounts of sensitive data.
3. Bot activity on Discord
Using bots is illegal across all forms of communication platforms. That being said, botnets often utilize chat programs like Discord to send spam links and messages. Since NFT enthusiasts tend to congregate within groups dedicated to discussing various topics related to the industry, hackers target these communities specifically.
As such, whenever you encounter strange behavior during group chats, consider running a background scan on yourself. By checking for malicious software, you can eliminate possible threats that come from outside sources.
Additionally, since Discord is owned by Amazon, it seems likely that you’d run into trouble with its anti-bot policies. Before joining any group where you see suspicious patterns, look up the rules first to ensure compliance.
Checking in with Discord regularly is important because it helps detect suspicious activities occurring within your account. Keep tabs on everything happening in your server channels, including admin notices regarding unusual actions.
4. Unrealistic roadmap
Many NFT companies promise huge returns for early investors, claiming that they’ll skyrocket towards astronomical heights once they release certain features. Unfortunately, many fall victim to false advertising tactics, promising unrealistic figures instead of providing accurate ones.
For instance, some claim that trading fees would decrease dramatically once their platform launches or that users will eventually receive dividends based on their investment amount. Others misleadingly state that they’ve raised hundreds of thousands of dollars from accredited investors.
These statements are outright lies and intended to appeal to naiveté. Don’t let greed cloud your judgment. Instead, focus on analyzing actual statistics provided by companies. Look for evidence that shows proof of concept, market viability, and realistic ROI projections.
5. Overly ambitious roadmap
Companies with lofty goals sometimes experience unexpected delays due to difficulties encountered along the way. Sometimes developers struggle to find solutions to technical problems, and need extra time to figure out how best to tackle issues head-on. Other times unforeseen circumstances arise, causing further complications. Either way, overambitious plans are bound to fail sooner or later.
Unfortunately, this scenario is quite common among startups hoping to launch big ideas. Even though it’s unfortunate, it does happen. So long as you remain patient and continue observing trends, you should have enough confidence to wait for future developments. Never put money down before completion.
Numerous successful entrepreneurs failed several times before achieving success. Many were turned down multiple times by banks before finally succeeding. Now imagine trying to achieve greatness under similar conditions?
There’s nothing wrong with dreaming big, but make sure that you give yourself ample room to adjust along the way. This guideline will help you identify 5 Ways to Spot NFT Scams.
Otherwise, you risk throwing away money unnecessarily. Just follow the advice above, and you should never feel guilty spending your hard-earned cash on NFT rugs.
What are your thoughts on NFT scams? Are you worried about falling prey to fraudulent actors? Or do you think the whole idea is pretty harmless overall? Share your opinions with us below.