Non-fungible tokens (NFTs) are valuable digital assets, which means is why NFT owners must keep them safe and secure from hackers and theft. More people are flooding into the NFT market and will be looking to buy NFTs as investments or collectibles, creating an incentive for more nefarious activity around stealing digital assets. There are many ways to protect your NFTs from hackers, but these 5 steps will provide you with the most comprehensive approach to keeping your tokens safe.
A brief explanation of what NFTs are
Non-fungible tokens, or NFTs, are digital assets that can represent unique items and serve as proof of ownership. The big advantage of NFTs is that they allow for more customization and diversity than traditional digital assets, as every token is different and each one holds value in a myriad of ways. Examples of NFTs include the infamous Bored Ape Yacht Club and items in crypto games like Axie Infinity.
A short overview of what it means to own an asset
What does it mean for an asset to be yours? A traditional example of ownership might be your car. You bought it, you paid for it, and now you have a title that proves that you own it outright. That piece of paper means something—you can borrow money against your car, use your car as collateral in a business deal, or sell your car and use that money as capital. But what about digital assets? How do we prove ownership when everything is stored on computers? This is where non-fungible tokens come into play. NFTs are unique digital assets that cannot be copied, cloned, or faked; they are truly one of a kind. They are not limited to images and can be video, audio or really any type of file. These characteristics make them ideal collectibles and investments because they give us confidence in their authenticity. There’s no need to worry about someone stealing your NFT because there’s no way to fake it!
You may think anyone can just right click and save on a jpeg file. Does this truly make the image yours? The best analogy here is the Mona Lisa. Everyone can search an image of it and plaster it everywhere in their home if they choose to. But there is only one painting that you can truly own. NFTs are similar in that manner since the ERC-721 has a specific link to that NFT asset on IPFS – which is the main source for storing images that are connected to NFTs.
Tips on keeping your NFTs
Determine where you will store your NFTs before purchasing. You have a few options. For long-term storage, consider a hardware wallet. Many people choose Trezor or Ledger wallets to store their ETH and other cryptocurrencies. These are both highly secure options that make it difficult for malicious hackers to access your assets. Additionally, many exchanges offer individual wallets on their platforms, which allow you to keep your assets in one central location while still providing strong security measures.
Where to store your NFTs – with centralized exchanges
If you want an NFT but aren’t ready to store your NFT off an exchange, then it’s best just not to purchase it at all. But if you do end up buying a NFT and need a place to store it, a centralized exchange is not necessarily your safest bet. A centralized exchange can be hacked, and hackers are constantly trying new ways into these platforms. It may seem like a good idea to keep your NFT on an exchange because you can trade them easily from there, but that means you’re putting all of your eggs in one basket—and that basket could get stolen by a hacker. It’s much safer to keep your NFT in a secure wallet or hardware wallet.
Where to store your NFTs – with self custody wallets
Private key storage is a critical part of safely storing NFTs. The most popular way of storing ERC721 tokens are in wallets offered by longtime providers such as Metamask, Rainbow Wallet or Coinbase Wallet. But if you’re more technically savvy, you can store them on a hardware wallet like Ledger Nano S or even a paper wallet.