Five Ways to Spot NFT Scam Projects
NFT (Non-fungible tokens) might be the new guy on the block, with thousands of projects all over marketplaces, and this hasn’t stopped age-old scams from finding their way into NFT.
Aside from hacking incidents and phishing scams, scammers are scavenging and selling fake NFT through scam projects that sound too good to be true. Both experienced and inexperienced unsuspecting buyers find it hard to spot these dubious projects.
Crypto monitoring setup, Peck Shield reported that BNB 42 project, an NFT scam project, had about 6,000 investors who lost around $2.7 million when the con artists behind it pulled the plug.
Tips to Identifying Scam NFT Projects
One of the most frequent types of fake NFT projects is those that end in a rug pull scam―a scam where a team markets the project, gets lots of investors, and suddenly abandons it after clearing all the funds linked to the project.
This act leaves investors with assets of zero value. An example is the Evolved Apes NFT project’s anonymous creator, Evil Ape, vanishing with 798 ETH without delivering a game.
1. Sale Volume
Sales volume is one of the first pieces of information to verify how credible an NFT project is and if it is safe to buy. Be wary of projects with low sales volumes over a long period. It means no one wants them, and you may be stuck with the assets with your funds vanished into thin air.
2. Team
An NFT project is as strong as the team driving it. Look up individual participants of an NFT project on Twitter and if they have little to no activity, exercise caution.
You may also want to check their track record and see what they had been up to before joining this project. Another red flag is a team with fewer members than expected, as NFT projects are people-intensive.
3. Social Media Handles
NFT scam projects deploy fake personas and catfish to reel in unsuspecting NFT investors and collectors. The fact that NFT sales and marketing are virtually held makes social media a useful tool for legit projects.
If there is little to no social media buzz about a hot NFT project, that's a red flag. Only buy NFTs from verified accounts with a blue check on NFT marketplaces and artists’ social media handles.
4. Floor Price
Very low or high floor prices might be a way to identify NFT scam projects. Most times, scammers reduce the prices of their collections to make them affordable and too good to be true so they can sell high volumes. As always, follow tips one to three as you do your own research.
5. Blockchain
You should also research the blockchain an NFT operates on and conclude whether they will last the next 4 or 6 decades to come. Collectors trust established blockchains like Ethereum because of their solid track record of continuity and stability. While the much cheaper ones are great alternatives if you’re just getting NFTs, be wary of potential scams.
