NFTs (Non-fungible tokens) are rare, valuable and prone to hacks. Yes, top NFTs may cost up to millions and hackers are after them all the time. Over $87 million worth of NFTs were stolen between January 2022 and August 2022 alone. Therefore, owners must store their NFTs securely. The sale of expensive NFTs like The Merge has attracted investors and scammers towards the NFT market. As NFTs get popular, security challenges also rise.
In this blog, you will learn how to store your NFTs securely to prevent hackers or cybercriminals from stealing them.
When blockchain came to the fore, it prevented digital assets from getting replicated to ensure appreciation in value and authenticity. NFTs use the same blockchain technology to maintain rarity - one of the biggest deciding factors for an NFT's value.
Just like crypto, you need to apply the famous formula, "Not your keys, not your crypto" to NFTs as well. Unlike cryptocurrencies, you don't need to store your NFTs on centralized exchanges. Unless you do not care about hacks and breaches. Also, you do not buy and sell NFTs on a daily basis. These are appreciating assets meant to be kept for a longer period. Therefore, it is wise to store your NFTs in a private wallet. Private wallets are basically offline wallets disconnected from the internet. Hence, hackers can not access these wallets as they are not part of any network.
There are a few things you need to keep in mind while selecting an offline wallet. You must take care of factors like compatibility with different chains, user reviews and company history before selecting a wallet.
As mentioned earlier, NFTs are no longer a mere concept. They are valuable digital assets with value directly linked to rarity. The only way to access an NFT and initiate transactions is through its key. NFT users have this key for their respective NFTs. But, if someone else gets access to the keys, they have access to the corresponding NFTs as well. Recall the "Not your key…" saying?
When you store your NFTs privately, you are basically safeguarding the keys. Since NFTs are unique and impossible to replicate, it is the key that needs security. But the question is, how do you store your NFTs privately to ensure complete security? Let's discuss
There are three different NFT storage options:
Software Wallets: Software wallets are applications available online with a user-friendly interface and easy-to-navigate options. Metamask is one of the most popular software wallets. These software wallets are further classified into three different categories: desktop wallets, online wallets and mobile wallets. You can use Metamask on your mobile phone as well as on your desktop through a browser extension. However, software wallets are prone to attack as they are connected to the internet all the time. They are still more secure than decentralized exchanges due to high-security encryption.
Interplanetary File System: Interplanetary File System or IPFS is a hypermedia protocol that allows users to store their digital assets off-chain, minimizing the likelihood of a cyberattack or breach. IPFS protocol functions in a peer-to-peer network. When you add a file to IPFS, it is split into multiple small fragments, secured using cryptographic hashing and assigned a unique fingerprint called CID or a content identifier. IPFS uses content-based addressing instead of location-based addressing.
In the IPFS, the CID is attached directly to the NFT content, ruling out the chances of a hack or breach attempt. Every time you add a new version of the file to IPFS, a new CID is assigned to it. In a nutshell, files stored on IPFS can not be tampered with. Pinata is a popular IPFS-based NFT wallet.
Hardware Wallet: Hardware wallets or cold wallets are highly secure NFT wallets that increase the security of your digital assets substantially. The private key required to access a particular NFT is stored in a physical hardware wallet. This practically makes your NFTs unhackable. So unless you lose your key or share it with someone, there are zero chances of your NFT getting stolen. Hardware wallets work fine for both cryptocurrencies and NFTs. Trezor and Ledger are two of the most popular hardware wallets for storing digital assets.
As the incidents of hacking and cyberattacks in the NFT space grow substantially, ensuring the security of your digital assets is paramount. If you are buying an NFT for the first time, you can follow the aforementioned steps to store your NFTs securely. While storing your NFTs in a hardware wallet is advisable, you can explore other options as well. If you are running an NFT project, you must educate the community about the importance of NFT storage. To manage communities from multiple channels under one roof, you can sign up on Blaze, which helps you track engagement in seconds.
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