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Jun 29 • 9 mins
NFT

NFT Security: The Complete Guide to Protecting Your Non-Fungible Tokens

NFTs, or non-fungible tokens, have evolved far beyond digital collectibles. Today, they are valuable assets that can be used in financial protocols, games, applications, and even DAOs. But as adoption grows, so do the threats.

This guide is your reliable navigator through every aspect of NFT security—from phishing and wallet breaches to smart contract protections and legal considerations.

Why NFT Security Matters More Than Ever

Each NFT is linked to a unique token on a blockchain, but that doesn’t make it immune to risks. Losing access to a wallet, interacting with a malicious smart contract, or falling for a phishing scheme can result in permanent loss.

That’s why NFT owners, developers, and platforms need to understand the risks they face and the tools they can use to mitigate them.

Top Threats and Attack Vectors

Phishing and Malicious Sites

Phishing remains one of the most common attack types. Scammers clone the interface of popular NFT marketplaces or dApps and trick users into signing malicious transactions that give them access to wallets.

Tip: Always double-check URLs and avoid links from Discord, Telegram, or email without verification.

Scam Collections and Counterfeits

Fraudsters frequently create knock-off NFT projects or impersonate celebrities. This is especially prevalent with celebrity NFT drops, where unauthorized collections are sold using public figures’ names and images.

Risks in NFT Gaming

The NFT gaming space is highly dynamic—but also vulnerable. Connecting to unverified games or transferring NFTs to a contract may result in irreversible losses.

Smart Contract Vulnerabilities

Bugs in NFT contract code or marketplace infrastructure can lead to exploits. Even some of the biggest NFT projects have suffered from unaudited code and insecure logic.

Rug Pulls and Wash Trading

Scam artists often hype fake collections on social media, only to disappear after collecting funds (rug pull). Others manipulate trading volume and prices through artificial activity—known as wash trading.

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Overlooked but Dangerous Threats

Wash Trading & Hidden Market Manipulation

Research shows that 5–6% of all NFT transactions are wash trades — repeated buy/sell actions between wallets controlled by the same entity to artificially inflate volume and perceived value. This is one of the least obvious but most harmful threats in the crypto ecosystem.

How to protect yourself:

  • Educate yourself on what is wash trading in crypto to identify it early.
  • Check transaction history for repetitive trading patterns.
  • Use tools like Dune Analytics or Nansen to assess wallet behavior.
  • Avoid projects with sudden surges in volume without organic community growth.

Cybersquatting & Fake Domains

Recent studies found over 8,000 fake NFT collections using cybersquatting tactics, leading to over $59M in user losses.

What to do:

  • Bookmark only trustworthy sources — don’t rely on search engine ads.
  • Double-check domain names (beware of “o” vs “0”, “.com” vs “.io”).
  • Look for verified platforms, checkmarks, and user reviews.

Smart Contract Security

Smart contracts behind NFT drops sometimes contain hidden admin privileges or backdoors that allow freezing or redirecting assets without the user’s consent.

Security checklist:

  • Use audited contracts based on standards like OpenZeppelin.
  • Check if the smart contract code is open-source and peer-reviewed.
  • Favor projects with external audits (e.g. CertiK, PeckShield).

How to Protect Your NFTs: A User Guide

Use Cold Wallets and Offline Storage

The safest way to store NFTs is with a hardware wallet like Ledger or Trezor. These devices keep your keys offline, out of reach from most attack vectors.

Avoid custodial wallets where you don’t control your private keys. A non-custodial approach is the gold standard for NFT ownership.

Check App Permissions Regularly

Many NFT apps request token access. If granted, these apps can transfer or burn your NFTs at any time. Make it a habit to regularly revoke unnecessary permissions using tools like revoke.cash.

