NFTs: A billion-dollar industry and a hot spot for scams

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Published: Mar. 29, 2022 at 10:37 PM PDT
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RENO, Nev. (KOLO) - The NFTs or Non Fungible Tokens market is now a billion-dollar industry, and scammers are taking advantage.

In the last six months, scammers have made $10 million out of NFT fraud, according to Department Chair and Associate Professor of Information Systems at the University of Nevada Reno, Amir Talaei-Khoei.

“In NFT you never receive any physical artifact, everything is digital,” said Talaei-Khoei.

If you are wondering, what’s a Non Fungible Token? It’s a unique code that serves as a certificate of originality for any digital asset you own.

“For example, if I go and take a picture of the Monalisa, that picture is nice but it doesn’t have that kind of value, right?,” said Talaei-Khoei. “It would be valuable if the originator of that picture is the actual artist... So, you can authenticate where it has been originated.”

Celebrities like Jay-Z, Serena Williams, and entities like the NBA are fully vested in the digital collectible world. With the NBA allowing fans to buy, sell, and trade NFTs of NBA video highlights.

The problem is thieves are tricking people into buying copies by selling them as originals.

“If you go on a website that is built by me or my friend and I’m trying to create a scam, that website will confirm the originality of the piece of work, but it’s actually not original,” said Talaei-Khoei.

Scammers will also use fraudulent NFT projects to steal your digital wallet credentials.

“The other way is, I go and get a digital copy of a piece of work and a lot of people go and bid on it, but they’re never going to buy it,” said Talaei-Khoei. “They’re just trying to jack up the price.”

He says there are two things to keep in mind when considering this type of investment.

“Like every single online purchase, don’t buy from a website that you don’t know. First, make sure that is legit then buy,” said Talaei-Khoei. “Second, keep the private credentials private... don’t give that to people online”.

Another piece of advice is to protect your digital assets with a ledger hardware wallet or crypto wallet and make sure you do research on the NFT projects you are buying into.

Verified projects on OpenSea, an NFT marketplace, will have a blue checkmark next to the official collection.

Talaei-kholei says there is a possibility of NFTs increasing in value over time, but with ongoing scams creating distrust in the business, some experts suggest regulations may be needed.

It appears that NFTs are here to stay but make sure you understand this odd, new phenomenon before buying into the next big thing.

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