Introduction to NFT
A new market has emerged somewhat recently in trading digital art. From picture files to video files, people can trade various tokens of digital art for money as each token is assigned an intrinsic value.
Non-fungible tokens, or NFTs, as these are called, hold an inherent value that makes them more comparable to goods on the digital market than a form of currency. In other words, an NFT is a token of sale from digital art that can be bought for money but is not freely exchangeable as legal tender. It can, however, be traded and change owners.
A record of these changes in ownership is known as a blockchain. One can reference the blockchain to confirm the validity of an NFT and differentiate it from a copy or a scam.
Where Cybersecurity Meets the NFT
Now that we have established a background into the terminology we will be using, let’s address the risk factors within this market. Cybercriminals are taking advantage of the growing popularity of NFT trading by creating misleading malware links.
They use these links to launch an internal attack on the victim’s PC, plant viruses, hijack their computer, and steal valuable personal information. Much like the risks that exist in every market, fraud in the digital market can be carefully avoided through careful research and due diligence.
By utilizing identity monitoring services, users can reduce risks and safely navigate the digital markets.
Why Does NFT Become Popular?
Much of the draw to NFT has come from the exposure the topic has gotten on social media. In addition, various celebrities have taken an interest and jumped into the market, adding more of a public status factor to owning NFTs.
The artwork can range from such a broad spectrum of topics and designs that the display draws the attention of a wide range of interested viewers. The status associated with ownership of an original NFT is enough for many users to consider buying in.
However, since they can be bought and sold at such high values, NFT trading can be a remarkably profitable market for wise users.
NFT Vulnerability and Security Concerns
Every NFT is a unique token or file bound to its specific blockchain and record of sales. In this way, buyers can prove the validity of the original and identify any copies as such. When cybercriminals attempt to trade false copies of NFTs, one can refer back to the blockchain to determine the correct owner and verify the original piece of digital art to avoid investing in a fraudulent collection of copies.
However, the blockchain system is based on centralized platforms where users can view and trade crypto assets. The companies that manage these platforms have security measures protecting the information stored there.
If the security measures are insufficient to prevent a cyberattack, the lack of firewalling puts the data at risk. Additionally, if the company that owns the platform goes out of business, the NFTs can be lost or decrease in value as their digital path no longer exists in the same place.
Types of Attacks on NFT
- Marketplace vulnerability attacks
- Theft of assets and personal information
- Identity fraud
Any asset with value is automatically at risk of being targeted by fraud. Cyberattacks on centralized platforms run by individual companies can be significant risks as the platforms are only as secure as the companies’ security measures allow.
If a hacker can access the private keys to the platform, they can relocate any assets and profit from the vulnerability. Weaker security measures allow for the theft of personal information such as account passcodes and payment information.
With this access, cybercriminals can steal previously purchased NFTs and use the user’s payment information to buy new NFTs. Without identity monitoring services in play, your information is left vulnerable.
Some scammers use malware links to access users’ crypto wallets and steal their assets. The victims of these attacks are then subject to having their accounts breached. Passphrases, payment information, and other personal identity information are at risk.
Once the hacker has transferred these assets to their own wallet, they begin charging buyers for these stolen NFTs that the buyer will never receive.
NFT and Identity Fraud
Each NFT is a unique digital token holding its own individual value. In contrast, digital currencies such as Bitcoin and Ethereum are composed of multiple identical coins. One bitcoin will have the same value as another bitcoin, much like one U.S. dollar does not differ in value from another U.S. dollar.
Because of this, digital currencies such as Bitcoin are tradable or fungible as a medium of exchange. Crypto wallets contain identifying information about the user and the user’s assets. If someone finds a way past the firewall of a crypto wallet, all of this information becomes vulnerable.
One common way cybercriminals hook people into scams is through cryptocurrency trading platforms. The hacker will send out a burst of emails to numerous users claiming to be following up on suspicious activity on the user’s account. Once the user opens the link attached to the fraudulent email, they receive instructions to enter their account information for verification.
After this is complete, the hacker will have gained access to certain sensitive information on their account and may lock the user out or corrupt their digital profile. The layout of these email scams may seem like a natural authentication process.
Still, users must be wary and take the time to ensure that the communications coming from such platforms are genuine and verifiable. This filtering process becomes simpler when using identity monitoring services as a smart system does the analytical work for you.
A wise user should carefully research and weigh the risks before participating in trading NFTs. As in any economic market, there are some risks to assess when considering investing in digital trading. However, writing off this venture upfront as not worth the potential risks would be premature.
The digital market is quickly growing and can hold actual potential returns for those who invest carefully and deliberately. You can keep your assets protected by considering factors such as the storage method of NFT metadata and the validity of any platform you enter personal details. Identity monitoring services protect your data from these risks.
Working in the background to analyze fake websites and scammers’ lures, they protect your data and alert you if any of your personal information is being exposed or sold. These solutions can help you safely navigate digital market trading and give you a clear understanding of NFT smart contract vulnerabilities.
Reference Sources:
1. The Verge https://www.theverge.com/22310188/nft-explainer-what-is-blockchain-crypto-art-faq
2. https://101blockchains.com/nft-vulnerabilities-and-security-concerns/
3. https://www.hkcert.org/blog/what-you-know-about-the-cyber-security-of-nft
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