How To Store NFTs Securely? – A Handbook For Starters
You’ve probably observed NFTs making it to the front page if you’re active on social networking sites or following the news in the last few years. These digital tokens have made headlines and evoked curiosity among the public and celebrities since 2021.
Some see it as a passing craze, while others see it as a fantastic opportunity for designers to showcase their skills. Whatever the reason, non-fungible tokens are becoming increasingly popular among celebrities. These collectible crypto assets are unique and can be anything from digital art to music, videos, or even tweets and screenshots.
With more and more brands chipping in with unique and innovative concepts, NFTs are getting increasingly experimental. For example, a Berlin-based lab sold the first digital scent – “Cyber Eau des Parfum” – as NFT for $18,000.
Although this kind of invention creates a buzz among the public, NFT is still a relatively new concept, and there is still confusion about it. Most people who want to invest in NFTs wonder where NFTs are stored. What are the options that one can have to store crypto collectibles? Are the assets vulnerable to tampering or theft once purchased or minted?
These are some of the concerns of people considering dipping their toes into this rapidly expanding market. And this guide is for all those who want to explore the safest place to store crypto assets.
These are some of the worries expressed by those considering dipping their toes into this rapidly expanding market. Thus, this article is for all those wondering how to store their crypto assets and what options they can use when storing them.
Popular NFT storage options
NFTs, like any other asset, require security. It is a critical factor when it comes to collecting NFTs. If you are thinking of purchasing NFTs, first consider learning about the available storage choices and decide how to store your assets.
What happens to NFT after purchase?
Once you select an NFT and buy them from a marketplace, it can be stored using 3 methods. They are:
- Software Wallet
- InterPlanetary File System
- Cold Storage Hardware Wallet
Software Wallet: Since it is fairly straightforward to establish a software wallet, most consumers, especially beginners, prefer this option to keep their purchases. These digital wallets usually store the asset contract and other information, such as source, description, etc. In fact, a software wallet is essential for purchasing non-fungible tokens on popular sites since it stores currency.
NFT offers a wide range of software wallet solutions that include mobile and web applications. Typically, wallets provide standard-level security for your crypto assets. They are protected by encryption, 12 – 24 worded seed phrases, and a strong passcode/password. Discover best nft wallets.
However, this storage method provides a very low-level security compared to other options. For example, using digital wallets necessitates having access to an internet browser or cloud service, which is a major drawback. This makes the NFTs stored in wallets exposed to phishing attacks. Thus, keeping your NFTs in them for a limited duration is advisable.
Examples of software wallets – MetaMask, Coin98, Enjin, MyEtherWallet, etc.,
InterPlanetary File System: Also known as IPFS, this option reduces the possibility of being cracked/hacked. It is a P2P model that enables people to save their localized and off-chain non-fungible tokens.
To change the way data is disseminated globally, this system uses content-based routing rather than traditional position-based routing. Once a document/file is submitted to this system, it is broken down into smaller parts, hashed further using cryptography, and given a distinct signature or a fingerprint called CID, which is also known as a content identifier.
Please note that the Content Identifier, CIDs are hashes directly linked to your NFT content rather than the HTTP link that may be updated and hacked. Thus, the ID functions as an unchangeable digital record. Whenever the encrypted hash gets upgraded, a new version is published. Which means, a new CID is generated.
In other words, no changes or alterations can replace the original file, and it is not possible to make changes in the records of interplanetary file. Moreover, the user gets an alert , if a hacking node generates a content identifier hash.
Additionally, this option has various features that make it an even more safe storage choice for non-fungible tokens. However, this option is STILL vulnerable to hackers through the computer despite these advantages.
Example for IPFS – Pinata
Cold Storage Hardware Wallet: Also known as hot wallet, this is the most suitable way to save non-fungible tokens. Most buyers favor it for the protection it offers to the assets. These wallets use mobile connectivity to access the internet.
Additionally, this wallet is password-protected which makes the information in it very secure. In most cases, these wallets can also restore device content if it is lost or stolen.
Furthermore, this kind of wallet uses 2FA, which provides an additional level of protection. As a result, it is difficult to crack and obtain the data without actually possessing the wallet.
Please keep in mind that no digital art or bitcoin is stored in these crypto-wallets. Nonetheless, they provide access to the users to handle their on-chain holdings (with the help of secret keys).
Thus, if you are an NFT investor, think about investing in a cold storage hard wallet to improve the safety of your holdings.
Examples for Cold Storage Hardware Wallet – Ledger, Trezor, etc.,
These are the 3 popular and common NFT storing methods in use. Of these available options, software wallets are the least expensive. However, as mentioned above, they do not offer optimal security.
Thus, use this option if you want to store your assets for a short duration. In other words, if you frequently purchase and resell NFT assets, you can keep them in your cryptocurrency wallets. Furthermore, invest in cold storage if you store your NFTs for longer.
Importance of storing NFT safely
Like any other assets of value, digital assets or NFTs are susceptible to theft and misuse. Thus, storing them is necessary, and you must decide on a storage method before purchasing. Furthermore, storing an NFT is just as crucial as purchasing one.
If you’re still unsure why you need to save your NFTs, consider the following concerns that could cause problems with your NFTs:
Your NFT can be hacked.
Although NFTs are based on the blockchain, this does not exclude them from being hacked. NFTs can and have been compromised.
In fact, hacking has already cost Nifty Gateway users thousands of dollars in art robbery. A hacker can attack at any time; therefore, it’s essential to be prepared.
You could lose your NFT
Yes, you read it right; if an NFT is stored inappropriately, you can lose your content and metadata. This situation can happen if a hacker alters the HTTP URL link that saves the content of the tokenâ€Œ.
It’s unlikely that you’ll lose NFT, but it can happen. Although the NFT smart contract will remain on the blockchain ledger, one may lose all of its content forever. Furthermore, if NFT content is stored on a specific HTTP URL site and that platform goes down, there’s a risk of losing the crypto-asset content.
Tips for storing NFT safely
No matter how you store your NFTs, there are specific tips for ensuring that they’re secure, and they are as follows:
- Ensure all your passwords and phrases are in physical form and adequately stored in a secure place (preferably not on the computer).
- Do not use those websites that have no SSL certificate.
- Make complex passwords by including sentences, numbers, and symbols.
- Don’t give access to your login information to anyone else.
- Never share your seed phrase with anyone.
- If you want your internet operations to remain private, employing a VPN that conceals your IP address is the best idea.
- Keep your long-term digital investments fully offline.
Finally, having assets such as digital collectibles or any other digital commodity should not pose any complications or security risks. You have many NFT storing options that help you secure your assets, depending on your economic status. Therefore, based on your needs and goals, you can choose low-cost solutions or expensive ones.
However, one must understand that though pricey, hardware wallets offer improved security that may be a worthy option for investors with many non-fungible tokens.
Whether you wish to learn about NFT, Blockchain, Web3.0, Metaverse, or other emerging technologies, we have the vital resources that will enlighten and help you make an informed decision.
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