NFTs are a buzzing topic in the crypto community, and with that comes an increased risk of theft and fraud. NFT files may disappear when hosting services go down, and private keys can be taken from your digital wallet.
Due to the rise of NFTs, there has been an uptick in stolen tokens on marketplaces – some selling at six-figure prices. Fortunately, there are steps you can take to safeguard your NFTs.
Deception
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Deception is a complex concept that encompasses both dissimulation (hiding information) and simulation (giving out inaccurate or false data). At its core, deception is simply lying. While deception may be used for morally acceptable reasons such as promoting social good or protecting someone from harm, it also has the power to influence opinions and motivate others into action.
Most cultures view deception as immoral, while some forms are accepted or encouraged by society. Examples include “social lies” and “white lies,” which aim to mislead others without harming or causing pain to the intended victim.
In the crypto world, many NFTs are being stolen by fraudsters and scammers. These criminals typically target those who have bought or traded NFTs with their bank account; they will often send messages that appear to come from that buyer’s bank with fake email addresses, identities and social media accounts in an effort to trick them into opening their wallet.
If you have purchased or traded NFTs using your credit card, it is wise to dispute the charge with your bank immediately. Doing so can help prevent future fraudulent transactions but does not guarantee that your NFTs will be returned.
Fraudsters can access your NFTs if they possess your private key and know how to unlock your wallet. A hardware wallet comes in handy here: It stores all of your private keys offline, making it much harder for hackers to gain access to your digital assets.
On NFT marketplaces, this issue of “image theft”–where users upload images and create NFTs linked to them without proof that they own the original art–has become a serious concern for some artists.
Due to this, some major NFT platforms are taking steps to make it harder for this type of fraudulence to take place. For instance, Rarible has implemented measures to verify creators and remove plagiarized NFTs from searches – with the company reporting a 90 percent reduction in plagiarism reports since implementing these procedures.
Exploitation
Hackers have several methods available for stealing nft funds. These include phishing, exploiting, and fraudulence.
Phishing is the practice of deceiving individuals into providing their password or other personal information. This practice of tricking people usually takes place through emails, but can also occur via social media platforms and Discord channels.
In the case of nft, thieves often create fake sites to imitate an official marketplace. These counterfeit sites attempt to appear as similar as possible to the real platform by using similar domain names or typosquatting techniques.
The aim is to deceive as many users into sharing their credentials, which can then be used to access wallets. Thieves then monetize by selling the stolen tokens they’ve obtained.
Hackers have recently targeted several NFT platforms, such as OpenSea and Treasure, due to bugs or vulnerabilities in the smart contracts that allow them to make transactions without paying gas fees.
Hackers then gain control of accounts and use NFTs in them to purchase other tokens, then resell them at a higher price. This practice of “flipping” may be especially lucrative for NFTs that are currently priced at a premium.
Another form of exploitation involves the theft of non-fungible tokens (NFTs). This occurs when malicious actors gain access to an NFT platform’s contract and are then able to mint NFTs at no cost.
A hacker who identified a vulnerability on the OpenSea NFT marketplace has reportedly stolen hundreds of thousands of NFTs from users of the site. They purchased popular NFTs at lower prices and then sold them at current ones, making massive profits in the process.
This type of sophisticated exploit occurs when hackers identify system logic flaws or vulnerabilities on NFT platforms and smart contracts. It could be an extremely profitable form of theft used for criminal activities or even drug trafficking.
These exploits are relatively rare and can be avoided by using a strong password with two-step authentication. You should also be aware of any changes to your profile or wallet address, and stay up-to-date on all security patches. Furthermore, be alert for any suspicious activity and report it immediately to both exchange and wallet providers.
Fraud
Non-fungible tokens, or NFTs for short, are digital assets that cannot be replicated. They cannot be exchanged with other cryptocurrencies like Bitcoin and must be stored in a wallet that can only be accessed by its owner’s private key.
Though these assets have grown in popularity and can be sold for a profit, they may not always be legitimate and can be stolen through fraud. Fortunately, there are various methods available to protect your NFTs and prevent theft.
First and foremost, ensure your accounts have strong passwords and two-factor authentication enabled. These measures help prevent scammers from logging in to your account with just your username and password. Furthermore, change your passwords regularly; never reuse the same one across multiple online accounts.
Another way to safeguard your NFTs is by using hardware wallets, which store all important information offline and can easily be recovered if the wallet is compromised. Alternatively, you could store your NFTs on a software wallet that can only be accessed by you.
Many NFT marketplaces have a stringent verification process that requires users to prove their identities before they can buy and sell NFTs. If this process doesn’t suit you, it’s best to steer clear of NFTs altogether or only purchase from reliable sites.
Before purchasing NFTs, it is wise to do your due diligence on the platform and community. If a marketplace has an excessive rate of fraudulent activity, then it would be best to steer clear of that site altogether.
Before purchasing NFTs, it’s wise to double-check their prices as some scammers may attempt to sell you NFTs below their actual worth. Once you find an NFT you are interested in, do your due diligence and read reviews from other buyers for guidance.
Finally, be wary of scams claiming to have access to your NFT wallet or sending emails asking for information about them. These may be phishing attempts which attempt to obtain both personal data and the private keys associated with your NFTs.
Identity theft
Like all digital assets, NFTs are vulnerable to theft. To protect your NFTs from thieves, take the necessary steps for security. The first step should be using two-factor authentication which helps guard against identity theft and fraud when using your nft wallets.
Second, it is critical to double-check the URL of any website or marketplace you intend to connect with your Web3 wallet. Hackers often create phishing sites that look genuine but actually redirect users to fake sites – this could result in significant losses if clicked upon without verification.
Another way to protect your NFTs is by using a cold wallet, which stores them in physical form rather than an online cryptocurrency wallet. This helps prevent hackers from accessing your assets since they must physically access your hardware wallet in order to make any moves.
It is strongly advised to only use authentic nft wallets, such as MetaMask or Phantom. These services provide a range of features designed to keep your wallet secure, such as an encrypted connection with multiple crypto wallets and additional protection against malware.
Finally, it is essential to copyright your NFTs. Doing so gives you the legal right to claim ownership and earn royalties whenever your NFT is sold. Furthermore, copyrighting helps safeguard you against counterfeiters who could copy and resell your NFTs.
Internet infringement and plagiarism are becoming a growing problem. This occurs when people create NFTs that copy the artwork of others, such as popular fan art from video games and TV shows or conceptual artwork from artist websites like DeviantArt.
OpenSea, a leading NFT market place, has implemented an effective screening process to prevent plagiarism from taking place. The company stated it freezes listings of stolen NFTs until the user filing a report can verify their ownership.
Though this policy has been implemented with good intention, it hasn’t prevented some cases from arising. OpenSea has received several complaints from victims of these scams and in response has hired more customer-support personnel to ensure a speedy response when reporting such incidents. Furthermore, an additional policy requires police reports be filed within seven days after an NFT is stolen in order for it to be removed from its platform for buying and selling.