NFT scams are everywhere, here are "5+1" tips to help you avoid them

Author: SAMANTHA HISSONG

Source: Rolling Stone

Translation: Moni, Planet Daily

"Until authenticity is clearly proven, it's best to assume everyone is a scammer." ------ Crypto experts share their tips for spotting danger signals.

At the start of the new year, global NFT sales surged past the $4 billion mark. Meanwhile, like a bloated garbage bag suddenly opened, some "stench" also wafted in ------ the rise in scams within the NFT market has sparked heated discussions in the industry. In the first week of 2022, Google searches for the keyword "NFT scams" hit an all-time high, as the enthusiasm for purchasing NFTs grew, some "guys" more tech-savvy than others began to implement scams.

Crypto project developer Georgio Constantinou stated, "As more funds flow into the NFT and metaverse space, bad actors are starting to target ordinary crypto users to make illicit gains. Crypto scams are becoming increasingly sophisticated, which means people need to act cautiously in the decentralized ecosystem."

So, how can we effectively scale risks? Here are a few tips.

Tip One: Turn Off Your Discord DMs

There is a story in Greek mythology about how the Trojan War was sparked by the goddess Eris, who left a shiny object ------ now known as the "Apple of Discord" ------ at a banquet, inciting the war.

Today, fake links on Discord ------ a decentralized online network of chatroom servers ------ are just as tempting and provocative as the "golden apple."

Discord is a common haunt for hackers, who, after gaining admin-level access to Discord servers, post fake minting links in announcement channels. According to Georgio Constantinou, these announcements often appear to be posted by project organizers and the deals offered seem very enticing yet somewhat unbelievable ------ for example, "To meet high demand, we will release another 1,000 NFTs." By understanding people's psychology regarding the scarcity of NFTs, hackers often deliberately target sold-out collectibles. He said, "Once a series is sold out, it usually won't mint additional NFTs."

Georgio Constantinou pointed out that most projects will place all official links in a designated channel and will not mint through those "shoddy-looking websites" ------ only on the project's main website. Furthermore, Georgio Constantinou also advises everyone to turn off direct messaging on Discord. If community members encounter issues and helplessly seek help on a hacked Discord, they will immediately receive about five private messages from scammers. Georgio Constantinou warns:

"Project teams will never DM you first, so until authenticity is clearly proven, it's best to assume everyone is a scammer."

Tip Two: Keep Your Private Keys Safe

Fake Discord links can mint a fake new NFT by tricking users into giving up ETH tokens, after which the scammer will disappear with the funds ------ and if the scammer also obtains the victim's seed phrase (a series of secret words used to access a crypto wallet), a bigger problem will arise. Georgio Constantinou said:

"Due to FOMO (fear of missing out), people rush to mint fake collectibles, unaware that this not only causes them to lose their ETH but also their tokens and NFTs. Never share your private keys with anyone; this is absolutely paramount. If you do, it's like handing over your money."

In addition to Discord, online scams can also occur through Twitter messages and emails. However, compared to the NFT space, people may be more vigilant and unlikely to provide their social security numbers to any email sender.

Georgio Constantinou recommends purchasing hardware wallets ------ physical devices the size of a USB that can be plugged into a computer ------ and suggests the brands Ledger and Trezor, as this is much safer than operating directly online. He believes that with a hardware wallet, "you don't have to enter your seed phrase in the browser, which protects you from harm." In fact, he himself uses two-factor authentication and sets complex passwords to ensure security.

Although Georgio Constantinou has never been scammed, he has heard of hackers impersonating platform proxies, specifically targeting the largest NFT marketplace OpenSea and the popular NFT storage digital wallet Metamask. He said that in some cases, the "proxy" tells victims they have been randomly selected to receive a surprise airdrop of virtual goods and instructs these victims to fake login pages and request them to log in. Georgio Constantinou reminds people to always download wallets through official websites and operate within them. If using an app, it is crucial to repeatedly confirm that everything is fine; if just browsing, make sure the URL is correct.

Tip Three: Be Cautious of Airdrops

Airdrops themselves may contain malicious code. RAC, a crypto enthusiast, musician, and entrepreneur, is also a co-founder of the Web3 consulting firm Six, which he founded last year with Georgio Constantinou and Jesse Grushack. As a prominent figure in the field, RAC stated that tokens have been randomly airdropped into his online wallet. He said, "The name of the token is a website that will try to get you to visit it. They want you to think, 'Hey, I got these free tokens; I need to go to this website to try to sell them.' However, everything is controlled; they will make these tokens unsellable and lock you into something, forcing you to allow them access to your funds, ultimately stealing your money." Anyone can send tokens to anyone at any time: wallet holders receive tokens like mailbox owners receive emails, without needing permission. He added, "The best approach is to choose to ignore it; that's what I do."

In reality, these airdropped tokens serve no purpose other than to confuse you: if someone is creating a project that includes both fake NFT collectibles and useless tokens, they are likely to airdrop those tokens into influencers' wallets, allowing them to claim that those influencers hold their tokens, implying their support for the project.

