By Saravanan Jaichandaran
A NFT once lost or stolen is often irretrievable! Don’t want to get into this situation right? That’s why a security-first mindset is super important to protect your valuable NFTs, whether you are a seasoned collector or considering your first dip into the NFT world.
While NFTs are built on highly secure blockchain technology, they are still vulnerable to various security risks, hacks and threats. Over $100 million worth of NFTs were reported stolen through various scams between July 2021 and July 2022, with July month alone witnessing 4600 stolen NFTs. (the highest month on record!). Shocking right? As these digital assets hold significant value, hackers and scammers are constantly finding different ways to make use of the loopholes. Therefore, NFT security requires careful attention and implementation of robust measures that ensure protection in every aspect possible.
But, can the integrity of NFTs be guaranteed? What steps should buyers and developers adopt to safeguard NFT data? Security is never a one-time task. Be a developer or a stakeholder, here are some best practices that can be implemented to enhance the security posture of NFTs.
- Smart Contract Security
Smart contracts are the foundation of NFTs, that automatically execute actions based on predetermined criteria. These contracts oversee the creation, transfer and management of NFTs. Bugs and exploits in the code can lead to serious fallouts and could be a loophole for malicious actors to steal valuable assets. Therefore, to ensure the long-term viability of the NFT ecosystem, it is important for developers and investors to continually assess and address it. Developers adhering to the established standards such as ERC 721 and ERC 1155 and implementing robust security measures is paramount for preserving the integrity of data.
- Regular Security Audits
Regular security audits are indispensable to uncover the underlying vulnerabilities, then and there, in the NFT landscape. It is an investment in security that includes a meticulous examination of the source code, contracts, projects and underlying systems. Both NFT contract developers and investors should be proactive by conducting routine security audits and pulling out potential vulnerabilities on the spot. This preemptively addresses issues before they cause significant threats. Numerous third-party sources are available to facilitate security audits with a common goal of enhancing the security and reliability of the transactions.
- Wallet Security
Distributing NFTs across multiple wallets ensures that a single breach in one way doesn’t cause an overall loss. Digital wallets are classified into hot and cold wallets. Hot wallets have a frequent online presence, hence it is vulnerable to quick losses. This wallet can be used for minting, flipping low/mid-value assets and high-risk activities. Cold wallet is a physical device that seldom connects to the internet. They are immune to online hacking attempts making them a secure choice to store the most valuable NFTs. Understanding the difference and selecting appropriate wallets based on the necessity is crucial for the safety and security of digital assets.
- Creating Awareness
Securing digital assets also extends to the broader NFT community who also play an active role. Being proactive, understanding various threats and constantly learning about advanced security measures are important. Enabling two-factor with (2FA), using strong passwords and being vigilant against phishing attempts are ways to stay proactive against the threats. Engaging through online communities and leveraging collective knowledge will significantly contribute to enhancing the implementation of effective security measures. By watching every step with due diligence, the NFT community can be the first line of defense against malicious activities, contributing to a safer ecosystem. With a deep understanding of the NFT ecosystem, Unleash NFTs from bitsCrunch offers unparalleled analytical insights that help make informed decisions in the NFT space.
Watch Every Step
Following the above-mentioned best practices ensures the longevity and security of your precious digital assets in the NFT world. This landscape is continuously improving and developing and hence staying updated on the regulatory discussions, potential law amendments and latest security measures are important for both the developers and investors to create a safer NFT environment.
In a world where NFTs are more than just collectibles, their security is a shared responsibility!
The author is co-founder and chief data scientist, bitsCrunch
