Scammers and fraudsters find more and more ways to rig the system, rob NFT assets, and earn a living as NFT technology develops and gains popularity. However, great popularity also raises significant concerns. You can look at the classical arts of the world where the more well-known the artist, the more likely it is that counterfeiters and criminals will target their creations. Picasso, for instance, is among the most famous artists whose paintings were involved in art thefts. Here, they took over a thousand of his valuable pieces.
Did you know that the theft of a two-ton and £3 million bronze statue by Henry Moore is among the most unbelievable crimes? The statue was melted down and then sold for just over £1,500, which is how the authorities were able to solve the crime.
We all have heard the phrase - Forewarned is forearmed. Continue reading if you want to learn more about the significant NFT vulnerabilities, typical scam tactics, and steps you can take to safeguard your assets, your NFT tokens, and eventually yourself.
What Are The Major NFT Vulnerabilities?
All transactions in an NFT marketplace are tracked on the blockchain, giving you an extra degree of security. However, this does not imply that security issues can never affect NFTs. It's important to know that the fundamental blockchain technology is unrelated to Discord phishing scams, which mainly focus on spam messaging or luring customers like in other social sites. Moreover, the blockchain cannot guarantee that a certain real-world person actually owns a given published piece of digital artwork.
It is potentially very challenging for attackers to break smart contracts provided they have been set up correctly and have completed their audit tests. But if any security flaws are left unfixed, hackers may rather readily take advantage of them. Therefore, you must remain aware of potential weaknesses while creating and running your own NFT marketplace.
What Are The Primary NFT Risks?
● Smart Contract Weaknesses
Any blockchain's primary and most crucial characteristic is its smart contracts. These smart contracts assist in handling ownership transfers and transaction processing of NFTs.
It is difficult for attackers to exploit smart contracts if they are well-programmed and have passed an independent audit.
On the other hand, hackers may use smart contracts to their advantage if security in NFT flaws is unfixed. An NFT owner could lose all their NFT tokens and thus a potentially significant sum of money, and the industry will certainly always be known for its scams.
● Risks to Market and NFT Privacy
NFT markets aim to decentralize since they operate on blockchain technology. OpenSea marketplace, among the biggest NFT platforms, is the subject of debate as it has been the target of several cyberattacks in the past two years, including two high-profile ones that were related to phishing.
One was on January 2022 and involved fake artists who deceived followers of Ozzy Osbourne's NFT project, CryptoBatz. They first set up a fictitious Discord server. Then, by reading previously published posts on Twitter from CryptoBatz and Ozzy Osbourne, users were unknowingly sent to a phishing website after being prompted to authenticate their assets on a false server.
● Issues with Cyber Security in NFT and NFT Fraud
Hackers frequently use phishing emails to gain consumers' personal information. They appear to be from reputable blockchain and web3 companies like Coinbase. Users understand that their accounts have experienced suspicious activity and must provide a username and password to confirm their identity. The fraudsters may access NFT platform users' accounts and take control of their assets.
● Process of Authentication and Current Issues
Works of art, such as contemporary art, have long been identified as ideal ways to launder money. Unsurprisingly, this process may be even simpler with NFTs. Owners of NFTs are currently pseudo-anonymous; thus, one might be unable to identify the person behind an artist's pseudonym or avatar. Even more, NFTs are not subject to any laws or regulations either.
How To Keep Your NFT Secure And Private In Its Ecosystem?
You must take action to protect your cherished NFTs and try to keep them safe. In fact, you don't keep cryptocurrencies or NFTs in your wallet. Instead, NFTs are held on the blockchain, and you can access them using a secret key that is kept securely in your wallet. This process allows you to approve transactions ensuring the highest level of security for NFTs.
● Buying from Reputable Websites
Copycat websites frequently target hyped projects to deceive customers into exposing their wallet private keys while purchasing. Be careful: never click on links or visit websites where you do not know their official source. The best option is to examine a project's verified website and take to its verified social media, OpenSea, or Discord accounts. Warning: Hackers have gotten crafty in imitating false accounts created on social networking sites.
Additionally, you need to be cautious with any browser plug-in you install. You may unwittingly authorize transactions created by attackers who might penetrate your NFTs and NFT privacy vault when using software wallets like MetaMask or Coinbase.
● Perform Independent Research
“An NFT project is most likely false if it looks too promising to be true”. Developers of projects that have been promoted on social media or by paid influencers, but lack the support of a clear roadmap (or one that makes unrealistic promises), often make money off of them before disappearing.
As a result of the founder of the blue-chip collection "Azuki" confessing to profiting from earlier unsuccessful enterprises, investors withdrew their holdings, causing prices to fall for the collection. Make sure the team has been “doxxed", which means they have been publicly identified and have a history of credibility.
● Be careful of Airdrops
NFTs can be obtained from an airdrop as a part of a promotional campaign, which is intended to increase user interaction. Free stuff is fantastic, but occasionally airdrops are given with bad intentions. Anyone can interact with your account and send you NFTs without your consent as soon as your NFT wallet's address is publicly open. Never interact with abrupt airdrops to prevent granting approvals to unknown contracts, as this might let a fraudster steal your money.
● Protect passwords
Passwords should never be shared or used more than once. Once set up, each software wallet gets a seed phrase, consisting of a string of ordered words, that allows the user to regain access. It may seem ironic, but writing down this information on paper is one of the most efficient and easy ways to protect your NFT password - as long as you don't lose or damage it.
Furthermore, instead of just using a username and password, it's also a good practice to use two-factor authentication (2FA) as an additional layer of security.
● Buy a Hardware Wallet
It's time for you to go shopping for a new metal wallet. A hardware wallet, sometimes also called a cold wallet, may effectively protect your NFT secret keys much more securely than what you get using a simply USB drive. Hardware wallets are excellent for individuals looking for long-term storage, as they securely generate and keep your private key on the device, which remains completely offline until you want to move your assets. A Hardware wallet's digital assets are highly secure against hackers because their private keys aren't kept online.
The gadget is secured with a PIN and is not related to the internet for connection purposes. Due to dual-layer protection, malwares cannot reach the device without having physical access. They are actual physical objects that often resemble USB sticks, and also serve as simplified dedicated computers for managing your private keys. Transactions are first digitally signed within the hardware device and then posted to the blockchain using a dedicated software bridge. This means that private keys are never exposed online.
● Learn to Identify Fraudulent NFTs
By using the transaction history and metadata of an NFT, one can easily determine its origin and get a complete list of its owners over time. A great alternative is to use reverse image searches to confirm the series, artist, and the quoted price of a fake NFT. Additionally, it is highly recommended to buy NFTs from reputable online stores in order to verify the vendor's legitimacy.
While you may have genuine questions and concerns about NFTs, you also have answers. Rather Labs is a company attempting to offer products and services to safeguard the blockchain ecosystem from fraudulent and illicit activities.
Need is the major driving force behind innovation. At different stages, technology has had its collection of problems that have been recognized and fixed to enable its adoption and progress. Much work may still be needed to fully develop NFT and blockchain network technologies, though it is crucial to remember that the advantages exceed any possible problems. Rather Labs can help you develop your NFT project, and also advise and support you in terms of privacy and security in this matter.45
About Rather Labs.
Rather Labs is a Blockchain Technical partner who provides the blockchain expertise along with the partner intensity founders need.
Rather Labs is committed to work alongside our clients as a technical partner, providing insights, technical design, engineering team management, recommendations, maintenance and technology projection.
The company is led by co-founders which have been involved in blockchain projects in finance, real state, gaming, and other industries for years.