What Kramer’s Lost Apes Tells Us About Protecting NFT Art

On December 3oth, Todd Kramer, a NY art gallery owner, found 16 of his non-fungible token (NFT) art stolen. They included eight from the popular Bored Ape Yacht Club (BAYC) collection, seven Ape spin-offs, and a Clonex.

Launched in April 2021, BAYC is inarguably one of the most prestigious NFT collections to date. According to one report, the value of a piece currently stands at a minimum of $267,000.

So, needless to say, this was no minor art theft. In total, Kramer lost an estimated $2.2 million in one fatal move—apparently by clicking on a phishing link.

The incident made waves on social networks, particularly Twitter, where Kramer first announced the incident. Of course, many were quick to sympathize. But it also gave NFT nay-sayers plenty of ammunition to hit back at the web 3.0’s much-talked-about decentralized world.

Centralized vs. Decentralized

In a traditional financial system, central regulators hold organizations responsible for keeping your financial assets safe. It has rules and regulations to help prevent fraud or at least minimize them.

But not in the decentralized world. In this non-traditional financial environment, there are no gatekeepers to set controls in place. So, the responsibility of protecting your financial assets remains with you. And there is simply no fall-back option in the event of human error or fraud.

This is where the troubles begin. Many people are still accustomed to the inherent controls set by traditional financial systems and are not quite ready to take up sole responsibility for protecting their wealth.

But for any NFT investor (or any user of decentralized finance, for that matter), taking charge of their personal digital assets is a critical mandate that they can no longer overlook. And Kramer’s lost Apes is an important reminder of this.

Keeping NFT art safe

The fact is, online hackings and internet scams are nothing new, even for web 2.0 and centralized finance. For example, 93% of all banking fraud attempts are attributed to online fraud activities like account takeovers, phishing attacks, and impersonation scams.

And with the recent boom in decentralized finance (DeFi), it’s become the latest playing ground for scammers. Thefts and scams in the DeFi space have been rapidly escalating, with more than $10.5 billion worth of losses reported in 2021. So, NFT owners should be extra cautious to avoid these obvious threats.

But there’s good news: keeping your investments safe in a decentralized environment isn’t impossible. Here’s what experts suggest:

1. Switch to a hardware wallet.

“If you have NFTs that are worth more than a few thousand dollars, you need to secure them with a hardware wallet,” says Morgan Linton, co-founder of Bold Metrics.

Hot wallets like MetaMask provide convenient and faster access to stored digital assets. But they are always connected online. This makes your assets vulnerable to cyberattacks. (It’s exactly what happened to Kramer when his hot wallet was hacked after falling victim to a phishing scam).

So, experts recommend hardware-based cold wallets like Trezor and Ledger. They provide offline storage facilities, thereby minimizing hacking threats and improving security for your NFT assets.

2. Stick to official sources.

Social networks, forums, and other community-centered platforms could dish out plenty of good advice. But they could also harbor hackers, scammers, and other malicious actors.

They could, for example, share malicious links that download viruses or direct you to hoax sites that imitate reputed ones. As a result, they could severely compromise the safety of your high-value digital art.

So, whether you want to download an app, purchase an NFT, or simply need reliable advice, using official sources is crucial to verify facts, guide your decisions, and ensure the safety of your financial assets.

3. Adopt basic security protocols and best practices.

Minding your online safety is critical even during ordinary day-to-day interactions with the digital world. And adopting standard security protocols and best practices will go a long way to protect your digital investments like NFTs, too. Here are some of the basic precautions to take.

• Set up strong passwords – Use complex, hard-to-guess phrases that combine letters, numbers, and special characters. Never recycle passwords. Choose a distinct phrase for each account instead. 
• Keep your passwords safe – Avoid sharing your login credentials, especially the seed phrase of your wallet. Keep them secure and avoid saving them on your computer. 
• Use two-factor authentication (2FA) and biometrics – 2FA and biometrics offer an added layer of security by eliminating some of the weaknesses of single-password security. So, make use of these facilities whenever they are available.
• Avoid unverified links and downloads – Hackers and scammers often use malicious links and downloads to launch viruses and phishing attacks. So, avoid clicking on attachments and links on unverified emails, websites, social media platforms, ads, and the like.
• Get virus protection – Install a reputed anti-virus software on all devices, including your smartphone. It can help prevent most cyberattacks and alert you to suspicious websites, emails, or external devices.
• Use a VPN – A virtual private network can provide you with better anonymity by hiding your IP address and encrypting your web traffic.

Conclusion

So, is Kramer’s lost Apes a warning to NFT investors? Not quite. It’s more of a reminder to be proactive about security. Remember, in the DeFi space, you’re fully responsible for keeping your investments safe, and a simple slip could set you back millions of dollars.

And despite the growing cyber threats, you can’t overlook the distinct advantages of decentralized finance. It offers greater privacy, inclusivity, and a host of other benefits to grow your wealth. And with the right precautions, NFT art, in particular, could be a lucrative investment.

Besides, bad actors are nothing new to the digital world, even within traditional financial systems. So, as with any other financial opportunity, exercising caution is imperative with your NFTs.