The non-fungibility of NFTs (Non-Fungible Tokens) makes this new asset class unique from traditional cryptocurrencies. This means that NFTs do not have a one-to-one exchangeability as they are uniquely digitally identifiable by their digital signatures.
The uniqueness and identifiability of NFTs are the reasons why more people are investing in this new asset class. In the past 12 months, the popularity of NFTs exploded, with its trading volume reaching nearly $11 billion in the third quarter of 2021.
While this explosion in popularity is a good thing for the industry, it also made the new asset class a prime target for cybercriminals. Therefore, industries using blockchain must bolster their cybersecurity measures to reduce their risks of fraud.
Many financial organizations are now employing eKYC (electronic Know Your Customer) guidelines to prevent potential threats and fraudsters right at the beginning of the onboarding process. The eKYC protocol is similar to the traditional KYC practice. Still, the only difference is that people will only have to upload the required documents for the digital identity verification processes.
Consequently, users utilizing a cryptocurrency digital wallet for their crypto exchange must leverage passwordless authentication to secure their accounts better. Conventional authentication methods like setting up a username and a password, and applying an additional layer of security with a one-time password (OTP), are not enough to block fraudulent individuals from accessing user accounts.
FIDO 2.0 passwordless authentication offers real-time fraud prevention. This authentication method utilizes a combination of biometric and mobile technology – it prompts users to enter their biometrics (fingerprint or face scan) into their device. Accordingly, the biometric and device will act as the private/public key that they can use to access their account securely.
Here is an infographic by LoginID, which provides more information about NFTs and how FIDO2 authentication solution can protect them.
