Hong Kong watchdog warns of NFT, metaverse risks as top 2022 tech dangers amid rising number of phishing scams

Risks involving non-fungible tokens (NFTs) and the metaverse are among key security threats to look out for in Hong Kong in 2022, according to the government-run cybersecurity watchdog Hong Kong Computer Emergency Response Team Coordination Centre (HKCERT).

It warned that as the value of cryptocurrencies continues to climb, criminals could steal sensitive user information or access their accounts to hijack money, either at the point of transaction or where it is stored.

The HKCERT said that last year it handled 7,725 information security incidents, with 48 per cent being phishing scams, a 7 per cent increase from 2020. Phishing, a common type of online scam, occurs when someone posing as a legitimate entity tricks users into opening a link that could steal their information.

NFTs, digital assets whose ownership and uniqueness are verified by blockchains, have become mainstream around the world, with people snapping up digital artworks and cartoon avatars for millions of dollars.

The metaverse, a concept that refers to an imagined immersive virtual world where digital representations of people can interact with each other like they do in real life, also took off over the past year, driving an investment frenzy.

NFTs, which allow people to own and trade digital assets, are expected to drive the metaverse economy. Both attracted greater attention from the public as the Covid-19 pandemic supercharged the expectation that even more activities will move into the digital realm.

A vibrant community of NFT and metaverse enthusiasts have formed in Hong Kong, Asia’s financial and art trading hub, where regulators have been slow to catch up with the rapid development of cryptocurrencies. Artists are adopting cryptocurrencies to sell their artworks as NFTs, and countless cartoon avatar projects are vying for people’s money and attention.