There is so much to love about NFTs - their irrefutable proof of ownership, the support for artists and creators, the community side of things, and all the other access that comes with owning one of these digital assets.

Since the very beginning of the history of NFTs, though, there has been skepticism about not only whether these actually provide tangible value, but if they’re more nefarious than meets the eye.

So, are NFTs scams? Not at all. In fact, we believe wholeheartedly that NFTs will change the world for the better for all parties involved, buyers and sellers alike. However, we do want to recognize that scams exist in any industry, and the digital realm is no exception. 

While a few bad apples shouldn’t spoil it for everyone, we are going to explain a few examples of scams that we’ve seen in this space so you can protect yourself and enjoy peace of mind collecting NFTs yourself.

The truth is, most (if not all) concerns can be alleviated simply by using a bit of logic and securing every transaction through the best NFT marketplaces. Learn more below to embark on this digital journey with confidence and clarity!

What are NFTs?

To understand why there are concerns of scams in the NFT space, we need to take a step back. What is an NFT in the first place?  It stands for non-fungible token, which speaks to what makes this digital asset so unique.

These represent a unique form of ownership and authenticity for various forms of digital content. Bitcoin, Ethereum, or the US dollar are fungible and can be exchanged on a one-to-one basis. In contrast, each NFT is distinct. They can represent anything digital - from art and music to videos and even tweets. There are so many different NFT types! Here is a deeper dive into what makes them unique:

• Indivisibility: NFTs cannot be divided into smaller units. You either own the whole item or none of it.
• Provenance: NFTs carry a detailed history of ownership and authenticity. This digital provenance ensures that buyers know the origin of the asset and its entire ownership history, which is securely recorded on the blockchain.
• Interoperability: Built on standard protocols on the Ethereum blockchain (most commonly ERC-721 and ERC-1155), NFTs can be displayed or utilized across multiple platforms and applications that recognize these standards.

These digital assets have opened up new possibilities for creators to monetize their works by selling ownership stakes in digital files they have created. There are so many benefits of NFTs, but we do want to make it clear that these are not investments.

Instead, you should look at them as a new way to engage with culture, art, and technology. They’re a fun introduction to the world of digital collectibles. When you shift your thinking in this way, it’s hard to see them as scams! But still, you have your doubts - are NFTs scams?

Are NFTs Scams?

As we said from the start, NFTs themselves are not scams. They are digital tokens that represent ownership of a unique item or piece of content on the blockchain. 

However, like any valuable asset in the digital or physical world, they can be associated with fraudulent activities. 

Fortunately, any of your worries disappear when you know what to look out for and take the necessary steps to protect yourself. So, let’s go over a few common scams associated with NFTs.

Common Scams Associated With NFTs

Phishing

Phishing is when scammers create fake emails or social media accounts that mimic legitimate NFT platforms. These messages often lure users into providing their private keys or sending funds to a scammer-controlled wallet. 

For example, a scammer could send an email from MetaMask saying your wallet’s details have been compromised along with a link to “reset your password”. However, logging in through that link will actually be what compromises the security of your NFTs and any cryptocurrency held in the wallet. 

Always verify the source before clicking on links or sharing any personal information. Don’t look at the name of the sender - instead, zero on the actual email address it’s being sent from. When in doubt, go to the wallet’s actual website and contact support.

Rug Pulling

Rug pulls happen when developers promote a new NFT project, gather significant interest and generate sales, and then fail to deliver the project.

This is the biggest scam you need to be aware of, and unfortunately, it’s harder to spot. But, you can do your due diligence into the team behind the project, look for transparency in their plans, and be wary of projects that promise financial returns.

It’s only right that you want to learn how to find upcoming NFT projects so you can capitalize on being early to the party, but don’t rush into anything without taking your time to research it first. 

Airdropping

The airdrop scam is where fraudsters promise free NFTs or tokens, only to steal your NFTs or tokens instead. To receive the airdrop, participants might be asked to connect their wallet to a malicious website, risking their assets. 

Genuine airdrops rarely require such invasive actions. Always research any airdrop thoroughly and use hardware wallets for added security. We have tips on how to transfer NFT to another wallet if you’re interested.

Counterfeiting

The entire purpose of NFTs is to prove ownership and avoid issues with duplication or counterfeiting - and yet, many have found themselves falling victim to this scam.

Scammers sell copies of genuine NFTs at lower prices, duping buyers into thinking they’re getting a deal. Verify authenticity through the original NFT creator’s known digital platforms or by checking the provenance and transaction history on the blockchain. 

Again, this can be avoided by sticking with proven marketplaces such as Magic Eden or OpenSea and using sound judgment. If something sounds too good to be true, it probably is!

Tips on Protecting Yourself and Reaping All the Benefits NFTs Have to Offer

We put together this guide not to scare you away from NFTs, but rather to set you up for safe, successful enjoyment of all that these digital assets have to offer. So, are NFTs safe? When you follow our advice below, they certainly can be!

• Use Reputable Marketplaces: Stick to well-known NFT platforms like Magic Eden, OpenSea, Rarible, or those with strong community backing and verified processes. Don’t transact with buyers or sellers off the platform, even if they promise a better price!
• Secure Your Wallet: Use hardware wallets for storing NFTs as these offer an extra layer of security by keeping your private keys offline.
• Double-check URLs and Contracts: Always double-check URLs and smart contract addresses. Scammers often create fake sites with slight misspellings to trick users.
• Engage with Community: Join NFT communities on platforms like Discord or Twitter to stay updated on projects and get feedback from other community members.
• Research Projects Before Buying: If you’re worried about rug pulling, stick with the best NFT projects led by a strong team with a proven track record of elevating projects to new heights, like Pudgy Penguins. While it’s tempting to find “the next big thing”, this is usually how you end up getting stuck holding the bag at the end.

By following our advice, you can immerse yourself in digital collectibles without worry. If you’re wondering what NFTs to buy to take that next step, look no further than Pudgy Penguins!

Enjoy Peace of Mind With Pudgy Penguins!

The Pudgy Penguins movement began in 2021 when we minted 8,888 cuddle penguin companions to share with the world, each with its own unique traits and appearance. The goal was to spread positivity, inclusivity, and create a community centered around fun.

Each NFT is not merely a digital asset but a passport to an inclusive community, where members gain exclusive access to events, our Discord server, and more.

Fast forward to today and our passion for our Pudgy Penguin burns stronger than ever as we seek to push our project higher and higher. One way we’ve done this is through innovation as the first Web3 brand to offer physical products.

That’s right - our penguin merch ranges from penguin figurines to penguin plush toys, penguin collectibles, and many other penguin toys. Each comes with a digital adoption certificate that can be redeemed at pudgyworld.com, where you’ll unlock special traits and be able to play games with other members of the community.

So, if you’re looking to join us here in the huddle, take a look at our secure marketplace and see what’s for sale right now - we can’t wait to meet you! Or, start your journey with physical Pudgy Penguins products. Either way, you’re in for a treat.

Parting Thoughts on Why NFTs are Not Scams

So, are NFTs scams? We hope this guide has left you with a clear realization that no, they are not. While the digital realm can be used to exploit innocent people, you are now equipped to protect yourself against such scams, from rug pulling to phishing and more.

Our blog has additional resources like why are NFT so expensive, are people still buying NFTs, how much does it cost to create an NFT, how to buy NFT on OpenSea, examples of NFTs, and more.

Otherwise, it’s time to dive into a world where digital innovation meets traditional collectibles, and experience the joy and security of being part of the Pudgy Penguins family. Embrace the future with us - where fun meets authenticity.