Tuesday, January 31, 2023
  • The creation of digital NFTs has led to the evolution of blockchain security and technology. Because only one individual can claim digital assets at a time, this creates a sense of integrity, essentially mitigating fraud.
  • Unfortunately, cyber hackers have found a way to bypass NFT security measures and gain access to NFT smart contracts.
  • Numerous cases have caused severe legal issues to fall upon various NFT marketplaces, some of which have ended up banning any slight hint of NFT fraud.

The concept of non-fungible tokens, or NFTs, took the world by storm. NFT artists began popping up everywhere, and the franchise grew exponentially within just a few years. The benefits within the NFT marketplace also had their roots in Africa as many organizations and communities, such as Black NFT Art, Kenyan NFT Club, and Nigeria NFT Community, began to rise.

Their main aim was to spread the African culture within the NFT world. Since this new concept gained so much attention from investors, collectors and artists, it also caught the eye of other unlikeable parties, cyber hackers. NFT security is less sophisticated than many might have guessed. 

The underlying blockchain security is set to function similarly to crypto, but the application of NFT had a far different mechanism.

As a result, cyber hackers have exploited and used various NFT vulnerabilities that greatly devastated the NFT community. Below are the core security threats NFT artists can face if appropriately secured.

This article is in line with a series dedicated to educating the masses on various blockchain security issues. Knowledge is power, and knowing what to be weary of can aid in the fight against cyber hackers.

A brief overview of NFTs

Those new to NFTs, these are digital assets built on top of blockchain technology similar to crypto. However, unlike crypto, NFT mainly comes in images, videos, art etc. The uniqueness of the various digital contents of NFT is that NFT artists can claim ownership of their work.

This means that if they were to place their artwork n an NFT marketplace, they could legally sell it just the way they would sell any art piece in the real world. For any form of duplication, the NFT artist has the right to take legal action or demand some form of compensation.

Also, Read about African Artists using NFTs to promote their culture to the world.

The creation of digital NFT has led to the evolution of blockchain security and technology. Because only one individual can claim digital assets at a time, this creates a sense of integrity, essentially mitigating fraud. However, along the way, experts noted that NFT security was also an aspect since cyber hackers found a new and innovative way to exploit NFTs.

NFT Security Threats

Smart Contract Vulnerabilities.

Smart contracts are the very backbone of all blockchain technology. They provide the exact consensus mechanism that creates the decentralized distributed ledger systems utilized within the NFT marketplace and the crypto world. Thus any error or minor mistakes during the creation or deployment of smart contracts can have devastating repercussions on blockchain and NFT security.

Unfortunately, cyber hackers have found a way to bypass NFT security measures and gain access to NFT intelligent contracts. A prime example is Crypto punks, one of the most popular NFT projects in history with a smart contract flaw. This flaw prevented ETH from reaching an NFT artist’s wallet, which brought about a lot of friction. Initially, even the developers needed help figuring out what was wrong. 

nft security

NFT security vulnerabilities plague the NFT marketplace and NFT artists.[Photo/PixelPlex]

A cyber hacker had discovered this flaw and exploited it by purchasing a crypto punk NFT art but then could reverse the transaction. The smart contract could not compute the reversal of funds, so it changed the ownership f the NFT product but could not finish the transaction of coins.

Another use case involved the Cross-Chain Def Site Poly Network. A cyber hacker attacked the Poly Network draining nearly $610 million in crypto from various wallets. After analyzing their blockchain network, security analysts discovered that their smart contract had various zero-day vulnerabilities. 

Having smart contract vulnerability is by far the most dangerous risk any NFT marketplace can face.

Editable Metadata

Metadata is structured reference data that sort and identify attributes of information described. Essentially metadata is information about information and gives a detailed definition of the underlying data that most users see with their eyes.

Blockchain technology utilizes metadata mechanisms to provide NFT with the same information that identifies its ownership. NFTs are essentially digital assets.

They already contain data; the difference now between NFTs and stock photos and videos is the underlying metadata. It identifies that the image or video content belongs to a specific individual. 

Unfortunately, cyber hackers understand that altering or even destroying the metadata of NFTs removes its uniqueness. It’s prudent to realize that even though some cyber hackers conduct these illegal activities to gain profit, some merely wish to destroy.

Also, Read The Evolution of Digital Asset Marketplaces in a Web3 Economy

Once they successfully bypass NFT security measures and alter the metadata, a collector or investor will not need the NFT. Doing this is like painting on top of the Mona Lisa. It would destroy its value.

Identity Fraud

With the NFT marketplace gradually growing, identity theft is significantly increasing. These cases mainly involve NFT artists who sell artwork that is initially not their own. Many scam artists have set up unauthorized customer support channels and social media platforms to showcase their “artwork”. Anything can become an NFT; the only difference is the ownership label slapped on top of it. 

Numerous cases have caused severe legal issues to fall upon various NFT marketplaces, some of which have ended up banning any slight hint of NFT fraud. An information Security Newspaper report once explained that NFT collectors should be wary of where and what they buy on NFT marketplaces.

They might copy most of their art. Some cyber hackers even go as far as blackmailing genuine NFT artists, threatening to report their work as stolen. Since finding out the authenticity of these artworks is genuinely cumbersome, most NFT marketplaces ban or restrict the NFT artist.

Years of hard work down the drain. Other reports are genuine, but in the digital world, pinpointing facts is a bit hectic.

Conclusion

Blockchain security is a fact that the digital world has to address. Cyber hackers are consistently finding ways to undermine the underlying structure of Web3 technology, and despite the efforts of security analysts, there is still a constant need for vigilance.

NFT security is still a new concept; hence most of the underlying work will fall to the NFT artists themselves. Safeguarding NFT artworks should not fall on the Platform hosting it alone; the owners should also take the initiative to practice security habits.

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