Owning non-fungible tokens (NFTs) has become extremely popular in recent years, thanks to the rise of blockchain technology.
If you’re a crypto trader, you know that storing your digital assets on the exchange’s servers is not a good idea. If one of the exchanges gets hacked or your private key gets compromised, all your funds will be gone, and it won’t be easy to recover them. Storing them in decentralized wallets helps protect against potentially dangerous hacks because there are no central servers for hackers to attack.
This guide will teach you about the different types of wallets for storing NFTs, how to keep your assets safe from hackers, and ultimately help you decide on the best way to manage your assets depending on your usage patterns.
What are Non-Fungible Tokens (NFTs)?
NFTs are digital assets that are not interchangeable. This means that each NFT is unique and can’t be replaced by another asset. They’re often used to represent items in video games or online worlds, but they can also be used for other things like art, music, popular culture, and more. Because NFTs are unique, they can be more valuable than other digital assets. This also means that they’re a target for hackers. If someone gains access to your account, they could steal all your tokens. Thankfully, there are ways you can protect yourself from being hacked.
When you purchase an NFT, you receive a key that gives you access to your NFT on the blockchain network and is kept on a digital ledger. The key can be preserved securely in a number of different ways and serves as evidence that you are the owner of the original copy of the NFT.
NFTs are designed to be used within decentralized applications (DApps) and can be traded just like any other cryptocurrency. Unlike fungible tokens, which are designed to be used in a single application, these NFTs are more specialized and have more limited uses.
For example, CryptoKitties is an example of an NFT that was created on the Ethereum blockchain. Users can buy or sell CryptoKitties on the Ethereum blockchain, but they cannot use them in other applications. The same is true for ERC-721 tokens—they can only be used in DApps or as collectibles within their specific ecosystem.
Can NFTs Be Stolen?
Yes, NFTs can be stolen in the same way that any digital asset can be stolen.
The most common way for hackers to steal NFTs is by gaining access to the private key associated with the NFT. Once they have your private key, they can take control of your NFT and do whatever they want. It’s imperative to protect your private keys so that you never lose access to them.
Deceptive NFT projects are another technique for hackers and scammers to steal NFTs. Frequently, these fraudulent individuals create an NFT initiative and promote it on various social media channels. Once investors catch the bait, the con artists close up shop and vanish with the money; this is known as a rug-pull scam.
What is the Safest Way to Store Your NFT?
If you’re like most people, you probably store most of your digital assets on a centralized exchange. But what happens if that exchange gets hacked? Suddenly, all of your NFTs are at risk. That’s why it’s important to know how to store your NFTs securely, off of exchanges. The best option is cold storage, which means storing your data offline and away from hackers.
It’s hard to make an outright recommendation for which type of cold storage is best because they each have their pros and cons. However, if you have some cash saved up and are serious about security, then hardware wallets can be worth the investment. This is because the seed phrase, password, and PIN code for hardware wallets are stored in the device itself, making it hard for hackers and keyloggers to get in. They’re more expensive than software wallets but tend to be more secure than desktop wallets or mobile apps. You’ll need to purchase a hardware wallet (think USB stick) to use this method of cold storage
Protecting Your Digital Assets: Common NFT Storage Options
NFTs are becoming a big deal. They’re the next big thing in the world of digital assets and are starting to become more and more mainstream. NFTs are a great way to store your digital assets, but they can be hard to keep safe and secure if you don’t know what you’re doing. Luckily, there are several different options available when it comes to storing NFTs safely and securely.
Cold Storage Hardware Wallet
This is the most secure way to store NFTs, and it requires the least amount of effort. Hardware wallets offer the highest level of security because all your wallet data is stored offline and protected by a device password, PIN, and 24-word secret phrase.
The only restriction to storing your NFTs in a hardware wallet is that they should not be connected to the internet. The greatest defense of a hardware wallet is that all of its private information is stored on the device itself rather than online.
That doesn’t mean you can’t use a hardware wallet as a hot wallet (connecting it to the internet), but doing so defeats the purpose of the wallet. They are popular because they are very difficult to hack or steal and keep your coins safe from malware, viruses, and other malicious programs.
The Ledger Nano X is one of the most popular cold storage hardware wallets on the market right now. It has a high level of security and can store up to 20 different coins at once. You can also use the Ledger Nano X to create ERC20 tokens that track your real-world purchases using NFC tags or QR codes.
The Trezor One is another popular option for storing digital assets in cold storage. It has an integrated screen that displays your private key when you need it most (like when you’re logging into an exchange), so you don’t have to worry about losing track of it as much as with other hardware wallets like the Ledger Nano X or KeepKey.
- Intuitive crypto wallet - perfect for beginners and veterans alike.
- Features a secure certified chip (CC EAL5+) designed to withstand sophisticated attacks, and to protect your valuable assets.
- Buy, sell, exchange and grow your crypto through our proprietary app: Ledger Live. All-in-one place.
- Manage all your assets like Bitcoin, Ethereum & tokens on the go. The Ledger Nano X connects to your phone with Bluetooth and has a large screen for ease of use
- Since we have rebranded, you may receive a package and/or product with the old Ledger logo on it
- All-in-one: Everything you need to use cryptocurrencies like Bitcoin safely and easily. Keep your digital assets secure for the long term
- Offline security: Create and store keys offline, so you can sign your transactions safely isolated from hacks, malware and other attacks
- Protect your privacy: Fully open-source hardware and software makes it easier to protect your identity and keep your finances private
- Easy-to-use: Compact and lightweight, Trezor wallets fit comfortably in the palm of your hand. Plug it in, secure your funds in minutes, and enjoy confidence in every transaction
- Other features: Option to install Bitcoin-only firmware or use your Trezor as a two-factor authenticator
- Bank-Grade Security that is Simple: KeepKey is the most secure bitcoin wallet available. It makes best-practice bitcoin security easy so that even your grandmother can protect her bitcoin wealth.
