NFTs Security Issues | Securing your NFTs

NFTs stand for Non-Fungible Tokens, which are unique assets in the crypto world. The term “fungibility” refers to the fact that digital assets have the same value and are indistinguishable from one another. Bitcoin, for example, is a fungible token in the sense that you can spend one Bitcoin and still have one Bitcoin. However, the value of NFTs is frequently determined by a variety of factors, including the number of coins produced, total supply, unique characteristics, and the community that surrounds the asset. Nonetheless, anything that includes money, technology, or people carries a risk of security.

How secure are NFTs?

When NFTs were first developed, there was a unique challenge: because to storage limitations, photos could not be saved in the Blockchain. Instead, it was recommended that an image identifier (such as the picture’s web address or hash) be stored in the Blockchain and used in a third-party platform to view the NFT. That means that when someone buys a given NFT, they are buying an identifier that could lead to a URL on the internet or the Interplanetary File System, rather than the real image (IPFS). In many cases, the IPFS node is run by the company you bought the NFT from, which challenges the idea of true ownership. If the platform you bought the NFT from goes out of business, the NFT might not be accessible and potentially lose all value.

Talking about Marketplace Security — Centralized platforms that allow users to purchase and sell digital assets are the backbone of NFTs. Because centralized platforms like Open Sea and Nifty Gateway own the private keys to all assets on their platform, hackers can take huge volumes of NFTs if their platform is hacked.

Earlier this year, numerous Nifty Gateway accounts were breached, allowing the attacker to gain access to acquired NFTs, swap them for other NFTs, and sell them for a profit. While money was restored to investors who were harmed, the NFTs were not. Even if marketplaces have extensive security procedures in place, individual hacks can still occur due to platform users’ lack of security. Users might lose access to their wallets and digital assets for a variety of reasons, including weak passwords, a lack of two-factor authentication, or an email hoax.

Smart contracts — Malicious attackers can make use of NFT smart contracts. In 2017, a flaw in Crypto Punks, one of the most popular NFT ventures in history, prohibited ETH from being sent 12 to the seller’s wallet. The flaw enabled the attacker to purchase a crypto punk and withdraw the funds from the contract. Later, the project was relaunched with a new and upgraded smart contract.

Non-fungible tokens are an obvious step forward in the evolution of digital assets. Along with the practical characteristics of blockchain technology, they deliver the benefits of uniqueness and improved control over digital assets. However, the NFT flaws and security concerns that are frequently revealed can be significant roadblocks to its adoption.

Securing NFTs

Because NFTs are virtual assets, users must adhere to cybersecurity guidelines similar to those that apply to cryptocurrencies. Wherever possible, users should use multi-factor authentication. Hot wallets have been blamed for a substantial number of recent hacks in the blockchain realm. As a result, users should aim to store their long-term virtual assets on cold (hardware) wallets that are not connected to the cloud and so are not vulnerable to cloud cybersecurity threats, especially when dealing with large amounts of assets.

Because scams and phishing messages provide a considerable NFT danger, users and investors should carefully double-check whether the information they get comes from official sources. If consumers are unsure if they are communicating with the project’s official representatives, they must contact the project’s team through other official means. The capacity of users to validate every piece of information they get is critical to NFT security.

Many NFT projects have created communities with tens of thousands, if not millions, of individuals connected through communication channels. Scammers, on the other hand, have turned to these channels to distribute links, photos, or advertising carrying malicious code or other harmful content. As a result, users should refrain from clicking on dubious stuff sent to them by strangers.

Best practices on how to secure your NFT:

Applying multi-factor authentication.

Using cold wallets for long term virtual assets.

Double-check all the information that is received.

Not clicking on suspicious links or ads.

Using password managers.

Using VPN services.

Examine the permissions you’ve been given to access your NFT and revoke any authorizations you’ve previously given for unknown reasons.

Conduct sufficient research before purchasing NFT. Verify the identity of the designer, and check whether information of the NFT is complete (for instance, users’ reviews, past transactions, whether it is an original work, etc.)

[1] “NFT Trading Volume Plummets but Analysts Say NFT Craze Is Far From Over”, Muyao Shen — Sep 9, 2021. URL: https://www.coindesk.com/markets/2021/09/09/nft-trading-volume-plummets-but-analysts-say-nft-craze-is-far-from-over/