Security Issues in NFT Marketplace you need to know

NFT marketplace has seen many ups and downs in their timeline. Many of them had given incremental benefits to its investors and creators. Some of NFT marketplaces experienced shutdown due to its poort backend infrastructure management and security loopholes. 

The latter one is a serious thing that needs to be addressed. Every startup or Institutional organization who wants to develop the NFT marketplace should understand the know-how of security breaches. 

When you understand what problems can occur in the NFT ecosystem, you can easily make an alternative solution.

In this blog, we are going to tell you what the security issues have happened in the NFT marketplace so far. How can you be careful to avoid such mistakes in the NFT marketplace?
 

Smart Contract Vulnerabilities
 

Smart contract code which is the backbone of NFT marketplace is the number one suspect. When smart contracts are executed on blockchain platforms, they are susceptible to vulnerabilities such as coding errors, logic flaws, and exploits. 

These vulnerabilities can be exploited by hackers to manipulate transactions, steal funds, or disrupt the NFT marketplace.

In July 2022, Omni, an NFT marketplace suffered from a reentrancy attack that cost them $1.4million. The hacker drained 1000+ ETH from the platform's owned funds system. 
 

Phishing Attacks
 

Phishing attacks are the traditional scams attacking the users' funds. It happens prevalent in the NFT space too, where users are tricked into revealing their private keys or sensitive information through fake websites, emails, or social media.

These attacks can result in unauthorized access to users' accounts and theft of their NFT assets.

In March 2022, popular NFT marketplace Axie infinity was hit by the massive phishing scam in the name of job opening. Hackers stole users' information when users clicked on the fake job offer sent in the name of Axie Infinity. 
 

Centralized Exchange Risks
 

NFT marketplaces that operate as centralized exchanges face risks such as hacking, data breaches, and insider threats. Popular crypto exchanges have NFT marketplaces in their add-on products and integrated their range of services in NFT as well.

Hackers may target centralized exchanges to steal user data, manipulate prices, or compromise the integrity of the marketplace.

Normally, centralized exchanges will have an online wallet storage method as it may be easily breachable. With cold wallet storage in place, centralized exchanges can hold their user funds in an additional layered security. 
 

Metadata Manipulation
 

Metadata associated with NFTs, including attributes such as title, description, and provenance, can be manipulated by malicious users. Generally NFT marketplaces offer editable metadata, frozen metadata, and centralized metadata types.

Hackers will try to use NFT meta image links for falsification. They send the wrong links using phishing techniques and try to get original metadata from users. 

It is not so easy for faking the meta data as NFT marketplaces are focusing on decentralized storage. Using frozen metadata can greatly reduce these kind of scams
 

Frontend Exploits
 

Vulnerabilities in the frontend of NFT marketplaces, such as cross-site scripting (XSS) or cross-site request forgery (CSRF) attacks can happen. They use this kind of method to inject malicious code into the website or application through users.

When the user clicks on the link and proceeds to the original application, the injecting code can compromise the application database and try to get the user's active session cookie. 

The cross site scripting generally occurred in web2 where poor code management can happen. Strong data sanitization in the NFT marketplace can avoid this issue easily. 
 

Transaction Reversals
 

In some cases, NFT transactions conducted on blockchain platforms may be susceptible to transaction reversals or "double spending" attacks. Even though blockchain doesn’t offer free hands for transaction reversal, the immutability nature prevents the user funds automatically.

Hackers tend to take advantage of the lack of knowledge among the users. They might trick the users to promise reversals on NFT transactions.  But it is not possible in blockchain most of us know. 
 

Privacy Concerns
 

NFT marketplaces sometimes face privacy concerns related to the exposure of users' transaction history, wallet addresses, and other sensitive information on public blockchain networks.

This information can be exploited by scammers for targeted attacks. When any user shares their NFT purchase or transactions in social media, the attackers will try to steal the user’s private wallet address.

Exposing the private keys or wallet address will likely get easy for attackers to get into your NFT funds. Most of the marketplace guidelines are insisting on the general security measurements in detail. Lack of user consciousness lead to the kind of hacks like this.
 

Conclusion
 

When seeing the extreme security challenges in NFT marketplaces, most of the makers will go on to outsourcing. Some of the companies will invest in their in-house team for development.

Overall, many of them will get whitelabel NFT marketplace solutions. Because, they can’t handle or have enough experience in NFT blockchain transactions facilitation. 

If you are the individuals or Entrepreneurs who want to make your venture into the NFT marketplace, join hands with us.

We build the best in-class NFT ecosystem for your idea. We not only stop with making your NFT marketplace, we develop tokenomics, DeFi integration and DEX development.