OpenSea Scam Puts $40 billion NFT Market At Risk | Crypto Crash Trigger 2022?

7 min read

At the beginning of 2021 to mid-December, more than $41 billion worth of cryptocurrency was spent in NFT marketplaces and collections, according to a new estimate from blockchain analytics firm Chainalysis Inc. 

The popularity of NFTs, or non-fungible tokens, exploded in popularity last year with recording-breaking, multimillion-dollar sales and celebrities, such as singer Shawn Mendes, socialite Paris Hilton, and former first lady Melania Trump jumping on the bandwagon.

However the NFT space is still not regulated and it can be like the lawless wild west once was. With this comes a whole host of scammers out there waiting for many users to fall victim of.

Touted as the first and largest NFT marketplace, you can find all sorts of unique digital items at OpenSea.  Besides digital art, there are collectibles, game items, domain names, even digital representations of physical assets. Essentially, OpenSea is like an eBay for NFTs with millions of assets organized into hundreds of categories.

Many are falling victim to the lawless market that Opensea offers. With billions already invested and more Billions being invested, this could see the NFT market crash and even the crypto market if $billions are lost to scammers. Could Opensea be the catalyst to bring the crypto market to its knees.

Related article: Looksrare Vs OpenSea Marketplace Volume | Trading Hack Used By Users

We are going to look at some of the biggest scams and tactics people are using to scam the Market.

Security Concerns with Opensea

Opensea was launched in 2017, it’s a young company that has not been as battle-tested compared to other marketplaces such as the New York Stock Exchange that was created in 1792. 

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Let’s talk about the Opensea platform itself.

The good news is Opensea doesn’t hold your NFT’s. It’s just a marketplace where you can view them and buy or sell them.

The only way a scammer or criminal can steal an NFT is from human error. The truth is when it comes to ALL cybercrimes the human really is the weakest link.

In fact, I really think most harm that people experience is usually self-inflicting.

Opensea uses something known as the Wyvern Protocol. It’s an audited system that creates a personal contract for each user of the platform. You also have to approve access to each transaction before the system can access any of the assets you own.

The contract works by only allowing a transfer if you approved an order or it’s properly matched with a buyer that is paying with the approved amount of money.

Opensea also doesn’t hold any NFTs or digital assets it’s just a website that allows people to view them and interact with the Opensea marketplace. 

Opensea also doesn’t hold any NFTs or digital assets it’s just a website that allows people to view them and interact with the Opensea marketplace.

Opensea seems like a VERY safe platform it’s the human error that can cause problems.

Let’s talk about the best way to prevent human error on this platform.

Scams to Avoid

When there is money to be made there are scams. The first scam to avoid is buying a fake NFT. Yes, there are fake NFT’s being sold.

There is only ONE way to truly avoid a fake NFT and it’s somewhat of a hassle. The blockchain really is just one ledger or I think of it as a receipt.

You can look at the receipt and double-check the address where it was minted is genuine. If you are making a large NFT purchase then it might be worth triple checking to ensure the product is the real thing.

You can do this by clicking on the details of a listing and then on the contract address there is a link. 

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If you click on this link then you can see the contract address and this is where the NFT was produced or minted from.

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ANY good project should make their contract address public on their website or social media account. You just want to double-check that they match what is listed for sale.

You might have to do some work to find the original contract address that the NFT came from, and this little bit of work might just help you avoid buying a fake NFT.

Opensea also has something called a blue verification checklist that can help. This blue verification checkmark just means the Opensea team verified the account is real and it’s safe for people. 

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Also if the price is WAY too low then that can be a warning sign as well.

The second scam that is NOT just with Opensea but has been going on for a while is phishing. Phishing is when someone sends you an email or sends you a message that leads you to a fake site.

Then on the fake site, you enter in some information such as a password or seed phrase for a Metamask wallet.

The way to avoid phishing scams is to only enter sensitive information into legitimate sites.

Your Metamask seed phrase you should NEVER give to any site EVER.

Passwords should only be entered into the 1 and only site that it is needed for.

I talk more about phishing scams with a post I made about tips on using a VPN. A VPN can be helpful especially with public wifi.

If you use public wifi and enter a password someone may be able to see it and a VPN can protect you. Don’t enter any sensitive information on a public wifi or if do use public wifi use a VPN for more security.

Another scam that has been circulating on Opensea is fake bidding. How it works is if you go to sell an NFT and someone bids with USD and not WETH (wrapped Ether) or ETh.

The person can even put a picture of Weth as their profile picture. If you’re not careful you can think the USD is Eth and get all excited and accept the bid.

Since USD is much lower than Weth you would lose a lot of money.

The way to avoid this scam is to double-check transactions. It’s the same when sending crypto to another wallet you just want to triple check everything so there are NO mistakes.

80% Minted is Fake, Scam

80% of NFTs created for free on its platform were either plagiarized from other artists or spam.

