Having been a trendy phenomenon over the last few years, we’re starting to get to the point where crypto and NFTs are becoming more mainstream and commonplace all over the world. No longer are they the domain of tech enthusiasts or those hoping to make a quick buck: they’re increasingly becoming integrated into our everyday lives.
But of course, anything digital that has a substantial monetary value, such as crypto or NFTs, brings an inherent security risk because cybercriminals will always want to get their hands on them through illegal means. In this blog, we’ll explore how NFTs and cryptos entered the common consciousness, the biggest security risks to watch out for, and what all this means for all of us in the future.
Crypto and NFTs, explained
First of all, it’s important to clearly define exactly what crypto and NFTs are. Cryptocurrencies are digital or virtual currencies where cryptography is used to secure each transaction between one party and another. They sidestep the traditional banking system, and payments are made on a peer-to-peer basis where each transaction is stored on the blockchain, a digital, decentralised ledger that notes who owns what at any one time. While Bitcoin is the most common (and usually the most valuable) cryptocurrency, there are thousands of others in open trade today, many of which have been created with specific uses in mind.
NFT stands for ‘non-fungible token’. It is a unique digital token that is completely one-of-a-kind, and can be more or less anything - a piece of art, some music, writing, data, or anything else you can think of that can be stored digitally. The same principle of storing transactions on a blockchain as proof of ownership applies, but the information within the blockchain is deeper compared to cryptocurrencies. The idea is that because NFTs are unique, they drive value through their exclusivity - which is why they have become so popular as a way of creating and selling digital art.
The biggest security risks
Some NFTs and cryptocurrencies are worth thousands of pounds, and more: indeed, one digital artwork was sold as an NFT for nearly $92million last year. So it’s no surprise that they’ve become such a popular target for cybercriminals.
There are two main ways in which bad actors can try and get hold of these digital assets. The first is more technical: hacking. Most often, this involves hacking into the computers of those holding crypto and NFTs and gaining access to the private keys (special passwords) that deliver access to the assets themselves. With access to those keys, criminals can then transfer funds and assets into their own wallets. The biggest hack to date was on the Ronin Network exchange in March 2022, where more than $600million of cryptocurrency was stolen.
The second way is more human, but no less damaging: scams. Phishing attacks that target unsuspecting people’s bank details or passwords for accounts have been just as effective in taking control of crypto accounts. There have also been cases of fraudulent projects being set up, where people invest in a particular coin to fund a seemingly honest project, which is then suddenly shut down without warning as the perpetrators make off with the money. One recent example involving a Squid Game-related coin cost buyers $3.3million.
What this means for the future
While there are huge opportunities for profit out of both crypto and NFTs, the security risks above - allied to the volatility of the market - means that any investments into digital funds and assets should be handled with extreme care. The crypto and NFT scene changes so quickly that it’s impossible to know what it will look like in 12 months’ time, never mind five years or ten. So while there is plenty of potential in making an investment in these areas, it should only really be done with the highest level of security protections and best practices in place.