Crypto

NFT: Eldorado for cybercriminals

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

Bots are now the secret weapon of cybercriminals and are increasingly being used to manipulate prices, defraud customers, and disrupt the NFT ecosystem. This means that NFT marketplaces must do their best to provide effective protection against bots and other cyber attacks in order to protect their NFT investment, 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. According to Chainalysis, the NFT market reached $41 billion by the end of 2021. NFT market ecosystems are relatively new and the technologies and processes behind them are not always well understood, making them an ideal target.

The e-commerce industry has been hit hard by bots, especially with the release of limited edition products such as sneakers that are targeted by stock-moving bots. Although blockchain, cryptocurrencies, and decentralized finance are recent innovations, they are emerging in a mature and already established cybercriminal environment.

Bots to watch

Malicious bots can manipulate the prices and availability of NFT products or offer fake products for sale. Bots can also be part of larger projects that include taking down entire websites as well as stealing identity and other personal financial information.

Here are some types of bots you need to protect yourself from: Buying bots. They are designed to buy goods or services in bulk online when they are on sale and pay for the order instantly. The goal is to gain mass control of valuable shares, which are usually resold in secondary markets at a high premium. They prevent real buyers from purchasing goods or services, leading to consumer frustration and inventory abandonment when NFTs are no longer available.

Auction bots. These bots make fake offers aimed at manipulating NFT prices. By placing a large number of low stakes on NFTs well below the asking price, price cut bots lower the value of the NFT without actually buying it. Price-boosting bots buy NFTs at low prices, artificially creating scarcity and increasing popularity in order to force buyers to pay more for remaining shares, often in secondary markets. And trading bots can artificially inflate the price of NFTs through automated bidding wars.

Fake NFT bots. This type of bot can be used to sell fake NFT projects that do not match the real identity of the buyer who is supposed to make the purchase. When a consumer mistakenly buys a fake NFT, they are unlikely to receive a refund, and without proper authentication, they have no chance of reselling it legally.

Fake ad bots. These bots can pose as phishing scams, tricking users into clicking on links to take advantage of very limited offers like the fake YouTube Genesis Mint Pass.

Bot activity on NFT marketplaces sows doubt and suspicion and influences potential buyers, legitimate sellers, artists, athletes, and creators whose products are sold on online marketplaces.

Malicious bots can hinder the growth of blockchain-based markets, and if NFT exchanges are known to be breeding grounds for bots, this could threaten one of the most dynamic aspects of the new digital economy.

Protection of the trading platform from bots

We have learned a lot by working with major NFT marketplaces and exchanges, helping them implement sophisticated security and protection measures. These include protecting against bot attacks that target login credentials, preventing the creation of fake accounts, and preventing stock grabs by bots that buy stocks and drive up NFT prices. Here are a few key points to consider: Understand fraudulent opening and verification of new accounts.

Assess your anti-bot strategy to prevent complex automation and retooling that mimics human actions. Prevent account takeovers by monitoring transactions for signs of fraud or risky behavior and protecting login systems from credential spoofing. Use smart authentication to improve quality client service.

Manage users to determine if they are clients or bots. Strengthen your security and anti-fraud teams with new tools and analytical support. Be prepared for the criminals to keep re-arranging their attacks – and you can quickly re-arrange your defenses.

Helping buyers protect themselves from cybercriminals

Protecting and earning customer trust is important, and it starts with awareness. Here are some helpful tips: Consider hardware wallets. If you are using cryptocurrencies to buy NFTs, then 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 greatly increase the security of cryptocurrency and NFT purchases by protecting them from bots and other cyberattacks.

Always review contracts. Buying an NFT almost always involves entering into a “smart contract” with the seller. Please review these contracts issued on the blockchain carefully before approving them as they contain unique information associated with your NFT, including ownership and transaction details. You always need to know what you are signing as smart contracts can specify rules regarding NFT exchange 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 options you have if your NFTs are stolen. By knowing in advance how your market will contact you and what your remedies are if your NFTs are stolen, you can prevent phishing attacks, identity theft and other types of fraud.

With the proliferation of NFT thefts, the question is whether hackers will be able to resell them for a good price once the hack is discovered… There is indeed a risk anyway. This is why Web3 companies must protect their customers from malicious bots.

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