NFT: an Eldorado for cybercriminals

NFT: an 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. departure.

Nowadays, bots are cybercriminals’ secret weapon and are increasingly being used to manipulate prices, defraud customers and erode the NFT ecosystem. This means that NFT marketplaces must do everything in their power to provide effective security defenses against bots and other cyberattacks 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 reached $41 billion by the end of 2021, according to Chainalysis. NFT market ecosystems are relatively new, and the technology and processes behind them are not always understood – making them a perfect target.

The e-commerce industry has been hit hard by bots, especially with releases of limited-edition products like sneakers being targeted by inventory-hopping bots. While blockchain, cryptocurrencies and decentralized finance are recent innovations, they are emerging in a mature and already proven 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 involve taking down entire websites, as well as stealing identities and other personal financial information.

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

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

Counterfeit NFT bots. This type of bots can be used to sell inauthentic 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 get a refund, and without proper authentication, they have no chance of reselling it legally.

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

Bot activity in NFT marketplaces sows doubt and suspicion and affects potential buyers, legitimate sellers, artists, sportspeople, and creators whose products are sold in online marketplaces.

Malicious bots have the potential to impede the growth of blockchain-based markets, and if NFT exchanges are known to be hotbeds of bots, this may threaten one of the most dynamic facets of the new digital economy.

Protecting the marketplace from bots

We have learned a lot from our work 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 grabbing bots that buy stocks and drive up NFT prices. . Here are some key points to consider: Understand fraudulent new account opening and validation patterns.

Assess your bot defense strategy to prevent sophisticated, human-mimicking automation and retooling. Prevent account takeover by monitoring transactions for signs of fraud or risky behavior and hardening systems to login 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 tools and intelligence support. Prepare for what criminals continue to rearrange their attacks – and be able to quickly rearrange your defenses.

Helping buyers protect themselves against cybercriminals

Protecting and earning customer trust is important, and that starts with awareness. Here are some savvy tips: Consider hardware wallets. If you are using cryptocurrencies to purchase NFTs, then consideration should be given to 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 cyberattacks.

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 that is associated with your NFT, including ownership and transaction details. One should always know what one is signing, as smart contracts can specify rules regarding the exchange of NFTs and other property rights.

Watch out for fake markets. NFTs should only be purchased from reputable organizations that take security seriously and ensure transactions are free of bots.

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 recourse is if your NFTs are stolen can help you thwart phishing attacks, identity theft and other fraud.

With the proliferation of NFT thefts, the question arises whether hackers manage to resell them at a good price, once the hacking is revealed… The risk is in any case indeed present. That’s why Web3 companies need to defend their customers against malicious bots.


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