NFT Security: Potential Risks and Vulnerabilities

Non-fungible tokens, or NFTs, have gained momentum in the digital space, becoming a headline-making new technology.

Given the space has grown considerably after the viral NFTs such as CryptoPunks or Bored Ape Yacht Club (BAYC), it keeps attracting billions of new enthusiasts. The surging popularity and the skyrocketing amounts have made the assets quite an attractive target for hackers.

Why Is NFT Security Important?

Paying more attention to NFT security may help you prevent m theft cases such as the one with BAYC. NFT hacks are pretty rife in the multibillion-dollar collection—among the latest ones was the phishing attack via IG post. By taking control of the official IG page of the collection, hackers phished the followers with a post. The post lured the followers into connecting their crypto wallets to the fake smart contract, enabling hackers to conduct transactions and, thus, steal the assets.

Social media phishing is, however, just the tip of the iceberg. Among other "prominent" hacks were OpenSea's security exploitations, when malicious actors managed to snag NFTs worth m.

Scams attempting to sell NFT art that doesn't belong to them are also going mainstream. Although the concept of ownership is central to NFTs, some artists, such as Lois van Baarle reported cases of stolen digital art that had been minted as NFT and put up for sale on OpenSea.

No asset is immune to attacks from the most expensive NFT collection to the new rising stars. Hackers get creative with new ways to steal, but so are the cybersecurity service providers. Hexens is among the companies that provide top-notch cybersecurity services and ensure the security of assets.

What Are the Common NFT Risks?

Given it's still developing, the NFT space is a popular destination for scammers, who have managed to make the headlines. This, however, doesn't affect the assets' popularity—quite the opposite—the numbers are whopping.

Smart Contract Vulnerabilities

Top among the NFT risks are smart contract vulnerabilities. Smart contracts are one of the building blocks for non-fungible tokens. NFTs basically are minted through smart contracts that assign ownership and manage the procession of transactions.

With a proper smart contract audit—like the one provided by Hexens—the chance of an attack is much smaller. Otherwise, smart contracts tend to get exploited to benefit malicious actors. In 2017 CryptoPunks had to launch a collection again with an updated smart contract as the previous one was hacked because of a bug that hackers had leveraged.

Marketplace Security Risks

While being stored on blockchain technology, NFTs' security can greatly depend on the safety of the marketplace. Marketplaces are the keys to the interaction between assets and their holders. The main problem with the NFTMs is that they are centralized and thus record the events in an off-chat in the database. This means that marketplaces usually store private keys to digital assets on the platform, making them easy to steal.

NFT Fraud

Other instances of malicious actors trying to invade the system are NFT frauds such as sending out fake emails. These emails often look quite trustworthy and require your data for some reason (verification, login, etc.). Fraud can have different forms, such as gift NFTs on OpenSea, social posts and beyond. One unauthorized click can grant access to your NFT wallets.

Smart contract audits are of utmost importance when trying to secure your assets. Hexens team can assess the code and review the architecture of smart contracts to identify any potential risks or system flaws. However hard the cybersecurity companies try to secure your assets, you'll need to keep the private information of your NFTs safe. If you're planning to join the marketplace, be aware of the potential risks, and try not to fall for the scams.