How Do Collectors Safeguard Their NFTs
Learning about trending and emerging technologies is exciting, but it can be tough. The silver lining is that you do not have to start from scratch. Unless you have been living under a rock since the launch of the world wide web, you already know the core principles of Internet safety. And yes, you can apply them to your crypto investments and NFT collections.
Fact: NFTs are revolutionizing the art industry, transforming the landscape radically. But the NFT world itself is changing constantly as well. It is full of ups and downs that those in the know are familiar with. Newcomers to the world of NFTs are right to seek reassurance and demand in-depth insight into the safety precautions at their disposal. Assuming that the risks of NFT forgery and inadequate permanence can be ruled out, there are other security risks. While tempted by the prospect of making a profitable investment, they are also concerned about the ways to protect the investment and ensure bulletproof security of their meticulously curated collection. After all, NFT thefts do happen.
One thing is certain: tightening the security of the NFT infrastructure has the power to shake things up in the art world as we know it. The bigger the collection and the higher its value, the more potent the safety mechanisms they need, because they want to be absolutely certain that the investment is sound. In a world that makes us question everything, safety is a burning issue.
Even if you do not have a single NFT to your name yet, you may have safety concerns, and no one can blame you. Fear of the unknown is legitimate until proven otherwise. Fraud is everywhere. And even if you do not know the first thing about NFTs, unless you have lived under a rock since the arrival of the Internet, you know that backing up your virtual assets, such as an NFT collection, is a smart idea.
Listed under the letter A in the Who’s Who of the NFT world is most definitely Artnome, the twitter handle of one Jason Bailey who has been an avid NFT collector and connoisseur since 2017. After he got interested in NFT collecting, Jason started thinking long and hard about all the ways he could protect and safeguard his precious collection.
So how did Jason go about protecting his NFT collection? It was a long and treacherous road. Jason learned from his mistakes. After all, he was entering uncharted territory. But now we have his experience to draw on.
Don’t Put All Your NFTs In One Basket
Phishing scams happen all the time. If it’s any consolation, we have all learnt by now that we have to be extremely cautious and always on the lookout for red flags when performing financial transactions online, as they often entail having to disclose sensitive information.
One way to prevent that is to have two separate wallets, a designated hot wallet for direct purshasing, and a cold wallet, also referred to as a hardware wallet or an offline wallet, which is a cryptocurrency wallet that is not connected to the Internet. So if you want to buy a specific NFT, you use your hot wallet and you fill it with the exact amount of money you need to make the purchase. That way, you avoid the risk of having all you have stolen or otherwise compromised. Immediately after the purchase, the NFT is transferred to a cold wallet. This wallet is where you can store the rest of your NFT collection and/or crypto, and it does not have any interactions with the Internet, which means there are no connections with websites that require your personal information,
There are also hard wallets such as Ledger and Tezor, which are physical devices used for offline seed phrase storage, as opposed to storing your seed phase online where hackers can reach it. Without the seed phrase, you cannot access your wallet. This means that you cannot approve a transaction if you do not have the device that has the phrase. Of course, the device itself can be stolen, but not if you apply an additional measure and store the device in a high-security place such as a safe.
Always Have a Backup Plan
The volatility of the NFT market can be intimidating, but investing is still worth the risk, as long as you employ experienced NFT collectors’ best practices. One of the things you can do before you buy an NFT is to verify where it is being stored. Opt for NFTs stored on a chain or a decentralized server as opposed to those stored on a private server. In the event that you already own NFTs stored on a private server, it is not to late to take protective action. Your best course of action is to preserve the work by sending a reminting request to the platform or the artist. To remint, they can use IPFS (Interplanetary File System), often dubbed the hardware of Blockchain, or a similar platform, and apply the same backup protocols.
Back to Jason, who is also the founder of ClubNFT: follow the backup protocols which ClubNFT employs and create a backup version of the NFT and its metadata files.
Backing up adds an exciting layer of security. You can create a local copy on your computer, which protects your investment even if the platform from which you purchased you NFT goes bankrupt and shuts down, as you would be able to perform the reupload to any decentralized server without losing any of the work’s functionality.
Some platforms offer non-fungible token art that uses IPFS. They sell you an NFT and then store it for you. As an added benefit, you can use fiat currency to pay for your NFT. In other words, you don’t need to own crypto or a crypto wallet. But as tempting and carefree as that sounds, there’s always the risk that something will go amiss, such as that the custodial platform will go under, causing you to lose your precious collection.
After all, this happened to many NFT marketplaces in the past. It seems that the crypto and NFT spaces are once again in a state of crisis. The market is hectic. That means two things: you can never let your guard down and you have to find out how to make the situation work in your favor.
This is why you need to take an additional precaution and file a request with the platform to have the NFTs transferred to you, at which point you will have to procure a crypto wallet. Just remember to store it wisely.