NFT scam – wash trading
The Internet is a bit of the Wild West. Without names or faces to trust, some ill-intentioned actors do not lack inspiration to deceive investors. Among the most common scams are the Wash Trading.
This consists of creating a NFT and initiate fictitious transactions to create a transaction history. The issuer of the NFT himself buys the NFT several times using several wallets to make it appear that his work is very coveted. If an unfortunate investor buys it, he finds himself with a work without real demand, difficult to resell.
There are other ways to get tricked, including fakes – NFTs appearing to be from a popular collection. There are also fake artists who inflate the prices of their NFTs.
Difficulties in evaluating NFT prices
The unpredictability of the NFT price estimate is the main difficulty in the market. The price of each NFT is determined by its innovation, uniqueness, as well as various other factors. Since there is no set standard for any NFT, costs fluctuate widely due to speculation.
As with cryptocurrencies, the risk is to buy at a high price just before interest in the work in question begins to drop. For example, the work Everyday’s: the First 5000 Days by artist Beeple sold for $69.3 million. But after the high-profile sale, observers spotted racist designs in the artwork. This compromises its value. This means that it is unlikely that the buyer will make any capital gains on resale.
Cyber threats and fake NFT marketplaces
The rise in popularity of NFTs has also increased the risk of cyberattacks on various marketplaces. There are several examples of NFT site phishing. Malicious actors have even specialized in the sale of clone sites of official marketplaces.
—DiamondStar (@DiamondStarNFT) April 8, 2022
These fake NFT marketplaces represent a significant danger, as they can offer NFTs that do not really exist or counterfeits.
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Buying an NFT – Ignore these 3 risks and you will regret it! – The ₿log
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