 The alarming figure is for tokens made using the free minting tool on OpenSea. Sports teams to have sold NFTs on the OpenSea marketplace include the Golden State Warriors, Boston Celtics and Washington Capitals—just to name a few. 

 OpenSea’s integrity issue comes amid a Barron’s report that says the White House is preparing to release a “national security” memorandum that will task federal agencies with regulating digital assets such as NFTs and cryptocurrencies. The sports world was recently burned by crypto fan token start-up Iqoniq, which went into liquidation after missing millions in payments to its partners

Is it Free to Mint and Sell on OpenSea?

It is free to mint something on Opensea and can be free to sell something or it could cost gas fees depending on who pays the gas fees.

The first step to having an Opensea account is to connect a wallet to it. The most popular and easiest wallet to use is Metamask.

You do need to initialize your wallet that supports Ether and that does require some gas. You also need Opensea to access your wallet. There really are 2 transactions needed to open an Opensea account and both cost money. The amount of money depends on gas prices.

The good news is there are NO gas fees to upload art, mint them and list them.

Only when something is sold on the platform there are gas fees that are either paid by the seller or the buyer. If you sell something and accept an offer then you pay the gas fees, otherwise, the buyer pays the gas prices.

Best Opensea Wallet to Use?

Opensea supports many wallets, but the most common one is Metamask for desktop and Coinbase for mobile.

Metamask is considered a hot wallet because it’s connected to the internet and more open to security risks.A more secure wallet is a cold wallet that isn’t connected online. One example of a cold wallet that is more secure is Ledger.

The general rule of thumb is it’s ok to have a small amount of crypto in a hot wallet, it does make trading easier. If you have a LARGE amount of crypto then it’s usually best to store them on a cold wallet for increased security.

Tips to Using Opensea

One tip is to buy an NFT (even if it’s the cheapest) because if Opensea does an airdrop in the future you will get free stuff if you did business with them.

Plus, you learn more about “everything” by buying something (just spend the least amount).

The second tip is you can list multiple NFT’s that are the same. By default, the option is greyed out and you have to put in a special code to have access to it. 

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You can learn more about this special code by clicking on the link HERE. the code is ?enable_supply=true and you just stick it in the external link box.

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The reason it’s greyed out is that each item is a different listing and is more difficult for the average person to manage.

The third tip is you can adjust the royalty you would receive by using the platform to sell something. You could think of this sort of like Network Marketing.

If you sell an NFT you would get paid. Now, that person sells it then you could get a small percentage from that sale.

This royalty is from ongoing sales is one of the reasons that make NFT’s very powerful!

It’s very hard to have this royalty from a physical art piece.

To change the commission price go to “my collections,” then click on one of your collections then click on edit.

At the bottom, you can change the commission price. 

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How to promote NFT on OpenSea?

I know what you’re thinking “shit I can design something, post it and make all kinds of money.” All of us are somewhat greedy, right?

When it comes to promoting an NFT some people will say to promote on Instagram, Facebook, or some other tactic.

Instead of talking about tactics, I wanted to go over something more Macro (big picture). The person to truly learn from is Beeple who sold an NFT for the most amount of money which is 69 million dollars.

What is important to realize is…

When someone purchases an NFT that person is investing in the artist JUST as much as the art.

The reason the artist Beeple can sell his NFT’s for an insane amount of money is because he is Beeple. Beeple has a huge history and he didn’t just show up make 1 post and sell his art piece Everydays for 69 million dollars.

You could say Beeple was working for 13 years with LITTLE money (nobody sees this part.) Understanding a little of the history of Beeple might help you understand how to promote and NFT and earn money.

In 2007 Beeple started Everydays with the goal of creating a new piece of art every day. He started with a pen a paper then moved to 3D art then Photography.

It was more about getting better at his craft rather than creating 7 pieces of art on Sunday and taking the rest of the week off.

Also creating work every single day helped him build a name and a community of followers. In 2018 Luis Vuitton contacted Beeple to put his art on their clothes. (They contacted him).

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Some people feel Beeple should have made MORE money from the deal with Luis Vuitton. According to Beeple Luis Vuitton didn’t need him and he didn’t overvalue his work.

Working for less money, helped Beeple build his reputation so he could charge more money in the future for his work. Then Beeple started selling digital art for tens of thousands of dollars.

Then came the million-dollar sales. The artwork that he sold for tens of thousands of dollars then got sold for 6 million dollars.

You can see how the floor price is starting to be established because he is Beeple. For you and me why would someone purchase an NFT you made even for even $1?

Heck, why do people even buy NFT’s? There are 4 main reasons..

  • Status
  • Investment
  • Collecting things
  • Verified Ownership of something

Thinking about how something will benefit someone else then reverse engineering how to deliver that is a good thing! Lastly, comes your pay, which the market will pay if you deliver the benefits.

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