The world prepared for another New Year’s Eve that was most likely to be spent at home, in quiet with their families. But for NFT collector Todd Kramer, it was all about scrambling to save nearly $2.2 million in collectible NFTs that were stolen from his collection after he was reportedly hacked.
The NFTs belonged to the Bored Apes Yacht Collection, a series of 10,000 algorithmically generated images of monkeys in varying attire, actions, and backgrounds that comes with exclusive benefits to owners in the collection. These benefits include a free minting opportunity for a Club Dog NFT, a donation to animal charities on secondary sales, an exclusive club for BAYC holders, and many others.
The project has proven extremely successful and popular among collectors, with celebrities such as Eminem, Jimmy Fallon, and many others among its members. The cheapest available Ape in the collection fetched a recent price of $217,000!
Kramer reportedly clicked a phishing link that was designed to imitate a popular NFT decentralized application. A click through the link allowed the hackers to gain access to Kramer’s collection, stealing eight BAYC tokens and seven MAYC tokens, a spin-off from the original collection. Hackers had planted this to exploit unwitting collectors such as Kramer.
Kramer then reported the theft, tweeting about it and warning collectors to remove the tokens in question from their liquidity pools. Furthermore, things took an interesting turn when reports emerged about the tokens in question being frozen by the NFT platform OpenSea, triggering a debate about whether blockchain technology was truly decentralized.
The theft also highlighted existing and potential security concerns over NFTs and crypto wallets in general, with many pointing towards other incidents of NFT theft and the losses that these thefts have incurred. These include the theft of BAYC NFTs from another collector, Calvin Becerra, and other isolated fraud and theft incidents such as spoofing and wash trading.
The answer to that question is, unfortunately, yes. One of the most insidious ways to do this is by wash trading or circular trading. This is done when two collectors deliberately inflate the price or sale volume of NFTs with the sole intention of making a quick profit. Once again, the BAYC collection has become infamous, as a lot of circular trades were done on its NFTs.
It is a double-edged sword, as the NFT community is one of the most dynamic and innovative applications of blockchain technology. It has so many varied potential use case scenarios and applications. Recent applications of the NFT technology to pay to earn models in gaming are a prime example of how the technology can foster vibrant online communities with enthusiastic participants and a quickly growing digital economy.
However, the true value that many collectors see in such marketplaces and platforms is in their decentralized approach to their data. It also relies on the level of control afforded to third parties over assets on the blockchain. Reports of OpenSea freezing Kramer’s stolen NFTs on the platform raise several valid concerns about just how decentralized blockchain platforms can be and how to address collectors’ concerns in situations similar to Kramer.
While some argue that perhaps Kramer should have been more careful about his security online, others are quick to point out the increasingly innovative approaches taken to steal, manipulate or otherwise behave unethically in the blockchain marketplace.
While the vulnerabilities discussed above are true causes for concern for any collector looking to explore the NFT space, all the news is certainly not bad. A host of analytical tools and applications are on the rise that allow collectors to monitor their collection, flag any transactions that seem out of the ordinary, and subsequently guard against inflated prices by providing the end-user with the information they need to make an informed purchase.
With the use of such tools, collectors can begin to worry less about their NFTs’ security and more about the value that they can gain from them in an increasingly competitive marketplace.
The Unleash NFT platform from Munich-based firm bitsCrunch is an excellent example of such a solution. bitsCrunch consists of a suite of AI tools that can seamlessly perform complex analysis. Be it transaction histories, volumes of decentralized databases, or providing users with the true value of an NFT, their tools can play the game better.
The right tools can guide your decisions and protect you from the misfortune that Kramer had to suffer. With bitsCrunch, rest assured as a collector, NFTs are a valuable way forward, as their adoption and engagement continue to grow and their applications continue to evolve.