Despite the current craze around NFTs, they are actually not a new technology. They’ve been around since 2012, and NFTs have a long history of being used in the digital spaces that often involve art. In fact, you probably have interacted with an NFT without even realizing it!
NFTs allow people to own items on the blockchain that aren’t physical objects. The idea behind these digital tokens is that they can provide some proof of ownership over an item, collectible, or artwork, among other things.
There are many ways to create your own custom NFTs and sell them in different markets; however, there has been an increase in scams related to this booming industry because anyone can make their own tokens for sale.
Now, as interesting as this sounds, NFTs have historically been the center of a number of scams over the past few years. This is why we’ve compiled a few things to look out for when you’re investing in NFTs, so you can safeguard your cryptocurrency value.
Don’t Be Fooled by Popular Names
Take note of the names associated with a project. Don’t be fooled by big names in the industry, like Vitalik Buterin, who is not involved in any NFT scam project (although he does own OmiseGo – a legitimate blockchain-based payment network).
Look for independent third-party sources that have reviewed the company. Most importantly, look for information about their product and business model. If they don’t have one, you don’t buy their token or invest in their ICO!
Check the NFT Website
Before you enter your credit card information, review the site. Check to see if it has an SSL certificate. This will be displayed in the top corner of the website as a green padlock or “https” instead of http:// or “http.”
If you can’t find either one, then we have another red flag: Your site may not meet basic legal requirements for collecting sensitive information like your social security number or even just your email address!
The next thing to check is whether there are any legal disclaimers written plainly on its homepage—these should include things like: “We do not offer investment advice”; “CryptoCurrency investments are highly volatile and risky”; and so forth—and if there aren’t any present, that could indicate shady business practices by whoever owns this particular domain name!
Look Out for Middlemen
If a project is being promoted by someone who’s not the creator of the project, there’s a good chance that person is taking a cut of your money. These are called “middlemen.” They’re often promoters and influencers on social media who promote NFTs as an investment opportunity.
Middlemen can be good for investors in some cases—they may help projects get attention and funding—but they should also be transparent about their role in projects, especially when they take part in promotional efforts like giveaways or contests with prizes like NFTs or ETH.
Middlemen are to be kept an eye on when buying NFTs because, in some cases, they may be stakeholders in an NFT scam. That means that these people sing high praises of an NFT collection because they have their own money invested in it and are trying to artificially drive up the NFT’s cryptocurrency prices in order to turn a profit.
Read the Whitepaper
To vet an NFT, you should look for a whitepaper. You should also check out their roadmap and any other supporting documents they have published online. Do they explain what the token is? Do they explain how it will be used? Are there plans for a public sale of tokens? Is there anything about this project that doesn’t sound 100% legit to you? Does their team seem too good to be true?
If a project seems suspect, do some digging on it! Check out their website, read their marketing materials carefully, and ask around on social media if anyone has heard anything about them before (and if so, what have they heard?). This will help you determine whether or not an NFT is legit before investing any money into it.
Too Good to Be True?
If a project sounds too good to be true, it probably is. If you ever see an NFT platform that promises you huge returns or guarantees success despite major fluctuations in the cryptocurrency market, then it’s a scam. These claims are usually made by scammers who are trying to convince people to invest in their platforms, making them money, and leaving investors empty-handed when the platform fails or disappears.
Make sure you do your research before investing in any NFT platform because if one doesn’t provide detailed information about their business plans, then it could be a red flag indicating that this company is not legitimate and may not deliver on its promises.
Always Do Your Research
There are a number of things you can do to protect yourself from NFT scams. Always do your research before giving money to an NFT project. First, research the company behind the project. Look up its website and see if any of its claims are legitimate. If you’re unsure about whether or not it’s bogus, ask someone who knows more about it than you do—for example, check with an expert or friend who may be able to verify what they’re saying is true.
Next, take a look at what kind of technology is actually behind this product; does that technology exist? Is there any proof that this company actually has access to this technology? If not, then the chances are good that your investment will end up being worthless in the end—which means that time spent researching these questions could save you from making a bad decision down the road!
If you’re still unsure whether to buy or sell an NFT, here are some more tips that will help you decide:
Check if the artwork is original or a copy of another piece by the same artist. You can do this by searching for keywords on social media platforms like Twitter, Reddit, and Facebook. Check out what other people have said about the seller on sites such as Trustpilot or Glassdoor before buying any tokens from them.
Stay away from any company that sells tokens with a promise of future profits without showing any proof they can deliver on that claim now – it’s likely just hyped to get more investors involved in their scheme! Familiarize yourself with how an escrow account works, so you don’t fall victim to fake NFTs scams disguised as “escrow services” like a few companies did last year when scammers impersonated them (and stole millions).
If an NFT seller doesn’t offer any information about themselves, their work history, or even where they’re based – then be cautious because this could be a sign that something isn’t right there. Stay away from anyone who claims “guaranteed success,” as there is no such thing when investing/gambling online. It’s always best practice not to send your money until after verifying the identity and legitimacy of the transaction first – so make sure you look into everything carefully before making any financial decisions!