Are Your NFTs Safe? The Basics of NFT Security
While some NFTs are worth a few dollars, others can cost as much as a house or several houses. But regardless of how much an individual pays for their NFT, it’s crucial to keep it safe.
So, exactly how secure are NFTs and are there any dangers you should be concerned about?
What Is an NFT?
If there’s one thing we know about NFTs, it’s that they’re a little tricky to wrap your head around, especially if you’re not big into tech. So, let’s quickly break down what exactly an NFT is before we get into how secure they are.
Contrary to popular belief, an NFT, or non-fungible token, is not an artwork in and of itself. Rather, a non-fungible token is proof of ownership of a cryptographically signed version of a specific artwork. These tokens are known as non-fungible because, unlike cryptocurrencies, you can’t trade one for another.
People tend to call the artworks NFTs, but this isn’t technically true. For instance, you can trade a dollar for a dollar in the real world, as they both have the same value. But you wouldn’t trade a house for a house, as each house is unique in its features and location.
So, when you buy an NFT, you’re buying a token that proves you own a digital artwork file. This file can be an image, video, sound, or even a GIF. NFTs are typically bought using Ethereum, or Ether, the world’s second-most valuable cryptocurrency. Examples of popular NFT collections include CryptoPunks, Bored Ape Yacht Club, and World of Women.
Where Are NFTs Stored?
Since an NFT is an encrypted token, it can be stored on a digital blockchain, just like cryptocurrency transactions. Blockchains are, by nature, secure, as they use unchangeable distributed ledgers (or distributed ledger technology) that anyone within the network can view. This makes blockchains very difficult to tamper with.
When you buy an NFT, you are provided with a private key that you can store in a digital wallet (as long as that wallet supports NFTs). This private key is required to access and transfer your NFT elsewhere and should be kept secret at all times. If you lose your private key, you will no longer be able to access your NFT, which could result in a substantial financial loss.
Vulnerabilities Within the NFT Industry
What’s important to remember is that the NFT industry hasn’t been around long but is now mammoth in size and value. This is why many cybercriminals have chosen to target this market to exploit unsuspecting victims and their precious NFTs.
There are two critical pieces of information that a cybercriminal will try to access in order to steal your NFTs: your private key and seed phrase. Your NFT cannot be moved anywhere without using a private key, as this allows you to verify that it is you making the transaction. On top of this, a seed phrase can give access to your NFT wallet. A scammer can get their hands on your NFTs in minutes with this information.
Scammers often use phishing tactics to access your private keys and seed phrases. This usually involves phony emails and websites designed to steal your data. For instance, a scammer could impersonate your NFT marketplace account and request that you log into your account via the provided link to sort out an issue or view a recent sales development. This gives a hacker direct access to your marketplace account.
Alternatively, a criminal could impersonate an NFT artist and state that you’ve won some kind of giveaway. These scams are pretty commonplace on Discord, Twitter, and Instagram, so be vigilant if you receive any DMs or see a post providing a link to a giveaway.
These posts or DMs will usually have a link where you’ll be asked to enter your private key or seed phrase to claim your prize. Remember that you never need to divulge this information to have an NFT sent to you; only your public wallet address is required for this.
We have a more in-depth piece on phishing in the NFT industry if you want to read more on the topic, but the key takeaway here is that you should always be cautious when you receive any kind of email that provides you with a link.
Keeping Your NFTs Safe
There are several things you can do to decrease the chances of NFT theft, the first being using two-factor authentication for your accounts. For example, if you have an OpenSea account, make sure you use two-factor authentication so that a hacker cannot directly access your account without verification from another source, such as email or text.
Additionally, you should ensure that, if you do want to click on any kind of link in this scenario, you use a link-checking website first, which will let you know if a site is legitimate or not. Most phishing scams occur via phony links, so using a link checker can mean the difference between avoiding a phishing scam and falling for one.
You should also check any account that messages you with an NFT airdrop or giveaway. If the account holder is claiming to be a big NFT artist but only has a handful of followers, chances are, they’re not who they claim to be. You can also report these phony accounts to Twitter and get them removed from the platform.
Lastly, ensure that you always store your private keys and seed phrases super securely, as they provide a gateway to your NFTs. You can use digital wallets to store your NFTs, but many of them are connected to the internet, making it easier for a hack to take place.
So, we suggest you use either a cold wallet (that has no internet connection) or a seed phrase capsule to store this sensitive data. Alternatively, you could simply write them down on paper or store them on a hard drive, but you’ll need to ensure that it’s in a safe location.
Keeping Your NFTs Safe Is Paramount
While it’s easy to assume that NFTs are secure by nature, cybercriminals are continuously developing more sophisticated methods through which they can access your valuable digital assets. So, make sure you’re doing what you can to protect your NFTs from the hands of malicious individuals.
The 5 Biggest NFT Scams and How to Avoid Them
About The Author
(265 Articles Published)
Katie is a Staff Writer at MUO with experience in content writing in travel and mental health. She as a specific interest in Samsung, and so has chosen to focus on Android in her position at MUO. She has written pieces for IMNOTABARISTA, Tourmeric and Vocal in the past, including one of her favourite pieces on remaining positive and strong through trying times, which can be found at the link above. Outside of her working life, Katie loves growing plants, cooking, and practicing yoga.
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May 15, 2022 at 10:54AM