Recently, an OpenSea scam raised questions regarding the security of people’s NFTs. On top of that, OpenSea has banned certain people from using their platform. MetaMask has followed this action, prompting those affected to wonder how to avoid damages to your NFT collection.
The best way to avoid any situation is to prevent it from happening in the first place. Even NFTs aren’t entirely safe from online scams, especially from unscrupulous sellers who want to benefit from people’s goodwill and innocence.
Here are some valuable tips on how to safeguard your NFTs from scammers and digital thieves:
Understand how NFTs are stolen
Prevention and awareness are excellent tools to avoid suffering from digital theft, so you must understand how hackers operate and establish security measures based on that.
NFTs can be stolen if the security information of your crypto wallet, your emails, or your NFT marketplace account is compromised by hackers. Marketplaces are the Best Places to buy NFTs and hackers and scammers have a diverse arsenal of digital tools to snatch away enough of your information to make off with your NFTs.
They obtain this information via NFT scams to lure unsuspecting traders into providing the necessary security information, usually by promising discounts, bonuses, and free crypto.
Examples include:
- Phishing scams
- Pump and dump scams
- Airdrop scams
- Bidding scams
- Investment scams
Phishing scams
The first major NFT scam is the phishing NFT scam.
Phishing is one of the primordial scams of the Internet, and sadly NFTs aren’t the exception. Whenever a new technology or social media platform comes out, phishers will do whatever is in their power to obtain your log-ins and passwords and steal your data. In this case, they’ll do that to steal your NFTs. These scams are also called rug pull scams.
To avoid the phishing scam, you must never share the contents of the seed phrase of your crypto wallet. Sharing any identifying information of your crypto-related assets is an absolute never, as disclosing this with any person will inevitably backfire and compromise your current and future NFTs.
Phishing scams can also happen in replicas of popular NFT Marketplaces so unsuspecting buyers end up compromising their personal information or even their wallets altogether. These aren’t ratchet replicas of OpenSea or Rarible rather they are incredibly detailed to the point that even a veteran NFT buyer might have a difficult time telling apart an accurate site from a phishing one. A person might end up spending all their valuable crypto on a counterfeit site, making sure that they are legitimate developers that have good reviews on their socials, and a considerable following would be a tell-tale sign.
To avoid compromising your personal information this way, verify the URL of the NFT marketplace before even attempting to log in. Fake websites have been an eternal staple of the phishing scammer’s arsenal, so always perform the due diligence of ensuring the site you’re purchasing from is legit.
Another type of phishing scam is the email phishing scam, where you follow an embedded link sent to your email that’ll take you to the fake NFT marketplace. They’ll entice you to click on the email by promising offers, sales, and special discounts for seemingly no reason. Once you type in your credentials and account information, the scammer will use spyware to record it and steal your NFTs. You can avoid this particular scam by verifying the address of emails received from an NFT trading marketplace.
Pump and dump NFT scams
Pump and dump NFT scams focus on the nature of NFTs being speculative tokens. Currency speculation causes investors to feel that the rate for a currency is wrongly valued.
As their name implies, the pump and dump scam involves getting early investors into an NFT project to purchase it exclusively because of hype while simultaneously leaving original holders who didn’t sell on time to leave and make a profit. The consequences are that a group of the original buyers is left with NFTs that keep decreasing in value.
By the time the scammed investors realize what’s going on, the founding team has left all their social media and ghosted them.
To avoid this scam, research the project yourself extensively. Most NFT projects have a Discord community and active social media managers on Twitter, Instagram, and other channels. Interact with its community members and leaders to understand how their project works and answer standard questions. If their answers are sketchy or do not satisfy your curiosity, then it might be wise to steer clear of the project.
Airdrop scams
These types of scams seek you out directly more than phishing scams do. A scammer will pose as an NFT trading entity on social media and organize an NFT giveaway campaign in an airdrop scam. These are tempting because airdrops are desired by members of the NFT community who want to get free NFTs simply by spreading the word about an NFT project.
The airdrop scammer will promise a free NFT if you raise awareness about an NFT and sign up on their website. Most people don’t know that once they have you link your cryptocurrency wallet information to obtain your prize, they’ll ghost you.
Bidding scams
Bidding scams happen when investors desire to resell an NFT they purchased in a market on another market. Say someone purchased an NFT on OpenSea and then decided to resell it in another maker with lower-valued cryptocurrencies.
Investment scams
Investment scams involve using crowdfunding to scam investors from their money, by getting people all across the Internet to pump their money into a project and then making off with the profits without providing them with any return or guarantee on their funds, the scammer banks on the goodwill of strangers on the Internet.
As with many previous scams, the best way to bypass this is to verify the creators behind a project or even contact them directly to ensure they are trusted.
While offers, bargains, and sales might seem tempting, the best course of action with NFTs these days is to resist the urge to take cheap choices or use non-reputable NFT marketplaces.
How to safe keep NFTs
Now that we know the usual methods for hackers and scammers to steal your information and/or NFTs, here are some ways to improve your online security.
Use two-factor authentication
Purchasing in a brand-name NFT Marketplace is an intelligent idea thanks to their hands-on customer support and extra security measures, but that doesn’t mean that you shouldn’t take additional steps on your own to ensure maximum security. Each NFT holder’s responsibility is to ensure their online security levels are up to the standard. Create robust passwords for your crypto wallet your NFT accounts and choose two-factor authentication for all linked email accounts.
Hot storage
You can also store your NFTs in a non-custodial wallet protected by word seed phrases, passwords, and even touch identification. While usually very free on their own, these can still be vulnerable to phishing scams as these targets the information you provide yourself.
Cold storage devices
One way to safeguard NFTs is with an offline external drive known as cold storage. This keeps your NFTs out of the range of scammers as no one on the Internet can even touch your NFTs without having physical access to your cold storage device. One of the most basic cold storage wallets is the paper wallet, a document with private and public keys written on it printed from a bitcoin paper wallet tool. This wallet features an embedded QR code scanned and signed every time you perform a transaction. This means that you need to protect the paper against all odds, as its destruction will mean you won’t be able to access the wallet altogether.
Another possible cold storage wallet is the Ledger USB wallet, another physical wallet that uses a smart card to safekeeping private keys. It works just like a USB, and you’ll need to download a Chrome-based extension app to store the private keys offline. Like the paper wallet, damage to the Ledger Usb Wallet will render your NFTs gone forever.
As this is an external safekeeping method, you’ll have to purchase a cold storage wallet from a manufacturer. Luckily, these can be found for less than $100, though some can reach up to $150 in pricing.
Final words
Many people seem to believe that NFTs are risky because they are scams. The truth is that NFTs are becoming safer than ever thanks to the tamper-free nature of blockchain, though that doesn’t mean that some NFT projects or marketplaces are safe from scams.
With even NFT marketplace giants like OpenSea being victims to scams themselves, it’s always a wise choice to understand how to prevent your NFTs from being stolen. Scammers will stop at nothing to find whatever kind of information they can obtain from you to steal your NFTs, so take all necessary measures to prevent them from having their way.
