Non-fungible tokens, more commonly referred to as NFTs, are taking off in the crypto world. They’re unique digital items that people can sell and trade. Some of the most popular NFTs are pieces of art. However, there are also NFTs that double as digital items with physical benefits, such as concert tickets.
Unfortunately, even though NFTs are relatively new, there’s already been an issue cropping up whereby hackers are stealing NFTs. Here’s a look at what’s happening and how to protect yourself.
OpenSea is a marketplace where people can sell and trade their NFTs. One of the defining characteristics of NFTs is their decentralized storage process. More specifically, NFTs get stored on the blockchain, which is much safer than keeping them all in one place.
However, people who have looked closer at how OpenSea works assert that most of its NFTs are on centralized servers, which poses a security risk. In late February 2022, hackers broke into the OpenSea platform and stole more than $1.7 million worth of NFT, equaling 254 tokens. That theft happened in approximately three hours.
The stolen collection included four Azukis and two Coolmans, along with a Cool Cat and a Bored Ape Yacht Club. Often, numerous artists collaborated to make those NFTs. For example, four artists teamed up to make Cool Cats NFTs, and they created 9,999 of them in total.
However, as lawyers familiar with NFTs have pointed out, some of these digital goods give people rights in the real world. The variations in what NFT ownership gives someone could impact the ramifications that occur once an owner finds out that hackers are stealing NFTs, and some of theirs are gone.
Another recent instance concerned the hacking of the TreasureDAO NFT marketplace. The perpetrators stole more than 100 NFTs, then took advantage of a bug that let them create more NFTs for free.
Social media posts about the hack indicated that at least 17 of the affected NFTs were Smol Brains tokens. Other sources claimed that the total value of the Smol Brains tokens was at least $1.4 million at the time of the attack. However, the good news to come out of that incident was that most of those stolen NFTs got returned to their rightful owners soon after hackers took them.
These examples show that the issue is not just that hackers are stealing NFTs. That’s part of the problem, but the issue becomes more complicated if criminals try to sell fake NFTs. Ethereum was the first platform used to make and launch NFTs, and it is still the most popular. However, due to a current lack of regulations, people do not have to prove that the NFTs they make are original.
This reality has led to an increased likelihood of people mistakenly buying fake NFTs or unauthorized copies. Fortunately, there are actionable ways to protect yourself. For starters, don’t keep your NFTs directly on a marketplace. The most secure way to store your NFTs is in a cold wallet.
Also, if you use a wallet that connects to the internet, practice good password hygiene. Turn on two-factor authentication (2FA) if available.
Then, regarding the risk of falling for fakes, be wary of any deals that seem too good to be true. Whether you’re dealing with someone claiming to be an NFT dealer or the original artist, take the time to verify their background and identity rather than just taking their word on everything.
Now that you know how quickly hackers can steal highly valuable NFTs, it should be easy to understand why they probably won’t stop. The main thing to keep in mind is that hackers love capitalizing on trends. There’s a lot of buzz around NFTs, and cybercriminals want to grab some of the associated wealth and attention linked to them. However, rather than letting the risk of theft scare you away from owning NFTs, it’s better to stay informed on what you can do to remain safe and unaffected.