Fraud Prevention

Stopping Fraud and Creating Trust on NFT-based Gaming Platforms

May, 4, 20226 min Read

Respond effectively with data-backed decisions and stop even the most sophisticated bot-powered attacks, while still maintaining a seamless digital experience

In the crypto space, trust is paramount. It’s an unfortunate fact that much of the public looks on anything to do with cryptocurrency, non-fungible tokens (NFTs), or blockchain with skepticism. And the media and press are all too quick to jump on any story involving scams, fraud, or hacks in the crypto, NFT, and blockchain space. 

Since the NFT sector is so new, many platforms have not yet implemented the robust security measures that companies in more entrenched industries may have in place. Furthermore, NFT and crypto platforms typically tend to serve tech-savvy consumers. These consumers want seamless digital authentication processes without the onerous friction to log in or sign up for a new account. If they don’t like the user experience on a platform, they’ll take their business elsewhere. As a result, many companies in this space often sacrifice more robust authentication processes – which may require more friction – for a seamless digital experience. 

The combination of less mature security, consumer pressure to maintain a frictionless experience, and the exploding popularity of NFTs and crypto means that these platforms have become a hot target for fraud and other malicious attacks. This is definitely true for NFT-based gaming platforms, which have become highly popular and targeted as more and more consumers become familiar with – and dabble in – the NFT space.

How Attackers Target NFT-based Gaming Platforms

Each NFT platform operates differently and the gaming environment varies between them. They generally involve some kind of NFT game pieces that players acquire and use in the game. For example, games may allow players to acquire NFTs by winning competitions, building their own NFT assets in-game, or combining NFT characters they own in the game. 

In some NFT games, players can keep their NFTs to use in the game, or to sell or trade them in a decentralized blockchain marketplace. This ability allows players to either build their own competitive collection of NFT game pieces over time by playing or save time and effort by buying a competitive collection using the marketplace.

As can be expected, attackers have targeted these gaming platforms because they see an opportunity to acquire valuable NFTs fraudulently, and resell them. Some of the ways they attack these platforms include: 

Fake New Accounts for Win-trading: Attackers use bots to create fake new accounts at scale. They can then use their ‘real’ account to defeat these fake accounts in games that are rigged, a type of cheating called win-trading. After that they either sell or trade valuable NFTs that they won dishonestly in the games. It is extremely hard to detect and stop these bots, as many of today’s intelligent bots are trained to mimic human activity.

Account Takeover Attacks: As with any industry where user accounts store money or other potentially valuable information, attackers seek to compromise existing accounts with ATO attacks. Once they are successful in doing so, they can drain that user’s account of NFTs and resell them, or take the personal information associated with the account and resell it to a third party, who might use it to create a synthetic ID.

Account takeover attacks are costly for NFT gaming companies in a multitude of ways. Companies may have to refund consumers financially for fraud losses. There can be sizable operational costs, for example customer service time spent remediating issues or time spent restoring locked accounts. But, one of the biggest dangers for NFT gaming companies is damaged customer trust.

In the innovative and fast-changing NFT gaming space, companies that aren’t able to corral fraudster attacks and ensure a smooth user experience run the risk of losing their consumers to the next popular platform. And news travels fast; if consumers’ accounts are hacked, or continually targeted by spam and phishing attacks, they’ll take to social media to voice their complaints.

If a company is victim to a large enough attack, it can generate news headlines and negative PR that cause damage to brand reputation, taking months or years to recover from.

Customer trust is critical for the long-term success of NFT gaming companies. And without proper cybersecurity defenses, that trust is in danger.

How Arkose Labs Can Help

Many NFT gaming companies are relatively new to the market and may experience periods of fast growth, given the buzz around NFTs and crypto. They may not be ready for the new security challenges and attack threats that come with fast growth since they’re not yet mature. They also may not be prepared to detect and stop the sophisticated malicious bots coming to their sites. 

Arkose Labs is designed to stop even the most sophisticated bot-powered attacks. Arkose Labs’ platform analyzes traffic based on device, network, and behavior data to differentiate good users from potential attackers and bad bots. The platform also leverages insights from usage patterns observed across the global network of Arkose Labs customers to ensure traffic is properly categorized.

Furthermore, the Arkose Labs platform can run its detection capabilities in ‘transparent mode’ during the in-game experience. This invisible detection enables NFT gaming companies to gather insights from Arkose Labs’ analysis of traffic and then decide internally how to manage abusive activity.

The hallmarks of the Arkose Labs platform include:

  • Continuously evolving detection methods that detect patterns using probabilistic, statistical, and machine learning-based models.
  • Presents challenges based on the risk assessment of a user and adapts to the growing risk of the user.
  • Utilizes a feedback loop between the dynamic risk engine and challenge-response mechanism to facilitate improved risk predictions.
  • Provides clients with actionable insights, which include analysis and visibility of bot vs human traffic.

NFT gaming platforms are experiencing a rise in popularity that’s triggering a coinciding rise in fraud. These platforms need to work with a security vendor that can effectively stop attacks targeting their platforms and consumers, while still maintaining a seamless digital experience. To find out how Arkose Labs can help, request a demo here