Practice Strong Digital Hygiene

  • Never store your seed phrase in the cloud or browser
  • Use unique, complex passwords with a password manager
  • Enable two-factor authentication
  • Verify every contract and URL before connecting

Understand the Risks of NFT + DeFi Integration

NFTs are increasingly used as collateral in decentralized finance. However, combining NFTs and DeFi introduces risks like liquidation errors, price manipulation, and logic flaws in smart contracts.

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NFT Use in DAOs

NFTs are often issued, owned, or governed collectively within DAOs. These DAO-powered NFT projects require clear governance rules and smart contract protections to prevent abuse or theft by insiders.

3D-rendered hands interacting with a digital tablet, displaying an NFT globe icon in a futuristic purple and blue environment

Industry Solutions and Security Technologies

Smart Contract Audits

Leading projects now undergo third-party audits from firms like CertiK and OpenZeppelin to uncover vulnerabilities before launch. Audits should be a non-negotiable standard for any serious NFT project.

Emerging Standards for Safer NFTs

New Ethereum standards are being introduced to improve NFT safety:

  • ERC-721R — Refundable NFTs
  • ERC-4907 — Time-limited rental NFTs
  • ERC-4337 — Account abstraction for customizable wallet logic

These upgrades make the NFT ecosystem more resilient to hacks and social engineering.

Platform-Level Protections

glowing tunnel with a neon-lit cube displaying the word 'NFT' in the center, symbolizing digital assets and blockchain technology

Modern NFT blockchain platforms offer built-in protection:

  • Flagging suspicious activity
  • Blocking fake collections
  • Improving wallet signing UX to prevent blind approvals

Legal Aspects of NFT Security

Responsibility and Recoverability

In most jurisdictions, if a user loses control of a wallet or signs a malicious transaction, assets cannot be recovered. That said, NFT theft is starting to appear in courts as a prosecutable offense.

Intellectual Property Infringement

NFTs that use unauthorized celebrity likenesses or copyrighted content can lead to lawsuits. Celebrity-themed NFTs remain a legal gray zone for many creators.

Regulation Trends

Global regulators are exploring NFT classification, taxation, and marketplace rules. Some regions push for KYC, AML compliance, and consumer protections as standard in the NFT space.

NFT Security Checklist

  • Use cold wallets for long-term storage
  • Never store your seed phrase online
  • Revoke unused app permissions regularly
  • Avoid dApps that haven’t been audited
  • Inspect project code or seek peer reviews
  • Use verified NFT marketplaces
  • Don’t trust hype — verify everything

What to Do If Your NFT Wallet Is Hacked

If you suspect your wallet has been compromised or NFTs have been stolen, follow these steps immediately:

  1. Revoke dApp permissions
    Visit revoke.cash and disconnect any suspicious contracts.
  2. Move remaining assets
    Transfer any unaffected NFTs and tokens to a new, secure wallet (preferably a cold wallet).
  3. Report the incident
    Contact the platform where the incident occurred (e.g., OpenSea, Blur) and file a report.
  4. Flag stolen NFTs
    Platforms like OpenSea allow you to mark items as stolen so they cannot be resold.
  5. Trace the attacker
    Use tools like Etherscan, Nansen, or Chainalysis to analyze transactions.
  6. Seek legal help
    In some jurisdictions, digital asset theft is a criminal offense. Consider filing a police report and consulting a lawyer.
  7. Warn the community
    Share your experience publicly to prevent others from falling victim to the same attack.

Final Thoughts

NFTs are valuable digital assets that deserve the same protection as financial instruments. Whether you’re a collector, builder, or investor, staying secure means staying informed.

Security is a shared responsibility between platforms, developers, and users. By understanding threats and following best practices, you can thrive safely in Web3.

Dmitry Khanevich

CEO NDLabs

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    About the author

    Dmitry K.

    CEO and Co-founder of ND Labs
    I’m a top professional with many-year experience in software development and IT. Founder and CEO of ND Labs specializing in FinTech industry, blockchain and smart contracts development for Defi and NFT.

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