- Backup and Recovery: During initialization, you are given the one-time opportunity to write down a backup of your KeepKey in the form of a twelve-word recovery sentence. If your KeepKey is lost or stolen, you can safely recover your device and its bitcoins without compromising the security of your private keys.
- Virus and Malware Proof: Because KeepKey does not have an operating system, the layers that viruses, malware, and key loggers infect do not exist on the device. Using KeepKey gives you confidence that hackers can't get to your bitcoins.
- Multi-Currency Support: KeepKey not only supports Bitcoin, but also Ethereum, Litecoin, Namecoin, Dogecoin, Dash, and Testnet.
- Works on PC, Mac, Linux, and Android: KeepKey is a USB HID-class device. That means, like a typical mouse or keyboard, drivers are not required. Plug in the provided premium USB cable, and your device just works: immediately giving you the highest level of bitcoin security.
InterPlanetary File System
The InterPlanetary File System (IPFS) is a decentralized network that allows you to store and share files securely.
IPFS allows you to store data in a decentralized manner, which means that your data will be stored across multiple servers around the world, rather than just on one server. This makes it extremely difficult for someone to take down your files or access them without your permission.
When you add a file to IPFS, it is given a unique identifier called a hash. This hash is used to access the file, and anyone with the hash can view or download the file. You can also share files securely by creating a link using the hash. The link can be shared with anyone, and they will be able to access the file without needing the hash.
Juan Benet originally developed IPFS in 2015 to design an application for storing and sharing 3D content across web browsers. Since then, it’s been used to store many other types of digital assets, including virtual worlds, 3D models, and even entire applications.
Along with storing your assets off-chain, IPFS uses content identifiers (CIDs), which are pieces of data linked to your NFTs. This method adds more security because URLs that are easy to hack are not used to access the NFTs.
The fact that the CID data hashes are kept on your computer makes IPFS one of the most secure ways to store NFTs. When data is requested from the IPFS, the nodes look for the same hash between the NFT and the locally stored data. Even though IPFS is a very safe way to store NFTs, it can still be broken into through your computer.
Software wallets are a type of digital wallet that stores and protects your cryptocurrency. They can be accessed through a web browser or installed on your desktop computer. You might need a software wallet if you buy and sell NFTs often. In fact, some marketplaces require these wallets to speed up and simplify transactions. Software wallets are usually available as mobile apps, browser extensions, and desktop programs. They are also sometimes called “hot wallets.”
There are many software wallets, but MetaMask is the most popular. It uses a password and a “seed phrase” to protect your transactions. There is also Trust Wallet, Rainbow, Enjin Wallet, and Math Wallet, which are all useful software wallets.
Software wallets are more convenient, but since your private keys travel online, they are more likely to be attacked. All it takes for someone with bad intentions to hack your software wallet is for them to get access to the device you use to log in to your software wallets, like your phone or computer.
In one of the most common scams, the wallet owner gives hackers access to their wallet by signing a transaction hash. This gives the hacker full control over the wallet. This kind of scam happens daily on social media and in Discord DMs.
If you decide to store your NFTs in a software wallet like MetaMask, do everything you can to keep your secret phrase and password safe. One of the best ways to use a software wallet is never to store your secret phrase or password online or on your computer or phone.
Also, make sure to always log out of your wallet before disconnecting it from every site. This makes sure that your wallet is safe even if one of the sites you visit gets hacked.
Tips to Secure Your NFT Wallet
Just like any other cryptocurrency, you need to take measures to protect your NFTs from hackers. Here are a few tips:
- Never share your private keys with anyone. An easy way to lose all of your assets would be to share this information with people who may try to steal it.
- Use a strong password. Make sure you use a strong password that is not easily guessed. It should be at least 8 characters long and include numbers, upper case letters, lower case letters, and symbols like @, $ or !. The best advice is to use a password manager to generate unique passwords for each site and then keep them locked down with different security questions. This way, if someone gets into one site, they won’t have access to all others.
- Update passwords regularly. A good practice is to update passwords every three months so that if someone does get hold of them, they will only have access for a limited time.
- Use a reputable platform. You should always use a reputable platform when storing your NFTs because they will have the most up-to-date security features. The best platforms provide an extra layer of security by keeping your information private and safe from hackers and others who may try to access it.
- Implement two-factor authentication (2FA) on all exchanges where you trade NFTs. It’s best to keep your funds on centralized exchange sites because they often offer more security features than decentralized ones.
- Back up everything. This is a no-brainer, but it’s important to do! If you lose your NFT or someone steals it from you, you will want to get it back. Plus, it’s super simple—make sure you have a backup of your keys and wallet.
- Store your NFTs offline. The safest way to store them is in cold storage wallets such as paper and hardware wallets.
- Use a Virtual Private Network (VPN). When using the internet with your wallet, your IP address can be easily tied back to you. If someone wants to steal something from you, they could easily go through all your transactions and find the one they want. Using a VPN will hide this information from them.
- Don’t click on suspicious links. To prevent yourself from getting fooled by a phishing attack, avoid clicking on links in emails or other messages that seem suspicious.
Storing your NFTs securely from hackers is a big concern for many collectors and players in the crypto gaming space. There are many options, some better than others, for keeping your assets safe and secure. Luckily, many sites have taken extra steps to help users safeguard their tokens. The safest and most secure solution to reduce the danger of data breaches and any cyberattacks is to store your funds offline in a cold storage hardware wallet.
Last update on 2022-10-04 / Affiliate links / Images from Amazon Product Advertising API