NFT risks explained: ownership, metadata, scams and liquidity

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A non-fungible token is a unique token identifier recorded by a smart contract. Holding an NFT normally proves control of that token; it does not automatically transfer copyright, guarantee access to an off-chain file, or establish the market value of the associated item.

Important risks include vulnerable contracts, malicious approvals, copied collections, marketplace impersonation, changing metadata, unavailable external storage, creator-rights disputes and limited liquidity. Network fees can also make small transactions uneconomic.

Before interacting with an NFT, verify the contract address, token standard, metadata location, licence terms and marketplace permissions.

Technical reference: Ethereum ERC-721 documentation.

This neutral overview is educational and not investment advice.

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