What do NFTs have to do with Cars?
Both can be stolen
February seems to be the month of NFTs. 2021, NFTs rose to fame when Beeple sold his NFT for almost USD70 million. This year, a potentially USD200 million hack on OpenSea, the biggest NFTs marketplace, has made it big to the news.
It is a “potentially USD200 million hack” because most of the stolen NFTs have not turned into Eth yet. So far, the hacker managed to pocket USD1.7 million.
Power of Attorney
Long story short and in plain English terms, the hacker has been sending OpenSea users a smart contract where if the user signs it, the user is signing a “Power of Attorney” equivalent to the hacker. With this, the hacker is authorised by the user to move the NFTs out of that particular address. Though the power is given, the hacker didn’t execute it at once but executed the transactions when OpenSea announced their migration plan, as the power the hacker is given is based on the expiring contract.
Ethereum 2.0 vs Symbol (Part 6): Non-Fungible Tokens
You are one of many; you are one of a kind. You bear the common features of humankind, yet you are the one and only…
With the power given to the hacker, the hacker sold those NFTs for 0 Eth and then flipped them for profit, leaving the users/owners high and dry. However, all these transactions look legit in the eyes of technicality but definitely dodgy ethically.
Certificate of Ownership
“I thought NFTs is supposed to protect our assets.” It is, but protection has many levels and aspects.
NFTs, non-fungible tokens, are certificates of ownership to anything unique, literally anything. Let’s take a car as an example. In real life, when you buy a car, you be given a car registration that has the details of the car, the car registration number and your information as the owner. Though your name is in the car registration, it doesn’t protect your car from being stolen. And in a worst-case scenario, some thieves might even fake some documents and put their name in the car registration instead of yours. This is what happened at OpenSea.
“If that’s the case, why should I use NFTs?” you may ask. The main benefits of the NFTs, or blockchain technology, is that, as long as you do not compromise your private key and do not sign any transaction that you are not sure of, then you are pretty safe. And if your account is hacked, all the history of the transactions is there and you will know which account pulled off those acts.
A lot of the time, the causes of a hack are human factors. So, blockchain technology can protect you from the technological aspects with all transactions recorded permanently, it can expedite transactions and processes thanks to its transparency. However, it can’t prevent any mishap that involves human ignorance or carelessness. Above all, no one can escape the $5 wrench attack. So, it is advisable not to flaunt your assets.
Reducing Red Tape with Transparency
What blockchain is meant to do is to get reduce the cost of intermediary and the time of transaction. This is achieved with the transparency it provides. It always has been that and will always be that. No technology can fix human ignorance and carelessness. You can mitigate it with more reminders and yet, have we not been reminded enough of being aware of a phishing attack. Anyway, reminders are still better than no reminders.
Education is the Key
I might be biased as I believe education is the root cause of everything. We need to keep educating ourselves as technology changes so fast nowadays.
There are a few important things you can equip yourself with:
- Ways to protect your private key. I bet you have been hearing time and again about how important is your private key. Do not share it, take it off-line, and store your assets in hardware wallets. Those are the common ways of protecting your assets. Keep an eye on the development of new ways security and ways of hacks happen. This is a long-term battle. There is a danger of making it too secure that you yourself forgot how to access it. However, it is necessary and this is no different than protecting your other non-blockchain assets.
- Know the contract that you are interacting with. If you have checked and made sure you are interacting with the right contract, you are 90% protected. However, most users do not even know what is a contract address, let alone check on it. I must admit that the blockchain explorer, e.g. Etherscan, is way too complicated even for a season blockchain user. But just like investing in the stock market, even if you are not Warren Buffett, at least don’t be like Tom, Dick and Harry who invest based on tips only. Do your research and learn the tricks. Protect yourself with knowledge.
- Learn from others’ mistakes. It is easier said than done. However, it is the best way to minimise our losses. Not even experienced smart contract users would think of this attack, if not putting on a hacker’s hat. There will be other attacks in the future, just like any other business, you can only keep protecting it until it is not protected.
Minting, selling, buying and trading NFTs is a business, treat it like a business. Learn whatever you need to make it successful and protected, just like what you do for any other business.
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