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As the world of NFTs (non-fungible tokens) continues to explode, so does the risk of deception and scams. NFTs have been around since 2020, but they have really taken off this year. After watching multiple NFT projects and launches of NFT collections, here are six ways to protect yourself as you navigate the NFT space.
1. Look for a Verification Tag
Make sure you do research on the NFT projects you are buying into. Verified projects on OpenSea will have a blue checkmark next to the official collection. Be aware that there are also scams on the OpenSea platform, so identifying the projects with the verification checkmark will help to mitigate your risk.
2. Jump into a Discord Channel
Discord is a hub for the NFT community. Beware of fake Discord channels and messages. The official project’s Discord can likely be found on the website or on the project’s Twitter page. The main things to look at inside the Discord channel to determine authenticity are the number of members and the monitoring level of activity. If there is an engaged community within the Discord channel, this is a great sign for the project.
3. Read the Road Map and Make Sure it’s for Real
The road map is the strategic plan for the project. A thorough and well-thought-out road map 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. A thorough road map will have details on how the project plans to achieve what they say it will.
4. Never Give Out Your Seed Phrase
Think of your seed phrase as your passcode. It’s the key to accessing your digital assets. Protect it like it’s your prized possession. No matter who asks for it, the answer is simple… No! And if someone asks to share your screen, be incredibly diligent that the QR code linked to that phrase isn’t visible to anyone.
5. Avoid ‘Pump and Dump’
Do 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 and sell as many NFTs as possible, but offer no additional path to a reward. Unfortunately, we are seeing a lot of this at the current time. This can be avoided by doing a vast amount of research and learning the entire space. Be the calculated investor; put your time into researching the projects, artists, social channels and as many other pieces of content that you can find to obtain a well-rounded perspective on the project as a whole.
6. 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, ensure you educate yourself as much as possible.
There are hundreds of thousands of videos on the NFT space. A quick search will yield you countless topics to educate yourself on before diving into the NFT world.
This list isn’t completely foolproof, 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.
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