NFT: an Eldorado for cybercriminals

Non-fungible tokens (NFTs) offer huge earning potential for brands, but they also represent ideal opportunities for cybercriminals to exploit if the security issue is not investigated in advance.

Nowadays, bots are the secret weapon of cybercriminals and are increasingly used to manipulate prices, defraud customers and erode the NFT ecosystem. This means that NFT markets must do everything in their power to provide effective security defenses against bots and other cyber attacks to safeguard their NFT investments, market reputation, and customer experience.

But why then do hackers focus their bots on NFT sales? The reason is simple, that’s where the money is. The NFT market hit $ 41 billion by the end of 2021, according to Chainalysis. The ecosystems of the NFT market are relatively new and the underlying technology and processes are not always understood, making them a perfect target.

The ecommerce industry has been hit hard by bots, particularly with versions of limited edition products like sneakers being targeted by inventory jumping robots. Although blockchain, cryptocurrency and decentralized finance are recent innovations, they are emerging in a mature and already proven cybercrime environment.

Bot to watch

Malicious bots can manipulate the pricing and availability of NFT products or offer fake products for sale. Bots can also be part of larger projects involving the removal of entire websites, as well as identity theft and other personal financial information.

Here are some types of bots you need to protect yourself from: Buying bots. These are designed to buy goods or services online in bulk, when they are marketed, and pay for the order immediately. The goal is to take massive control of a valuable stock, which is usually resold in secondary markets by a large margin. They prevent true buyers from acquiring goods or services, leading to consumer frustration and inventory rejection when NFTs are no longer available.

Auction robot. These robots make fake offers that aim to manipulate NFT prices. By placing a large number of low NFT bids well below the asking price, price reduction robots drop the value of an NFT without actually buying it. Price-raising robots buy NFTs at low prices, artificially creating scarcity and increasing popularity in order to force buyers to pay more for the remaining stock, often in secondary markets. And bidding bots can artificially raise the price of NFTs through automated bidding wars.

Counterfeit NFT bots. This type of bot can be used to sell inauthentic NFT projects that do not match the true identity of the buyer who should make the purchase. When a consumer buys a fake NFT by mistake, he is unlikely to get a refund and, without proper authentication, he has no chance to legally resell it.

Fake promotional robots. These bots can pretend to be phishing schemes, tricking users into clicking links to take advantage of very limited offers, such as a fake YouTube Genesis Mint Pass.

The activity of bots in NFT markets sows doubts and suspicions and affects potential buyers, legitimate sellers, artists, athletes and creators whose products are sold in online marketplaces.

Malicious bots have the potential to prevent the growth of blockchain-based markets, and if NFT exchanges are known to be bot hotbeds, that could threaten one of the most dynamic aspects of the new digital economy.

Protect the market from bots

We have learned a lot from our work with major NFT markets and exchanges, helping them implement sophisticated safety and security measures. These include protecting against bot attacks targeting login credentials, preventing fake account creation, and preventing bots grabbing stocks that buy stocks and drive NFT prices up. Here are some key points to consider: Understanding fraudulent patterns of opening and validating new accounts.

Evaluate your bot defense strategy to prevent sophisticated automation and retooling that mimic humans. Prevent account takeover by monitoring transactions for signs of fraud or risky behavior, and by hardening access systems against credential stuffing. Leverage smart authentication to improve the customer experience.

Manage users to determine if they are customers or bots. Strengthen your security and fraud teams with new intelligence tools and support. Be prepared for what criminals keep rearranging their attacks and be able to quickly rearrange your defenses.

Helping shoppers protect themselves from cybercriminals

Protecting and earning customer trust is important and this starts with awareness. Here are some practical tips: consider hardware wallets. If you are using cryptocurrencies to buy NFTs, you should consider using a hardware wallet to make the purchase. Hardware wallets, which are external physical devices with specialized firmware to prevent access to private keys, can significantly improve the security of cryptocurrency and NFT purchases by protecting them from bots and other cyber attacks.

Always review contracts. Buying an NFT almost always involves entering into a “smart contract” with the seller. Carefully review these contracts, which are issued on the blockchain, before approving them, as they detail the unique information associated with your NFT, including ownership and transaction details. You should always know what you are signing up for, as smart contracts can specify rules relating to the trading of NFTs and other property rights.

Beware of fake markets. NFTs should only be purchased from reputable organizations that take security seriously and ensure transactions are bot-free.

Understand how your NFT market communicates and what your options are if your NFTs are stolen. Knowing in advance how your market will contact you and what your resource will be if your NFTs are stolen can help you thwart phishing attacks, identity theft and other frauds.

With the proliferation of NFT thefts, the question arises whether hackers can resell them at a good price once hacking is discovered … The risk is still present. That’s why Web3 companies need to defend their customers from malicious bots.

Leave a Comment