According to Wikipedia, the first known non-fungible token (NFT) was created in 2014 and the first NFT project was launched at the end of 2015. It took a few more years and more projects for the concept to spread into mainstream consciousness. , then a few more for the massive investments in NFTs to follow.
2020 and 2021 have seen hundreds of millions of dollars spent on NFT. The boom was obvious but baffling to many, as buying an NFT of a piece of digital art – a song, photo, video, in-game collectible, etc. – does not mean that you obtain any copyright, intellectual property, or other legal rights in the digital asset that the NFT represents.
So what is the appeal of NFTs?
We asked Satnam Narang, Research Engineer at Tenable, to shed some light on the issue for the uninitiated and offer security tips for those who have already invested in it.
Why do buyers use NFTs?
“Most commonly associated with digital art, NFTs are considered the modern equivalent of an art collection. Only a certain number of NFTs are produced for a project and they have a variety of characteristics, which can contribute to an NFT’s value from a rarity perspective,” Narang explains.
“Most of the popular NFT projects are what are called PFP (Profile Pictures) projects like CryptoPunks or Bored Apes. Buyers acquire them and use them as profile pictures on social media because social media has become our digital art gallery.While it’s true anyone can right click and save a PFP from one of these projects and claim it for themselves because it’s When it comes to blockchain-based projects, there is a way to verifiably prove ownership.Twitter recognized the value of NFTs as PFPs, which is why they started offering cryptocurrency enthusiasts the opportunity to verify ownership of their NFTs on the blockchain in a more transparent manner.
He attributes the recent popularity of NFTs in part to the fact that, for many cryptocurrency enthusiasts and investors who missed the early days of Bitcoin and Ethereum, NFTs have become another investment vehicle and potential earning opportunity. .
Several noteworthy projects have seen the value of their NFTs skyrocket over the past year, even as the broader cryptocurrency market entered a bear market, he pointed out.
However, it should be noted that the NFT market has cooled somewhat since then.
How are they secured?
NFTs are bought and sold on NFT marketplaces (e.g. OpenSea).
“NFTs are typically stored in hot wallets: cryptocurrency wallets that are easily accessible over the Internet through browser extensions like MetaMask. This allows users to easily access their NFTs for sale,” Narang explains.
“Some power users may choose to store their NFTs in cold wallets, which are offline wallets (physical devices) that are not connected to the internet. Cold wallets include hardware wallets like Ledger or Trezor, which require a user to securely store a private key offline in order to access their funds or NFT in their cold wallet.
NFT: a treasure trove for scammers
As software engineer Molly White documented in her Web3 Is Going Great project, compromised NFT projects have become almost a daily occurrence, and draws on questionable NFT projects are also known.
It is difficult for those looking to buy NFTs or have the ability to mint them to be absolutely sure that they are not being fooled.
“There is often a window of opportunity offered to scammers to target NFT projects that are trying to add more value for their holders. These projects will do things like offer token airdrops that are only granted to holders of NFTs or plan to pivot to things like the metaverse, where holders of these NFTs can get the first dibs on a piece of digital land in the project’s metaverse,” Narang explains.
“If users miss these airdrops or opportunities to procure digital land deeds, they are more likely to be scammed by unexpected offers. Scammers are also really exploiting the urgency factor, claiming that an NFT project only reopens airdrops or only grants access to obtaining digital land deeds for a limited time or for a certain number of years. users.
Beware of phishing
Scammers can sue NFT owners via imitations of different projects or by general cryptocurrency phishing that gives an attacker control of the victim’s wallet.
Skepticism is an NFT collector’s best friend, Narang notes. “Unsolicited social media posts claiming you can partake in an NFT airdrop or mint are more likely to be scams. If you are unsure, you should visit the respective NFT projects’ social media accounts or Discord to validate these claims, but I can assure you that in 9 out of 10 cases, these are simply scams designed to steal your digital wallets.
Better to miss out on a potential upcoming NFT project than to have all your cryptocurrencies and NFTs stolen from your wallet, he believes, and advises NFT owners to consider using storage cold for their NFTs and other digital assets.
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