Non-fungible tokens (NFTs) offer great revenue potential for brands, but also represent ideal opportunities for cybercriminals to exploit if the security issue is not investigated early.
Nowadays, bots are the secret weapon of cybercriminals and are increasingly used to manipulate prices, cheat customers and destroy the NFT ecosystem. This means that NFT markets must do everything in their power to provide effective security defenses against bots and other cyberattacks to protect their NFT investments, market reputation, and experience. customer.
But why are hackers targeting their NFT trading bots? The reason is simple, the money is there. The NFT market will reach $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 such as sneakers targeted by inventory-taking bots. While blockchain, cryptocurrencies and decentralized finance are recent innovations, they have emerged in a mature and 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 include taking over entire websites, as well as stealing identities and other personal financial information.
Here are some types of bots you should protect yourself against: Buy bots. It is designed to buy goods or services on the internet in bulk, when they are sold, and immediately pay for the order. The goal is to take significant control of a valuable stock, which is usually resold in the secondary markets with a large margin. They prevent genuine buyers from obtaining goods or services, leading to consumer disillusionment and inventory rejection when NFTs are no longer available.
Auction bots. These bots create fake offers that aim to manipulate NFT prices. By placing a large number of low bids for NFTs well below the asking price, price gouging bots drive up the value of an NFT without actually buying it. Price-inflating bots buy NFTs at low prices, artificially creating scarcity and increasing popularity to force buyers to pay more for remaining stocks, often in secondary markets. And bidding bots can artificially inflate the price of NFTs through automated bidding wars.
Fake NFT bots. This type of bots can be used to sell fake NFT projects that do not match the real identity of the buyer who needs to buy. If a consumer mistakenly buys a counterfeit NFT, they cannot get a refund, and without proper authentication, they have no chance to sell it legally.
Fake promotion bots. These bots can pose as phishing schemes, tricking users into clicking on links to take advantage of limited offers, such as a fake YouTube Genesis Mint Pass.
Bot activity in NFT markets spreads doubt and suspicion and affects potential buyers, legitimate sellers, artists, sportspeople, and creators whose products are sold in online markets.
Malicious bots have the potential to disrupt the growth of blockchain-based markets, and if NFT exchanges are known to be hotbeds of bots, it could threaten one of the most dynamic segments of the new digital economy.
Protecting the market from bots
We have learned a lot from our work with large NFT markets and exchanges, helping them implement sophisticated security and protection measures. This includes protecting against bot attacks targeting login credentials, preventing the creation of fake accounts, and preventing stock-taking bots that buy stocks and drive up prices. in NFT. . Here are some key points to consider: Understand fraudulent new account opening and validation standards.
Review your bot defense strategy to avoid sophisticated, human-shaped automation and retooling. Avoid account takeover by monitoring transactions for signs of fraud or risky behavior and hardening systems to login against credential stuffing. Use smart authentication to improve the customer experience.
Manage users to determine whether they are customers or bots. Strengthen your security and fraud teams with new tools and intelligence support. Be prepared for which criminals keep rearranging their attacks – and your defenses can be quickly adjusted.
Helping buyers protect themselves against cybercriminals
Protecting and earning customer trust is important, and that starts with awareness. Here are some good 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 special firmware to prevent access to private keys, can 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, issued on the blockchain, before approving them, as they detail the unique information associated with your NFT, including ownership and transaction details. One should always know what one is signing up for, as smart contracts can set rules regarding the exchange of NFTs and other property rights.
Beware of fake markets. NFTs should only be purchased from reputable organizations that take security seriously and ensure that 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 you can do if your NFTs are stolen can help you prevent phishing attacks, identity theft and other fraud.
With the increase in NFT thefts, the question arises if the hackers were able to resell them at a good price, once the hacking was revealed… The risk in any case is real. That’s why Web3 companies need to protect their customers against malicious bots.