NFT Scams: How to Keep Your NFTs Safe | How to Keep Your Wallet Safe from Hacks

How to Keep Your Wallet Safe
How to Keep Your Wallet Safe

The NFT ecosystem now inevitably includes scams. Nearly every major player in the industry has now fallen victim to hacking. The Azuki Twitter account was hacked in January 2023, and PROOF Collective founder Kevin Rose lost more than $1 million in NFTs as a result of a phishing fraud.

The cumulative loss of NFTs for followers who clicked a malicious link sent by the hackers was close to $800,000. You can be hacked if the biggest names in cryptocurrency and NFTs can. Everyone, from NFT tourists to purists, still runs a significant danger of being conned out of their assets by dishonest people despite the increased awareness of these scams.

Fortunately, by following the accepted best practices recommended by blockchain developers and security experts, you may reduce some of the dangers. It’s true that not all frauds can be avoided. Still, the NFT community could probably prevent a substantial amount of the numerous and well-liked scams by adopting the required (though occasionally difficult) precautions to safeguard software wallets. How? Read on.

Safekeep your seed phrase

The most obvious technique to protect your cryptocurrency and NFTs is to be cautious with your wallet’s seed phrase. For those who are not familiar, a software wallet’s private keys are represented by a seed phrase, which is a group of words that are produced at random and given to the user when they first create a wallet. In the unlikely event that a user loses access to their wallet or needs to import their wallet into a new device, this private key serves as a failsafe that enables the contents of a crypto wallet to be restored.

The seed phrase for your wallet should never be typed out. Put an end to any ideas of emailing it to yourself or keeping it in a Google Doc or another note-taking software on your phone or PC. Only write down your specific private key on paper and keep it hidden away in your house. Some people even go as far as to have their seed word engraved on a metal plate and keep it in a safe.

Use hardware wallet or delegate a wallet

Using a hardware wallet to preserve your holy grails and large crypto scores could save you from a world of hurt. It may be tempting to store all of your assets in one or two software wallets for rapid access and tradeability. Users’ private keys are stored offline on the safe microprocessors of the device of origin with a hardware-based wallet, such as a Ledger or Trezor. Considering that viruses, key loggers, screen capture tools, and other malicious software might infect a computer or other device, using a hardware wallet from the beginning is a dependable approach to keep your NFTs secure.

Even this system can be compromised, even if some people try to keep a small number of online-enabled software wallets (hot wallets) for active trading while keeping other funds safeguarded in an offline hardware wallet (cold wallet). The mere act of signing a transaction with a high-value wallet can result in loss, as we just seen with the hacks of important Web3 individuals like Rose, Nikhil Gopalani, CryptoNovo, and more. Users might think about utilizing a burner wallet—a wallet with no holdings or site connections used exclusively for transactions—or assigning a wallet to transact in place of an active one to further reduce risk.

Collectors can do this by utilizing programs like Delegate Cash. Users can build and designate a brand-new MetaMask hot wallet as a delegate for a cold wallet where priceless NFTs are stored using Delegate Cash. By doing this, users can make use of an NFT without keeping it in an active wallet by claiming airdrops, confirming ownership, or in other ways. This technique was recently employed to great advantage by anonymous collector tropoFarmer, who made his Sewer Pass available to others so they could play Dookey Dash using a delegated wallet.

Verify handles, URLs, and signatures three times.

You should always double-check that the gateway you are using is secure and genuine before even thinking of minting, collecting, signing, or dealing with a website or contract (including Delegate Cash). Popular Twitter accounts and Discord servers are frequently breached by hackers, which results in the announcement of phony NFT mints and significant cryptocurrency losses for the NFT community.

Most often, fraudsters would require users to enter a seed word (again, never even contemplate doing this) or sign a harmful transaction in order to trick them into parting with their crypto or NFTs. Check every URL you wish to contact with and the URL source to be extra cautious, as the latter is what compromised Rose. Scammers may easily make bogus links and browser-based popups that function and appear exactly like MetaMasks.

However, even if you are not forced to use a fraudulent website or wallet software, signing a transaction without thinking can leave you open to fraud. Without a doubt, hackers depend on people to do this action. When signing speed-defining minting transactions, it might be simple to overlook the minutiae given the enormous volume of signatures and transactions provided to collectors every week. Always read the fine print of any contracts you intend to let your wallet interact with, just to be on the safe side.

What to do if you get hacked

Your next steps will depend on the type of attack or scam you were the victim of if all else fails and you do find yourself on the receiving end of evil intent. If you signed a transaction and connected with a bogus mint or claim, you’re out of luck. There isn’t much you can do once your crypto or NFTs are out of your possession. As a result, in order to avoid a hack in the first place, it’s crucial to comprehend the security flaws of others.

Although marketplace security teams may be able to assist you in some circumstances, particularly if they are at fault, the user is nearly always accountable. Learn how to properly prepare yourself to protect your investments. Read up on typical scams, develop your ability to see warning signs, and above important, put the safety precautions suggested in this guide or in other ways by reliable NFT community members into action as soon as possible.

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