I’ll get this warning out of the gate first. Right now, I can’t encourage investing in NFTs with your hard-earned money. Because it’s an unregulated market, there’s a danger the digital products bubble may collapse, leaving you as part-owner of a few useless pixels. Furthermore, the present state of NFT transactions provides lots of opportunities for con artists to defraud you while you’re acquiring your piece of digital art.
However, it is your money and your life; do what makes you happy. So, if buying an NFT and using it as your Twitter profile picture makes your heart sing, don’t let some internet girl tell you that you shouldn’t. All I’m saying is that you may be a trailblazer, but you’re a target for scammers.
Be safe from NFT scams
Research before buying: Before you spend your money, look into each transaction. What is the location of the transaction? Is it on a popular website like OpenSea? OpenSea is a huge online marketplace with security warnings, anti-fraud measures, and a Help Center.
Watch for suspicious drops: Giveaways or free “drops” involving security flaws are common in the NFT sector. Each NFT has a contract, and some scammers include approvals to access your crypto wallet or sell all of your assets in these contracts. To summarize, don’t take a free NFT from someone you don’t know and trust.
Never share your seed phase or private key to your crypto wallet: During an NFT transaction, if someone asks for your wallet key, run! That kind of information should never be shared. No hacking is required because anyone with your seed phrase or key can take all of your cryptocurrency or NFTs.
Never store your seed phase online: Even whether you save it as a text file, PDF, or JPG, if it’s on the internet, a hacker can locate it. Find a mechanism to back up your seed phrase that is completely offline, such as a hardware security key.
Don’t open files from unfamiliar senders: Viruses that target your cryptocurrency wallet are created by hackers. Hackers and con artists also encourage you to visit phony exchange sites, which are plenty. Don’t click links in emails from unknown senders, as we’ve highlighted many times in our coverage of phishing scams.
Make them pay
Infringement on intellectual property rights is nothing new in the NFT world. For months, artists have been screaming about theft and hacking. Both are hoaxes, and just last week, famed rock artist Ozzy Osbourne unintentionally assisted in the theft of thousands of dollars in cryptocurrency holdings from his fans.
The question is, what are we going to do about it? The Wall Street Journal recently urged for crypto market regulation, claiming that it would help to decrease frauds and stabilize markets. The goal of cryptocurrency was to be decentralized, but it’s evident that this isn’t working out for talented artists and consumers of fraudulent or spamming NFTs.
Insure your NFT
To safeguard NFTs and other digital products, the insurance sector is developing new types of coverage that are tailored to the risks associated with NFTs.
Giusti authored a paper on NFT insurance. “Just like any other cryptocurrency, tokens can be covered under certain situations, for certain losses,” Sharon Henley, director of research and production at Coincover, a crypto asset insurer based in the United Kingdom, wrote in the document. NFTs can be insured across a variety of risk vectors.”