7 Ways to Protect Yourself in the World of NFTs Heighten your awareness and self-preservation against scammers and hackers in this digital marketplace.
By Nick Brucker Edited by Russell Sicklick
Opinions expressed by Entrepreneur contributors are their own.
In 2022, everybody is trying to make money off other people's stupidity. That's amplified when you bring the virtual world into the conversation.
As the world of NFT — non-fungible tokens — continues to explode, so does the risk of deception and scams.
Fungibility refers to goods and assets — anything from music, to art, to memes, to real estate — that can be swapped interchangeably. Every bitcoin is worth as much as every other bitcoin. This equality in cryptocurrency enables a trusted means of trade, which has skyrocketed in interest. This heightened interest is cause for newcomers, as well as those already existing in the space, to be aware of tools and practices that will help protect you and your assets from scammers and hackers.
Related: The Crypto Wallet Hustle -- What You Need to Know
Verification tag
Make sure that you are doing research on the projects that you are buying into. Verified projects on OpenSea will have a blue checkmark next to the official collection. Smart contracts of NFTs will list its transaction history, which will help you identify the original creator and owner of something. Verification can also occur through scouting the owner's social media accounts and NFT platforms, or through utilizing a NFT verification service. Many NFTs come with a digital certificate of authenticity.
Jump into a Discord channel
This is where all the action is. Discord is the hub for the NFT community — an interactive space that provides helpful information while allowing members to participate in in-depth conversation. Here you can access basic tips about trading and investment. But, beware of fake Discord channels and messages. The official project Discord can be found on the website or on the project's Twitter page.
Read the roadmap and make sure it's for real
The roadmap is the strategic plan for a project. It documents and maps out the goals and strategies of any NFT project in order to communicate its long-term value as an investment. A thorough and well thought-out roadmap should expand somewhat into the future. It will tell you about the future plans the project has in store. And, how they plan on getting there, including goals and plans for marketing and growth.
Watch out for TGTBT
We've all fallen for an investment that isn't what it purports to be. Where it promises huge returns and rewards for little investment, whether it's your time or your money. The get-rich-quick schemes.
There are NFTs that are Too Good To Be True (TGTBT) as well. These are roadmaps that make giant promises but offer no path to get there. Huge passive income levels. But the developers haven't done their homework and in the end just walk away with your money. You're left with nothing but a JPEG and a cautionary tale.
Never give out your seed phrase
Think of your seed phrase as your master passcode. It is the key to accessing all digital assets within your digital wallet. Protect it like it is your prized possession (or, a wallet). As long as you have your seed phrase, you'll be able to access all cryptocurrency associated with that wallet and phrase (even if you delete or lose the wallet). So, no matter who asks for it, the answer is simple — no.
Your seed phase can easily be protected simply by writing it down, like a valued passcode, and keeping copies in various secure locations. Encryption services are also available if you prefer to digitally secure your seed phrase. However, be aware that if someone asks to share your screen, be incredibly diligent that the QR code linked to that phrase isn't visible to anyone.
Related: The Security Change That Would Make Digital Asset Scams as Rare ...
Avoid pump and dump
You know what project is worse than one that's not realistic? An NFT that just wants as many people to pump money into it with no return on investment. The old pump and dump scheme has one directive: Get money into the pocket of the artist. Sell as many tokens as possible, but offer no additional path to a reward. Unfortunately, we are currently seeing this occur quite often but it can be avoided by doing a vast amount of research and learning the entire space. Be the calculated investor.
Dive in and learn
There's a lot to learn about the NFT space. While NFTs have been around for about a decade, the past year has been explosive. Before you invest your money and your brand in this space, make it a point to educate yourself as much as possible.
There are hundreds of thousands of videos in the NFT space. A quick search will yield you countless topics to educate yourself before diving into the NFT world.
This list is not a 100 percent foolproof method. But by doing these types of things, you can learn the NFT space on a deeper level. And, you'll be less likely to go down the road of regret.
Related: Can Anything Be an NFT? Here's What You Need to Know.
