Just when the industry thought it had begun to understand cryptocurrencies and the digital world, new concepts like non-fungible tokens (NFTs) and the metaverse begin to dominate the conversation.
If you grew up in an era of cassette tapes, drive-in movies and pay phones, these evolving frontiers may seem foreign and a bit overwhelming, a Morgan Stanley report interjects.
Even if you don’t engage in NFTs or the metaverse now, you may do so in the future.
“NFTs recently broke a monthly sales record with $4 billion in trading activity. Meanwhile, Gartner, a leading research and consulting firm, predicts that 25% of the population will spend at least one hour a day in the metaverse for work, shopping, education, social networking or entertainment by 2026,” adds the report.
For this reason, investors should be wary of the most common scams surrounding NFTs.
For example, the price of NFTs can be manipulated. With this scam, a group of fraudsters work in harmony to buy select NFTs to pump up the demand for them—which causes the price to rise. When the price reaches their target, the cybercriminals will cash out. Without the artificial demand from the fraudsters, the price of the NFTs plummets—leaving newer buyers with a sharply devalued or worthless asset.
If you’re interested in an NFT, review its transaction history and wallet records before buying. If you notice unusual activity—such as a large number of transactions within a short timeframe—it could be due to scammers trying to inflate the value of the NFT.
Another popular scam are the phishing sites, ads and pop-ups. In a twist on typical phishing scams, fraudsters will create NFT sites that closely replicate authentic sites in appearance. As a result, it’s easy for eager buyers to end up purchasing worthless, counterfeit NFTs on these bogus sites.
Additionally, phony ads or pop-ups may lure you to fake login pages for legitimate NFT sites. And, if you enter your information, cybercriminals will capture it. So, make sure to verify the URL of any NFT site before logging in or making a purchase.
For additional safety, type the URL directly into your browser instead of relying on a search engine result. Also, don’t click on any ads, pop-ups or links for NFT sites. Always go directly to the verified site instead.
Fake social media profiles: Unfortunately, fraudsters are also adept at creating social media accounts that seem to represent legitimate NFT organizations. They use these platforms to hawk counterfeit NFT artwork, hype fake NFT endorsements from celebrities/influencers and promote phony NFT giveaways.
While it’s not foolproof, look for a blue verification tick on the profile to verify the authenticity of the account and check to see if reputable personalities follow the page.
Another rule of thumb is to not link your social media to any Crypto or NFT exchange. This provides a way for fraudsters to create tailored phishing messages based on your portfolio.