The non-fungible token (NFT) field has seen a boom in activity over the years, from young artists presenting their digital art to celebrities starting their own collections. Demand for digital assets has even continued to grow in 2023 so far, despite a shaky crypto market. According to the analytical platform, Nansen, NFT sales soared to over $4.54 billion in Q1 2023, an increase of 230 percent from $1.97 billion in Q4 2022.
However, with the increased popularity of collecting and trading NFTs, the space has also become a breeding ground for scams and hacks. There have been several instances of individuals losing their valuable NFTs to scammers, or falling victim to rug pulls. Therefore, it is crucial to safeguard your digital assets. Here are some precautionary measures that you can follow to keep your NFTs safe.
Keep your NFT in cold storage hardware wallets
A cold storage wallet, typically a physical USB stick, provides offline storage for your NFTs. It ensures that hackers cannot access your NFTs unless they physically possess your device. If you frequently engage in NFT shopping sprees and plan to hold your NFTs for an extended period, it is highly recommended to use hardware wallets.
Popular hardware wallets, such as Ledger and Trezor, are widely used for this purpose. However, it is important to be cautious of third-party sellers who may sell counterfeit wallets that could compromise the security of your stored NFTs. When opting for a hardware crypto wallet, it is also advisable to be
aware of possible threats that could pose a risk to your security.
Beware of fake airdrops
Crypto airdrop scams are deep-rooted in the NFT industry, which is an ugly truth. Since NFTs are stored on the blockchain, your wallet address is visible to the public and its every move can be tracked. Scammers can take advantage of this and send NFTs as an airdrop to your wallet without your permission.
If you happen to interact with a "fake" airdrop NFT, scammers may gain a way to extract your personal details. Hence, you should always verify the origin of an NFT before interacting with it.
Stay clear of fake mint pages
A highly anticipated NFT drop often stirs interest among many on social media platforms. Scammers may take note of this and develop fake pages on platforms such as OpenSea. These pages can make it difficult for you to spot legitimate NFT collections.
When there is market FOMO (fear of missing out) and people rush to buy certain NFTs at low floor prices, they may skip important steps to authenticate the collection and may end up minting fake copies of the same. If OpenSea takes time to remove the illegitimate collection, scammers will get away with your money. A similar incident occurred with the Punks Comic NFT collection, where many lost hundreds of dollars by minting fake copies on a bogus OpenSea page.
To be on the safer side, it is best to double-check the domain link and verify the authenticity of the collection by visiting the official Twitter or Discord account.
Store NFTs on IPFS
IPFS stands for Interplanetary File System. It is a decentralized protocol that helps you store NFTs off-chain. IPFS works on a content-based addressing system instead of a standard location-based addressing system. This means that when you store an NFT on IPFS, it is given a unique content identifier (CID), which is less prone to being hacked, as compared to URLs. These CID hashes are stored on your PC and you will be alerted if anyone attempts to hack them.
Fake links and accounts
Scammers often target certain email addresses by sending fake OpenSea offers. Once a recipient clicks the "view" button, they are taken to a fake page that asks for their wallet details and seed phrases. The seed phrase is something that should never be shared under any circumstance.
If a scammer obtains your information, they can transfer all your assets to another wallet. Similarly, Twitter accounts with 'fake blue ticks' can also be used to scam NFT holders.
It is easy to be deceived as these accounts are near-perfect replicas of the original account. They may even have the same bio, profile picture, and the exact number of followers as the original account. These fake accounts may even send direct messages asking potential victims to send money in exchange for a fake NFT.
Therefore, it is important to understand that a massive following does not necessarily mean the account is legitimate. To verify its authenticity, you should check who is following the account. If you suspect that an account is fake, you should report it to Twitter.
Closing remarks
To safeguard your NFTs, it is important not to click on any links sent to you without verifying them. Before minting an NFT, double-check the contract address, as it provides information about where the NFT was minted. Always ensure that you are minting on a verified website.
Furthermore, bookmark popular NFT marketplaces like OpenSea to avoid encountering fake ones. It is also advisable to use two-factor authentication to safeguard your account.
