What are NFTs and How to Best Protect Them

The term “identity” refers to the property of being identical or the perfect correspondence of one object to another when compared. It is the collection of one-of-a-kind features and characteristics that define a person as unique and irreplaceable. This becomes critical when discussing individuals, particularly in the internet context, where identity theft is more prevalent than we realize. Identity verification is a necessary component of the majority of processes and procedures. Everything is possible, from establishing a bank account to online completing tax processes.

Know-Your-Customer is the term used in banking and many other businesses to refer to the process of verifying an individual’s identification. Identity verification establishes that a procedure is being carried out by a genuine person and confirms that they are who they claim to be. This prohibits anybody from acting on behalf of another person without authorization, establishing fake identities, or conducting fraud. There are a variety of techniques and systems for offline and online identity verification. This implies that the process of identity verification may be carried out in a variety of ways, depending on the channel and technique employed.

Since 2020, the whole world has been battling COVID-19. This virus has brought multiple deaths to people and their businesses. Many have lost their jobs or source of income. And until today, everyone is still suffering from the economic losses imposed by the virus. Despite the vaccination, the virus has mutated repeatedly and spreads faster than before. With that in mind, the world continues to function digitally.

NFT

The pandemic has truly pushed the entire world to go digital. Today, almost every application and transaction has to be done via the internet, and online identity verification has been more prominent. Apart from this, many people have also gambled by participating in online games to earn some money during the pandemic. One example of these games is the Axie Infinity.

Axie Infinity is an online video game developed by Sky Mavis, a Vietnamese studio. In this game, players use pokemon-like digital pets to transact exclusively. In order to play and generate some income, users have to set up a Ronin Wallet to deposit Etherum. This game has over $2.1 billion in trading volume and is one of the most popular games these days. Axie Infinity uses NFT or Non-fungible Token.

NFT is a blockchain-based means of declaring ownership over a specific digital asset. Currently, NFTs are popularly applied to digital artworks. But this technological innovation can also be used in other categories aside from art. NFTs can also be applied to music, video game items, trading cards and collectibles, sports highlights, memes and GIFs, domain names, virtual fashion, online pop culture items such as popular tweets or FB posts, and even the COVID-19 vaccination passport.

What makes NFTs so enticing for investors are their uniqueness and way of asserting ownership. A certain prestige is connected with being a certified owner of a specific digital asset. Given that, it only makes sense why many people are attracted to them in the first place and are even willing to shell out vast amounts of money for them.

However, with the growing pool of investments going into the NFT market, even bad actors are attracted to exploit this industry. They will try to find weaknesses in online defenses to use digital networks for their illicit motives.

For example, hackers will try to circumvent inadequate identity verification processes like passwords, which are often relatively easy to steal or guess. They may succeed in obtaining someone else’s password through phishing scams or SIM swap scams.

These persistent threats emphasize the need for more robust fraud barriers. In lieu of knowledge-based credentials, modern solutions like biometric identity verification should be used by enterprises. This technology is more effective than traditional authentication methods and is not quickly susceptible to tactics used against passwords.

NFT using FIDO2

Undeniably, NFT seems exciting and easy to grasp. However, this is still a technological advancement that needs the internet. And just like any other online development, NFTs are also subject to hackers, especially since it involves using digital wallets. Fortunately, NFTs use the same protocol as most mobile identity verification, which is the FIDO2 authentication.

FIDO2 is a more robust verification method that uses standard public key cryptography techniques. Unlike the traditional and outdated authentication processes, FIDO2 is more likely to withstand cyber attacks and is now being used for a more secure, private authentication for the future.

Individuals may use their mobile devices to verify their identity through mobile identity verification. You may use your mobile device to compare anything about yourself, such as a facial recognition biometric, to the picture on a government-issued identification document, such as a passport, driver’s license, or national identity card. Moreover, identity verification contributes to the prevention of application fraud. Artificial intelligence (AI) and sophisticated authentication algorithms evaluate the picture to determine if the ID document is real or a forgery. When application fraud is detected at the outset of the new account application stage via the identification of false official IDs, the likelihood of needing to mitigate fraud later is significantly reduced.

In the past year, many new trends have arisen across industries.

To know more below is an infographic from LoginID that discusses what are NFTs and how to best protect them.