Today in the crypto space, non-fungible tokens (NFTs) are the latest trend in the industry. Daily, there are new audiences, and participants increase as they adopt this innovation. NFTs are becoming marketing campaigns and an integral part of business today because companies now seek business opportunities to explore the space.
While this adoption and creation of NFTs are increasing, some unethical individuals won’t stop exploiting this space to scam people and cart away their existing digital tokens from their wallets. Thus, you must be on the lookout while participating in an NFT project to protect yourself against scams.
This guide is created to inform you about how to validate a legit NFT project.
Definition of Non-Fungible Tokens (NFTs)
Non-fungible tokens (NFTs) are the digital representation of valuable items wherein you can claim ownership via the unique code attached to your copy. They are one-of-a-kind digital assets that can’t be found elsewhere. NFTs can represent arts, collectibles, music, and physical assets. The term non-fungible means materials that are not interchangeable.
The unique digital code attached to NFTs is what makes them exceptional. This makes them not available for non-owners, and they are evaluated based on their intrinsic properties instead of economic capacity like fungible items.
NFTs are purchased on decentralized platforms, which are blockchain networks based on the creator’s choice. Examples of NFT marketplace where you can get NFTs are OpenSea, Foundation, and Rarible. They are decentralized platforms that give total control to the creators.
The popularity of NFTs is increasing daily, and the value perception is on a spike. Despite the interests and values surrounding NFT growth, some notorious individuals won’t stop taking advantage of NFT newbies. Thus, it is important you know which NFT project is legit. As a result, we compiled this guide to inform you about recognizing a legitimate NFT project and protecting yourself against an NFT scam.
6 Ways to Determine NFT Legitimacy
Over time, there is an increase in the creation, release and trading of NFTs. As a result, it is becoming easier to understand the behavioral patterns of NFT from data, community activities plus feedback, and market experience. Likewise, users are becoming more familiar with the financial habits of the NFT market.
As a result, we compiled this guide to provide you with important factors to consider when you are evaluating the legitimacy of an NFT project.
1. Creator’s Identity
Launching an NFT is becoming a thing of major brands, athletes, celebrities or renowned artists. This grants transparent and accountable legitimacy to NFTs. But they are not the only set of individuals that can launch an NFT project. You can as well, provided you are established, and the community can trust you with their funds.
The attractive feature of NFTs is how they can be easily traced. As a participant, you can know its original creator, minting period, number of traders, and the price at which it was sold for each trade. Understanding this will prevent you from engaging fake NFTs and buying “right-click and save” images as NFTs from scammers.
2. The Underlying Blockchain Network
Another major factor to consider is the blockchain network on which the NFT project was launched. This gives you an insight into how long the NFT project will be sustainable and how safe it will be. Ethereum enjoys the early NFT ride because it provides NFT creators the flexibility to be secure and entrust them with their NFTs.
But the gas fees required for each transaction are high. As a result, users are exploring other available blockchain networks. One such platform is Solana (SOL). However, you should factor in platform stability and continuity while checking the underlying blockchain network.
On the other hand, some affordable blockchains sprung up, but NFT creators must ascertain that these blockchains will survive the test of time and scalability. Ask the question of “Will this blockchain be around in about three decades?”
3. Brand Recognition
When you want to purchase an item, you consider the brand history and society discussing such a brand. That’s community feedback. In the NFT space, knowing how well-established a brand behind the project is will help you validate the legitimacy of the NFT project. Likewise, an increase in the number of active trading and adding more NFTs to the collection establish the legitimacy of an NFT project.
Violating intellectual is a criminal offense. You must establish an NFT brand as the rightful owner of any NFT project you want to engage in. If they are not the original creators, make sure they have the copyright.
When an athlete, a celebrity or a brand launches an NFT, the public is well aware of it. That explains the legitimacy. However, when an unknown person is impersonating any of the people mentioned above, such a person violates intellectual property rights and may be sued. Such NFT will lose its values, and your investment will vanish into thin air. Thus, it would be best if you stayed away from such a project.
5. Community Size
For every NFT that has recorded massive sales and participation, community support is the major drive behind that. Having a viable community discussing an NFT project hints at how legitimate such a project is. Otherwise, do not engage in such NFT if no online communities are talking about those NFT projects.
6. Giveaways and/or Airdrops
One of the easiest ways to recognize a fake NFT project is when the creator requires you to register to get it for free or engage in a competition before you can get yours. They only want to have access to your wallet logins to cart away your digital assets. Thus, stay away from NFTs that publicize their launch with giveaways or airdrops.
Now that you know what to look out for while seeking legitimate NFTs to participate in, it is important to pay attention to other details. That’s because some creators will stay under legitimate disguise to cart away your funds and digital tokens. Stay alerted and listen carefully to discourse in the NFT space.