Key Takeaways:
- Dealing with blockchain is not the same as internet banking, there are no do-overs.
- Opensea, the largest digital art marketplace, was attacked leading to a loss of about $1.7 million in NFT.
- In phishing, the attacker often sends their prey malicious links mostly in emails, which could appear to be from the company.
The double-edged sword of digital technology is that it is much too convenient. Case in point, to execute money transfers in the old era, one had to go to a bank, talk to the clerk, and fill out a bunch of forms, with every step of the process double-checked by both parties.
Such a physical, analog process may be time-consuming, but it creates many redundancy layers that lower errors to a minimum.
In contrast, the digital era is super cost-effective and convenient like NFT trading, but error redundancy was sacrificed in the process.
NFT TRADING MISTAKES
Here are some of the most common mistakes to keep in mind in order to avoid.
NFT Trading Mistake #01 –Accessing Blockchain With Half Steam
How would it be possible to sell an digital art worth $300,000 for only $3,000? It turns out, quite simply, if you don’t fully absorb the elementary school lesson on decimal point counting. As reported by Cnet, when maxnaut tried to list Bored Ape #3547, he typed Ξ0.75 instead of Ξ75.
Two days later, the Ape was put on sale for Ξ59.99, which was at the time $250,000 due to ETH price being much higher at $4,170. The lucky trader who took advantage of the decimal fumble got away with Ξ59.24, a 7,898% profit margin!
Of course, because transactions on blockchains are final, with an immutable ledger being the backbone of the space, it was not possible to cancel/reverse it.
On the other hand, the trader (bot) has to pay a hefty gas fee of Ξ8 ($32k) to ensure that the transaction gets ahead of the line and executes instantly. The lesson?
Dealing with blockchain is not the same as internet banking. There are no do-overs, so don’t do anything when your mental focus is on the lower end of the stamina spectrum.
NFT Trading Mistake #02 –Mistaking One Crypto for Another
DAI, ETH, BTC…it’s all the same, right?
Another lack of focus ended up costing a fortune. A user under the pseudonym “cchan” took a 115 DAI offer on March 28, 2022 for their Bored Ape #835. Needless to say, this was 99.9% lower than the NFT’s floor price, which is the lowest price available.
Likewise, cchan also sold Mutant Ape #11670 for 25 DAI to the same lucky buyer. Just like Kennel Ape Yacht Club, Mutant Apes are derivatives distributed as airdrops to original Bored Ape holders. The current floor price for Mutant Apes is Ξ26 ($85.4k)
Of course, for those who are not familiar, DAI is a stablecoin backed by crypto assets in order to remain its peg to the dollar at a 1:1 ratio. Meaning, 100 DAI equals $100.
Mistaking DAI for ETH seems the only possible explanation for why anyone would sell these blue-chip NFTs for such a low-ball price, not once but twice.
The lesson? Are you using a wallet that can make it easy to misselect types of cryptocurrencies? If so, it may be wise to switch to another one.
NFT Trading Mistake #03 – Is That the Right Link You Are Clicking?
In mid-February, Opensea, the largest digital art marketplace, was attacked leading to a loss of about $1.7 million in NFT. According to the reports, about 17 people were affected, while 15 others interacted with the attackers but left unharmed.
The attackers managed to steal the NFTs by exploiting the underlying code, which allows NFTs to be bought and sold. OpenSea mentioned that this attack was a phishing activity whose origin was outside the OpenSea web page.
In phishing, the attacker often sends their prey malicious links mostly in emails, which could appear to be from the company. Just a few days before the attack, OpenSea had launched a new smart contract which the attackers copied and resent the emails to users.
Users who followed these malicious links were directed to a fake web page, where they were supposed to sign transactions transferring their artworks from the old contract to the new one.
Immediately they clicked ‘sign’ a new contract called ‘atomicMatch’ was triggered, stealing the victims’ assets.
The lesson? Phishing is a very easy way for criminals to fraudulently steal your NFTs from your wallet. You must avoid malicious emails and crypto-related links. Instead, follow the official websites of the project, by typing into the search bar.
NFT Trading Mistake #04 –This Is Definitely a Genuine NFT, Is It?
Earlier this year, Cent, another large NFT marketplace, had to stop transactions due to the increasing number of counterfeit digital assets. Cent is one of the popular marketplaces, having participated in selling Jack Dorsey’s first tweet as an NFT in 2021.
The CEO of this NFT marketplace, Cameron Hejazi, mentioned that they had to halt transactions since every time they stopped one copycat, other ones would appear.
He mentioned that many people were selling digital assets they didn’t own, while others produced copies of other artworks.
Another NFT marketplace, Opensea, also faced a similar problem, where there were a lot of plagiarized and fake NFTs. The marketplace had to set minting limits to curb the problem but later removed the limits.
The two instances show a classic case of NFT ripoffs. You visit the marketplace intending to purchase an NFT, only for you to get a fake or copycat of it. This will often happen if you don’t check the actual contract address of your NFTs.
The lesson? Every time you purchase an NFT, make sure you use the correct contract address to avoid buying ripoffs.
Watch Out When You Buy Your Next NFT
NFT Trading seem easy, right? You could be wrong, like literally wrong.
NFT scams are very common, and the saddest news is that as an investor, you can get ripped off by a simple technique like Photoshop.
Hence, it is unimaginably important for one to exhaust every research resource they have at hand before making any purchases, even on mainstream platforms like OpenSea.
To avoid ending up with losses like the sad former owner of Bored Ape #3547, please make sure you countercheck your listing before setting up trades.
It would be heart-wrenching if you lost millions of dollars just because of a typo; please leave the typos to your Whatsapp messengers and texts.
Human is to error, but some errors are unavoidable, and the above mistakes account for how one can avoid losing chunks of funds from NFTs transactions. Nonetheless, ridden of mistakes, NFTs serve as a good investment option for the present and foreseeable future.
POPULAR TOPIC: Security Tips For NFT Traders & Investors
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