What is NFT and how does it work?
Non-fungible tokens, or NFTs, are a form of a digital collector item. It is designed to maintain rights and ownership of digital content. This includes digital arts, video, music, or any digital assets that are based on blockchain technology.
Non-Fungible Tokens mean that they are not interchangeable. This means that if you trade it, you will receive something completely different like real money, cryptocurrency, or any other asset.
Each token is represented with unique assets owned by a specific person. It contains information like who owns and purchased it. So, when someone purchases your NFT, they only own the token of the blockchain but they do not own the rights to the artwork.
People earn by creating digital assets and selling them to NFT marketplaces.
Imagine seeing your created avatar used by people in a video game. Isn’t it cool and fulfilling?
In order to fully understand how NFTs work, you must understand what blockchain is. With the unique identification codes, blockchain stores data in a secure and anonymous way.
NFTs are managed with private keys that are similar to your debit card PIN used to make transactions and serve as proof of ownership. Private keys also decrypt your data.
Private keys must always be kept secured. If not, then you’ll get a higher chance to fall victim to cyber attacks.
If you are serious about getting into the NFT market, you must also be serious about knowing its security risks and concerns.
NFTs are like online accounts or anything else on the Internet that can be hacked. Anyone who knows the private key can get access to your account. So, if there’s an unauthorized person who knows your private key, they can get access to your account, get your digital assets and sell them.
Phishing attacks are still the most common and successful cyber threats used by cyber attackers to trick their victims. Cyber attackers compromise their victim’s accounts in NFT marketplaces by sending phishing emails. Once the victim clicks the link or downloads a file attached in the email, malware will automatically install on the victim’s system. Through this, cyber attackers can easily steal passwords or private keys.
When cyber attackers compromise their victim’s accounts, they will either steal NFTs owned by the victims or use credit cards linked to the account to purchase other NFTs.
The worst part is, it is nearly impossible to return the stolen NFTs to their rightful owners. So, if someone gets access to your account, then good luck.
Another risk is that cyber attackers can easily impersonate other NFT artists.
Ways to protect your investment
- Store your NFTs in a secure wallet
- Distribute your NFTs in multiple wallets to mitigate the risk
- Use PIN codes that are hard to guess
- Use unique and complex passwords
- Consider additional security layers like Two-Factor Authentication
- Change your passwords regularly
- Update your software
- Never click suspicious links or files
- Think before you click
- Stay updated with the latest threats
NFT security risks must be addressed. Never let your assets be stolen by cyber attackers in just one click. NFT could be the perfect investment for some people. However, knowing the risks before taking any action is a better idea.
For any questions or concerns, drop us a message and we’d be glad to help.