If you’ve regularly been on social media or have followed the news in the past couple of years, you’ve most likely heard of non-fungible tokens (NFTs). Whether you think NFTs are a fad or present great opportunities for artists and investors, they often make the news and have even sold for millions of dollars.
NFTs are collectible digital assets similar to cryptocurrency and can range from everything to pieces of art, music, videos, memes, and even screenshots of tweets—for example, Twitter CEO Jack Dorsey sold his first-ever tweet for $2.9 million.
As NFTs are relatively new, there’s still a lot of confusion and controversy about what they are, how they work, and how to attain them. In this detailed guide, you’ll learn all about what an NFT is, the technology it uses, and how to securely store your NFTs.
Unlike cryptocurrency, non-fungible tokens are unique and non-interchangeable, which means they can’t be traded for another that’s identical. For example, trading one Bitcoin for another Bitcoin would give you an identical Bitcoin back. However, each NFT cannot be exchanged for like-to-like, which makes it “non-fungible.”
Similar to physical pieces of art or collectible items, NFTs hold value and can be created from reproduced digital files such as photography, videos, music, and writing. Instead of paying for a physical item, collectors purchase the file and proof of ownership.
When you buy an NFT, you're given a key, which is stored on a digital ledger and grants you access to your NFT on the blockchain network. The key establishes proof that you own the original copy of the NFT and can be kept safely through a few different methods.
If you’re looking to buy your own NFTs as collectibles or investments, then they can be bought on a number of different platforms, depending on what you’re looking for. For example, if you’re looking for art NFTs, Nifty Gateway contains a large collection of different types of art NFTs or OpenSea, which is considered the first-ever and largest NFT marketplace.
When purchasing NFTs, you'll have to connect either a payment card or cryptocurrency wallet to your storage wallet and the platform you're purchasing from. For example, when buying and storing your NFT within the Ethereum (ETH) network, you'll have to connect a cryptocurrency wallet like Coinbase that is accepted on the ETH network.
It’s important to note that there’s a high demand for different types of NFTs, so they’re often released in “drops.” A drop is an event where batches of an item become available for a short period of time, a lot like concert ticket sales or sneaker drops. The drop often creates a frenzy or rush for buyers to try and purchase the NFT within a limited time.
If you want to begin creating or selling your own NFTs, it's essential to find an expert. Hire a professional NFT Artist on the Fiverr marketplace today.
Blockchain is helping to shape the future of technological security frameworks and cybersecurity. To keep data safe, blockchain essentially utilizes a decentralized platform that works as a distributed database; this database can continuously grow a list of data records, which are known as blocks.
Each of the blocks contains certain elements, such as a cryptographic hash of the previous block, transaction data, and a timestamp. One of the key features of blockchain is that it can verify users and ensure that their identities remain anonymous, helping to mitigate security risks.
Blockchain is essential to the security of NFTs, as it reduces the risk of them being stolen via data breaches. A private decentralized blockchain network allows data to be stored without a central authority. However, a single server could be hacked, and all of the sensitive data on that server could be stolen. NFTs also contain integrated cybersecurity features as they are difficult to duplicate and link with another digital asset.
Everyone on the blockchain network is able to see all data exchanges and transactions, making it completely transparent for its users. Blockchain is immutable, meaning that once data is recorded, it can't be erased or altered, which also helps to reduce any risk of fraudulent activity.
Keeping your NFTs protected is essential, as they are digital assets that are worth money and could also hold sentimental value. NFTs should be stored in a secure location, and if you’re buying NFTs as investments or collectibles, you’ll want the highest security possible.
There are three methods of NFT storage. Here you'll learn what those storage options are, the security they provide, and the best option for you.
A software wallet is a popular choice for investors and collectors to store their NFTs, but it only has standard-level security. Software wallets are secured with encryption, password, and a 12-24 word seed phrase.
One of the biggest cons about software wallets is that they need to be accessed via a browser or cloud service. In comparison to other file storage methods, software wallets provide the lowest level of security, so it’s best to store your NFTs in them for a short period of time.
An InterPlanetary File System (IPFS) works by storing your NFT assets off-chain, helping to mitigate the likelihood of hacks and cyber attacks. Alongside storing your assets off-chain, IPFS utilizes content identifiers (CIDs), which are pieces of data that are linked to your NFTs. This method provides additional layers of security, as easily hackable URLs are not used to access the NFTs.
What makes the IPFS one of the most secure NFT storage options is that the CID data hashes are stored locally on your computer. When data is requested from the IPFS, the nodes look for the same data hash between the NFT and the locally stored data.
Despite an IPFS being a very secure method of NFT storage, it can still be hacked via your computer.
Known as the best and most secure way to store your NFTs, cold storage hardware wallets provide the most security for your digital assets because all of your sensitive data is stored offline. Furthermore, all of your data is password-protected to provide an additional layer of security.
Cold storage hardware wallets usually come with multiple features to provide greater functionality to users. One of those features is the ability to restore the device’s content if it’s ever lost, stolen, or malfunctions.
Another major benefit of a cold storage wallet is that it can be used as a hot wallet through the device’s mobile connectivity. This allows you to look at your data and make transactions with the same level of security.
Regardless of the type of wallet or system you store your NFTs in, it’s still essential to follow some best practices to keep your digital assets safe when tucked away in storage.
Tips to follow when keeping NFTs safe:
No matter which NFT provider you purchase your digital assets from, you’re still going to need a wallet to grant you access to your investments within the blockchain framework. Storing your assets offline with a cold storage hardware wallet is the safest and most secure way to mitigate the risk of any cyberattacks, alongside mitigating the risk of data breaches.
To learn more about data security and how to keep your NFTs safe, hire a professional cyber security specialist.
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