Have you ever wondered what you would do if you owned a physical collectible in the form of any artwork, music album, rare design, or anything worth millions of dollars? The first step while collecting such collectibles is to store them in the right place with optimum security. Now let’s replace the word ‘physical’ with ‘digital,’ and the security concerns remain the same as physical assets. However, the problem is that you cannot store a digital asset like a physical one, which can be stored in lockers, banks, or high-security storage boxes. To store a digital asset, you need specific storage systems to ensure that your million dollars are stored correctly. This article will ensure that you learn everything about storing NFTs securely.
What is NFT?
The term NFT stands for Non-Fungible Tokens. These non-fungible tokens are digitized tokens of physical assets like art, music, album, or others. These digitized tokens are currently less valuable than physical assets, but some of them hold the value of millions of dollars. It enhances the necessity of learning to store NFTs securely to avoid chances of losing access to your NFT investments. Before the adoption of blockchain technology, digital assets were less popular than now, considering the poor distribution and lack of ownership in the centralized ecosystem. The owner of digital assets could not trace their distribution, leading them to lose their worth. Blockchain provides an immutable digital ledger that allows creators and artists to validate the original piece of their creation to manage their assets without requiring any Intermediaries.
The Growth of the NFT Market
According to a survey conducted by Reuters, the exponential growth was first registered in 2021. The global NFT market surged from $ 13.7 million to $ 2.5 billion. People were trading NFTs in volume, and the cumulative sales figures touched $ 5 billion. The most popular NFT marketplace OpenSea recorded an all-time high of $ 1 billion worth of sales in October.
The growth in NFT popularity has become significant and consistent with the rise of blockchain technology. Become an NFT expert today with Blockchain Council lifetime valid NFT certifications.
Why should you always store NFTs with optimum privacy?
For a long time, non-fungible tokens have become rare assets with high value. It has successfully attracted investors and hackers for those wondering how NTFs can be hacked if backed by blockchain technology. The way you are storing NFTs is particularly important for their security. NFTs can be accessed through keys that the owner stores. If somebody gets their hands on the key to access NFTs, they can take ownership without restriction. However, it can be tracked with the ledger technology of blockchain. Incidents like this had happened before where hackers stole digital assets from Nifty Gateway, an NFT marketplace. However, there was a thorough check on the company’s security, and it was found that it wasn’t compromised. So how did it happen? Well, the answer lies in the improper storage of NFTs. There is a popular saying in cryptocurrency markets that if you don’t have the keys, you don’t own the crypto. It implies NFT also, as one cannot access NTFs if they don’t have access to their wallet keys.
Types of storage for NFTs
NFT storage is as crucial as cryptocurrency storage. If you leave your NFTs in marketplace platforms that work as an exchange, your NFTs are open to potential risks or hacks. Always opt for blockchain-based decentralized storage that offers better security and offers you full ownership of your assets. Furthermore, it should be noted that you don’t store your NFTs or crypto in your wallet. Instead, these wallets store keys required to access your NFT or cryptocurrency. With the help of a private key, you get the ownership of a cryptographic address. This address gives you access to anything stored on that cryptographic address. However, your digital assets are vulnerable to hacking attacks when it is online. So it is important to store and save NFTs in offline storage, popularly known as cold storage. Since it is not connected to the internet, it is not vulnerable to cyber-attacks and other vulnerabilities associated with corresponding data. The best way of storing your NFT digital assets is to purchase a cold storage hardware wallet and transfer your digital assets there. It keeps your digital assets offline and offers security from keyloggers and hackers by retaining unauthorized access. Every cold hardware wallet has its unique ID and password as an additional layer of security.
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Steps for preserving NFT’s privacy
Here is a step-by-step guide to preserving the privacy of NFTs:
Step 1: Offline long-term storage of digital assets
Step 2: You can access your digital wallet through a 12-24 word recovery key, aka seed phrase. Always ensure you don’t enter it online or give it to anybody else.
Step 3: You should use all available options for protecting data, including two-factor authentication and complex passcodes.
Step 4: Make sure you do not allow anybody to access your credentials
Step 5: Always ensure you don’t store seed phrases and passwords on your computer. Make sure you always store them on paper in a physical form and lock them away in physical form.
Step 6: Keep your distance from malicious or unknown sites
Step-7: You can also use a virtual private network to hide your internet protocol address
Before selecting your NFT storage, check its compatibility with different blockchains and marketplaces used to trade NFTs. Always ensure that your wallet offers a user-friendly interface and robust security.
Common ways of storing NFTs
Software wallets are online and easy ways of storing NFT for non-techie users and newbies. The user interface is relatively friendly, and these wallets are the most popular choice of common people. MetaMask is among the most popular software wallet that offers standard security for your non-fungible tokens. The transactions on MetaMask are secured and encrypted by a 12-24 word seed phrase and a password. However, these software wallets like MetaMask are online and susceptible to cyber attacks. Other common alternatives to MetaMask are Enjin and Math wallet. The Math wallet differs considerably from its alternatives as it supports 60+ public blockchains. Furthermore, Coinbase has also announced plans to create a peer-to-peer marketplace that allows users and NFT holders to purchase, Mintz, manage and showcase their digital assets in one place.
Interplanetary Filing System
The Interplanetary Filing System is a hypermedia protocol that works in a peer to peer transactions and allows users to store their non-fungible tokens off-chain. It changes the distribution of information across the world. IPFS uses content-based addressing, whereas others use the standard location-based addressing. When a user adds a file in IPFS, the file is divided into smaller pieces that are cryptographically hashed and provided with a unique fingerprint known as CID or content identifier. These CIDs are hashes that are directly connected to non-fungible tokens. It provides a permanent record for your file and allows you to create a new version of your file in IPFS. It means that the files stored in the Interplanetary Filing System are tamper-proof and censorship-proof. Pinata is a popular NFT wallet that functions on IPFS. It was launched in 2018 and contained over 45 million files with 70000 global users. Files on IPFS offer security as they don’t allow overwriting, and if a hacker node tries to produce CIDs, the user will always get a notification showing false data.
The most popular and significant security option is a cold or offline or hardware wallet to store your non-fungible tokens. It means that the private keys required to access the ownership on a non-fungible token are stored in a physical hardware wallet that is not connected to the internet. It reduces the vulnerability of wallet devices. It also features two-factor authentication as additional security. It is impossible to hack into a physical hardware wallet without getting access to it physically. Ledger and Trezor are users’ most popular hardware wallets to store their non-fungible tokens.
Non-fungible tokens are growing rapidly, and users need to be made aware of increasing threats around digital assets. In most cases, a hacker’s inability to retrieve keys to NFTs is improper storage and security reasons. With the popularity of NFTs, organizations have started to develop solutions that escalate security standards. Blockchain Council’s NFT certification offers a complete and in-depth understanding of threats and solutions to those threats associated with non-fungible tokens. Get certified today and work with top global organizations as a certified NFT expert. Several NFT developers and NFT training courses are available online, but Blockchain Council has the best-in-class NFT courses online with lifetime valid certifications.