Everyone is getting in on the NFT hype, and rightly so. Recently, Beeple, an online digital artist, sold a digital NFT art piece for $69.3 million.
While it is highly unlikely most people will get to own an NFT worth that much, they are still valuable.
As the market continues to generate interest, some NFTs are no doubt going to experience a huge appreciation in price.
Today, people are holding NFTs whose value has grown from a few dollars to thousands of dollars. Naturally, that will attract criminals who wish to steal these pieces and profit from them.
It is thus important to understand how to store your NFT securely to preserve your value.
It is even more important since NFTs are currently not covered by insurance.
How To Secure Your NFT
Since an NFT exists in a digital format, the biggest vulnerability is from hackers, who could be situated anywhere in the world.
The first step is to sever the connection between your NFT and the internet. The best solution for that is a hardware wallet.
When you join an NFT marketplace, you are required to have a software wallet. This wallet will instantly allow you to create an account on the platform.
While huge strides have been made to secure digital wallets, hackers are always scrutinizing the code for any exploits.
As such, there is always a risk of infiltration.
The area that hackers target is the private keys. Since the software wallet is exposed to the internet, the private keys are always at risk.
The safest option is a hardware wallet, which keeps the private keys off the internet. However, a hardware wallet makes it hard to buy and sell NFTs.
So how do you strike a balance?
Storing Your NFTs On A Hardware Wallet
One of the best solutions is a hardware wallet that allows you to connect to a trusted third-party hot wallet such as MetaMask.
A good example of such a wallet is the Ledger Nano wallet. When you connect it to the MetaMask wallet, the private keys that control your NFT remain in the hardware wallet.
However, you can still read the balance in your wallet when being able to manage it.
With a hardware wallet connected to the software wallet, you can still trade in NFTs while keeping your private keys secure.
When you initiate an action, MetaMask sends a signal to the Ledger Nano wallet.
A transaction will only be approved when you physically approve it using the private key in the hardware wallet.
It works similarly to the one-time PIN the bank sends you when you conduct a transaction via a mobile banking app or online portal.
As long as you have your physical Ledger Nano wallet and you keep your recovery phrase secure, online hackers can not cart away your NFTs.
NFT Wallet Types
There are several options for saving your NFTs. The digital wallet is the common thread here, but there are different types of wallets. Which wallet you would like to use also depends on the type of NFTs you own. If your NFTs are built on, for example, the blockchain of Binance (BNB Smart Chain) or on Ethereum, you may need different wallets. Like coins, NFTs are packaged as tokens in a smart contract. These tokens are specifically built for a certain blockchain, which means that not every NFT can just be placed in a digital wallet.
The most commonly used wallets are software and hardware wallets. These wallets each have their own advantages. To avoid losing all your digital assets at once, it is useful to store your NFTs in different wallets. If someone hacks one wallet, you do not immediately lose all your non-fungible artworks. But which wallets suit you best?
Software wallets are easy to use, because you can easily open them via an app on your mobile or use them as an extension in your web browser, for example. A well-known example of a software wallet is the MetaMask wallet, which is used by many NFT traders for trading on marketplaces such as OpenSea.
The most secure wallet is the hardware wallet. This is a physical wallet that makes it possible to store your digital assets securely and offline. Because your NFTs can be stored offline, it is more difficult for hackers, for example, to get into your wallet. However, if you want to remove your NFTs from the Ledger or Trezor, they will come back online. This means you never have 100% certainty.
Other Tips To Keep Your Nfts Secure
Whether you decide to use a software or hardware solution, some tips could help secure your NFTs and reduce the chances of them being stolen.
- Create complex passwords that include letters, phrases, and symbols
- Never reveal your wallet seed phrase to anyone
- Avoid visiting malicious sites
- Never give your login credentials to anyone
- Store your phrases and passwords in physical form outside your internet-enabled computer
- Use a VPN when browsing the internet
- Store your long-term NFT investments completely offline
Security Is More Than A Wallet
Security is of course more than just your wallet, it is about your complete online security on the internet. For example, never just click on a link to which you do not know where you will be taken. You can find such a link in your mailbox or simply on the internet. Always be aware of this, so that you do not end up on the wrong site or suddenly download something. These downloaded files can allow hackers to gain access to your computer and thus gain access to your wallet. This method is also known as phishing.
Keep Your Private Keys Safe!
In addition, you should also keep your private keys safe. People who have this code can get everything out of their wallets. Therefore, do not store this code online, but not on your desktop or mobile at all, and in a place that no one knows or can find. However, make sure that you remember this place yourself because without your codes you can no longer retrieve your wallet yourself! If you do not remember your password, you can still access your NFTs using this code.
Due to the enormous popularity, which comes with scarcity, NFTs can be worth a lot. And you want to keep these expensive digital artworks safe because losing them would be a shame and a financial disaster! And not only for your wallet but also for the rarity.
NFTs are as unique as physical paintings, which you cannot simply replace. But how do you ensure that your NFTs are protected as well as possible? Find out in this article where to keep your non-fungible tokens and how to make sure others can’t rob your digital vault!