Tip Four: Beware of Various "Rug Pulls"

Currently, fake or immature collectibles have become a significant problem. Scammers will initially set a foundational series of NFTs as the start of a large project, promising that the project will unfold over time, potentially including video game components and other merchandise. However, before any promised actions are fulfilled, they choose to abandon the project and flee with millions of dollars, a practice known as a "rug pull." If these scammers promise victims that the only thing they need to do is hold these NFTs to unlock additional benefits in the future, then when these innocent victims are scammed, they may not even bear legal responsibility. Georgio Constantinou only recognizes verified online NFT projects, as these projects contain mature and credible information. He stated:

"Large collectibles with great potential do not appear at lightning speed; if a project looks like it was completed in a day… and the website looks terrible, then there is definitely a risk; it just wants to quickly cash in through this means."

Tip Five: Question Everything ------ and Everyone

Ragzy is a visual artist who launched her first NFT series last year and later became an NFT collector. She said she was looking for a "fully mature team" before getting involved in the field ------ in any project, a team composed of well-known individuals who publicly identify themselves is crucial. Ragzy believes unauthorized teams can easily "escape punishment because no one knows who to hold accountable."

Ragzy opened a TikTok account specifically for training Web3 beginners in NFTs, during which she noticed an increasing number of scammers, clearly a dangerous signal. To address this issue, Ragzy introduced a set of "golden rules" for researching the background of cryptocurrency projects, which mainly include:

1. What is the reputation of the project team in the NFT space?
2. Has the project team had other successful projects?
3. Are there any well-known artists in the project team?
4. Is the quality of the artwork itself up to standard?

Georgio Constantinou strongly agrees with Ragzy's views and adds:

"Don't trust, verify, slow down, important things should be checked three times."

On the project website, even if there are some reputable individuals among the team members, it does not guarantee that their affiliations are reliable. Ragzy emphasizes that it is also essential to pay attention to who the project's investors are; do they want to see the NFT project develop positively in the long term, or are they ready to "cash out and leave"?

Ragzy also points out that NFT projects must have clear value; excessive hype on social media is not necessarily a good thing. She stated, "The NFT community needs to come together for a common purpose; if the common purpose is to inflate prices through purchasing NFTs and profit from it, then this is not a real community. In fact, social media can buy followers, and celebrity endorsements can be obtained through payment. You will see many celebrities being asked to promote NFTs and other cryptocurrencies, and they often do not know what these things are; it's not their fault because they view it as sponsored advertising. For me, these projects carry no weight. Just because a celebrity supports or creates a project does not mean it will survive."

Final Tip: Be Prepared to Lose Everything

As a visual artist, Ragzy worries about the long-term impact of this chaotic rise and fall on the NFT market. She explains:

"Many artists have never received fair compensation. Artists often receive low pay, and sometimes they are even asked to work for free and told to be grateful. Our work has no value; many artists remain impoverished until their death. NFTs are changing that. NFTs not only create an environment for us to receive fair compensation, but also allow us to earn royalties if our work is resold. That’s why I hate all the scams and various rug pulls that have occurred because I believe these actions tarnish the entire industry. Originally, NFTs were a very innovative and beautiful industry that allowed artists to profit from their work and ideas, but now it has turned into a place filled with scams and various negative elements."

On the other hand, RAC believes that all bad things will eventually pass. In his view, things are cyclical, and he does not seem worried that the NFT market will disappear due to fraudulent activities, stating:

"There was a time when people were afraid to put their credit cards online. They were like, 'Oh my God. Never do that! Your money will be stolen. The internet is not always the safe place we think it is.' Whenever something new emerges and attracts a lot of attention, some bad things always happen. I saw this in 2017 ------ when Bitcoin's value soared from $900 to $18,000, and then in the bear market of 2018 and 2019, people said Bitcoin would completely disappear, but then Bitcoin fully recovered in 2020. I think the NFT market seems to be experiencing something similar now."

RAC explains that entering a relatively unknown field always carries the "risk" of being scammed. When entering the crypto ecosystem, one must always be aware that it is a form of "investment." He believes that while the crypto system is secure in many ways, it cannot prevent someone from trying to deceive you. On the other hand, crypto itself is a completely open system, designed without any protective measures, and is still in its early stages of development, so true "professionalism" has not been achieved. Therefore, one cannot fully rely on the system… If you are unfamiliar with the crypto industry, then "unfortunately," you are likely to become a target for "evil people," sometimes even having to endure the pain of being attacked to some extent.

Jesse Grushack, another co-founder of Six, also agrees with RAC's views, concluding:

"The reality is that crypto is an emerging field; if you don't understand it, don't blindly enter. If you can't afford to lose, don't play. Coinbase and other custodians are great for beginners. There is no such thing as a free lunch ------ so if it sounds too good to be true, it probably is."