NFT Theft Trend Highlights Crypto Vulnerability Issue

Blockchain, News | July 14, 2022 By:

When cryptocurrency emerged in 2009, the average person didn’t understand what it was or could represent. Today, cryptocurrencies come in all shapes and sizes and anyone with a smartphone can invest in different cryptos or hunt for the next coin that might rocket to the moon. 

After crypto came NFTs — non-fungible tokens representing digital assets like art or music. These one-of-a-kind digital assets are only supposed to exist in one place and be owned by one person, unlike other digital assets that can have millions of copies or exist in millions of places at once. 

Unfortunately, the fact that NFTs are supposed to be one of a kind doesn’t prevent theft. It might make them more lucrative targets. The NFT theft trend could also showcase a much larger crypto vulnerability issue.

The Promise of Protection

One of cryptocurrency’s most significant selling points is the use of blockchain technology. These digital ledgers are public records, but the basis of blockchain is that it’s supposed to be immutable, unchangeable and decentralized. This decentralization was thought to provide better security, with crypto advocates claiming that the technology was completely unhackable

Of course, much like claiming something is foolproof incites the universe to create a better fool, calling something unhackable is a taunt that will encourage hackers to try and break in. 

One such crypto theft occurred in 2019, allowing hackers to steal around $1.1 million worth of Ethereum Classic after they made their way into that crypto’s blockchain. The problem with blockchain is that if one crypto miner controls more than 50% of a cryptocurrency’s blockchain, the blockchain itself becomes vulnerable to attack. 

If blockchains don’t offer the protection that users were promised, investors have little to no recourse. Traditional accounts are protected against fraud and theft through laws such as The False Claims Act because they’re insured by the Federal Deposit Insurance Corporation (FDIC). Cryptocurrency’s decentralization is a selling point, but it also means no protection against theft and no way to get your money back if someone empties your crypto wallet. 

The Problem of Cryptobridges

At its inception, investing in cryptocurrency meant becoming part of a blockchain ecosystem that could only be accessed using a specific key or code. As the currency becomes more mainstream, the technology needs to evolve and become more accessible Crypto bridges became the solution. 

A crypto bridge allows users to take tokens from one blockchain and use them on another. Moving away from a singular blockchain allowed users to diversify their investments and use their cryptocurrency for other applications — such as buying NFTs or playing games. It sounds like a positive direction for the technology, but it creates unique crypto vulnerabilities that hackers are taking advantage of. 

Billions of dollars worth of cryptocurrency are tied up in crypto bridges, meaning hackers don’t even need to get into the core blockchains to steal crypto — they just need to make it onto the bridge. 

There have even been cases where crypto bridge projects were taken over by hackers before the system even went online. The Optics bridge, crafted on the Celo network, was one such case. Additionally, it can take days for users to discover this crypto vulnerability, which is more than enough time for hackers and thieves to make off millions in crypto. 

NTF Thefts in the News

NFTs might be nothing more than digital assets to the average observer, but these tokens are worth a lot of money — which always attracts thieves. 

Bored Apes and Mutant Apes are considered some of the most valuable NFTs on the market — digital artwork of cartoon apes in various costumes or settings — and account for some of the most expensive NFT thefts in recent years. Many sites, like OpenSea and Nifty Gateway, used to buy and sell these digital assets, have been compromised, allowing hackers to make off millions of dollars worth of NFTs. 

Even some celebrities have been targeted. Seth Green was planning to use one of his Bored Apes as the main character in an upcoming animated feature until his account was phished with a fake version of the Gutter Cats marketplace, costing him four of his NFTs. The compromised marketplaces are another tool hackers use to create crypto vulnerabilities and contribute to crypto theft. 

The Future of Crypto

It’s hard to tell where cryptocurrency might go in the future. NFTs are losing popularity with the general public and many cryptocurrencies are foundering, but we can’t count these technologies out just yet. People are hungry for a form of decentralized banking, and if the architects behind crypto and NFTs can figure out how to stabilize their currency, they may be able to provide just that.