Copyright infringement and the circulation of fake or stolen NFT projects have become a growing concern since the rise in popularity of NFTs. You will probably get scammed if you don’t learn how to spot a fake NFT soon. These online investment scams will cost you your hard-earned money and make you lose trust in the whole market, including legit future investment opportunities. So stay with us to get some valuable information on the Insights.
In our previous articles, we have addressed several topics on NFTs and what they are. A non-fungible token, often known as an NFT, is an online asset like a digital artwork that resides on the blockchain.
There have been many arguments about the possibility of their duplicity. For example, some argue that NFTs can simply be duplicated without any problems. In contrast, others claim that NFTs are non-fungible and immutable (i.e., cannot be changed or altered), but this is not the focus of today’s article.
Read more about NFTs and get an idea of what it takes to create one for yourself by checking out our previous posts, “How much does it cost to create an NFT?”
Why the Increasing Trends in NFT Scams?
Research published by yahoo finance showed that NFT scams have increased by around 400% in the UK alone between 2020 and 2021, which is disheartening.
Generally, there are bad actors everywhere one could imagine in every industry, private, public organizations, and even within governments or nation-states. Admittedly, this is no different regarding the crypto space. There are always certain minority groups that are acting against the good players. These bad actors perform various illegitimate acts, scams, money laundering, and cyber terrorism, usually for their selfish interests.
Regarding the NFTs, there are a lot of scammers active on NFT marketplaces who try to sell people fake NFTs. Furthermore, anyone can fabricate an NFT. It’s simple; all they have to do is copy an image available for free on the internet. Unfortunately, there are many fake NFTs on Opensea every day, if not every minute. Isn’t this a serious problem? Absolutely!
So, in this article, we will provide a helpful guide on how to spot a fake NFT and how to protect yourself from these NFT scams.
Why is NFT getting worse by the minute?
There are two critical explanations for the significant increase in fake NFTs. For starters, worldwide demand for NFTs is skyrocketing, which means many more individuals are active in the marketplaces. Moreover, several key NFT marketplaces do not implement the necessary infrastructure since people could also list their NFTs without hosting them on the blockchain.
To better understand how to protect yourself and others from different NFT scams, you can also scan through this writeup, “how people use NFTs for money laundering.”
Easy steps on how to spot a fake NFT
NFTs help artists profit from selling their creations, but fake NFTs are becoming increasingly common in the same vein as a ripple effect. Unfortunately, when you buy a phony NFT on Opensea or similar platforms, there will be no chance to get your money back. You’ve already handed it to the scammers and certainly will receive nothing but a copied or stolen piece of art or even an empty file.
Everyone should learn to spot a fake NFT before even thinking about buying an item. Here are the eight things you should do to learn how to spot a fake NFT:
Don’t fall for dreamy deals
When something appears or sounds too good to be true, it is likely not genuine. Unfortunately, bad actors play on peoples’ intelligence and greed to scam them. In most economies, market prices are determined by the forces of demand and supply. For instance, a perfect red flag is a well-known (popular) NFT that appears too cheap or more expensive than items in the same collection or even in the same category.
Bad actors and NFT scammers usually bring down the price of the collections to attract the target audience and sell all of their items. Furthermore, if an NFT’s floor price looks to be less than what it is worth, it is most likely a fake and should be treated with caution.
Do a Google image search for every NFT
If you want to see how to spot a fake NFT, you can do a reverse Google image search to confirm its authenticity. So, you can check if an NFT is genuine by downloading it and uploading it to Google for a reverse search. If you come across a similar photograph, double-check the link. It may be fake if there are many copies from different sources. Unfortunately, this only pertains to NFT artworks, and you won’t be able to check the authenticity of other categories with this technique.
Examine the project description and website
Scammers do not focus on describing their ideas because they don’t have an objective other than to exploit potential buyers. So, this could be a red flag when there is no meaningful project description for an NFT.
A reliable NFT project should also have a solid backup website where buyers can learn more about its activities and team members. Examine the website to see whether it has a professional design that includes all relevant information. Unfortunately for these scammers, they rarely have the time to create well-planned websites.
How to spot a fake NFT: Check out the project’s fine print
Don’t forget to read and examine the project’s fine print and smart contract if available, as it is a great way to spot a fake NFT. A transfer clause is commonly included in the smart contract, and it is required every time it sells, with a portion of the revenues going to the former owner.
Check out the team’s activity on Twitter and Discord
Scammers are notorious for not connecting their Twitter or Discord accounts to their owners’ profiles, and in most cases, they use an avatar. Even if a link exists, the NFT team’s activity, or lack of action in this case, on Discord and Twitter can expose their fakeness.
A legitimate NFT community also uses its Twitter account and Discord channel to keep members informed about project updates. It’s best to proceed with care when dealing with dormant accounts with little activity.
How to spot a fake NFT: Contact the artist directly
If you try and find the artist or content creator on social media or their website and contact them personally, you can be confident you’re getting an original NFT.
Also, before purchasing a bespoke version of something, double-check that it is available on the platform you’re already using.
Choose the right marketplace
The best solution to verify your NFT is legitimate is to use the right marketplace. Reputable NFT websites have safeguards that make buying art safer. In most cases, the marketplace can validate collections and artists. In addition, it’ll have a blue checkmark next to its profile.
Meanwhile, keep an eye out for the mintable warning icon too. As the yellow circle features an exclamation point within, proceed with caution.
If you insist on buying an item from a newly founded and unknown marketplace, at least do proper due diligence and use this guide on how to spot a fake NFT.
Don’t fall for fake giveaways or airdrops
Notably, fake NFT giveaways are among the most common NFT scams to watch out for. Although it’s common for artists to offer NFT giveaways, sometimes scammers use this opportunity to exploit unknowing individuals. Scammers may invite users to link their NFT wallets to their fake platforms on these occasions. Anyone that falls for such will most likely have their card details and passwords compromised. As a result, leading to token theft in most cases, and if appropriate actions are not taken quickly, the wallet can get emptied.
Bonus tip: Take a look at the numbers
If you have done all the above and you’re still not sure how to spot a fake NFT, look at the following:
Carry out further investigation on the number of people who own or hold the NFTs: Look at the ratio of the number of owners to the number of NFTs available. It’s probably not good if an NFT collection has just one contributor.
Sales volume over time: A fake NFT will have low sales volume, which won’t change as time passes, unlike the genuine NFTs.
Final words about how to spot a fake NFT
Although we’ve provided various examples of how to spot a fake NFT, it is still up to you to take responsible actions not to fall prey. If you are looking to make NFT like CryptoPunks, we will help you to learn. Although the methods and guides provided here aren’t limited to this, you can find out more at your leisure, but ultimately, this guide can be pretty helpful.
To reiterate, always stay vigilant while doing your due diligence. Endeavor to read other posts on the Insights, and don’t forget to leave your comments and share with others.