While the broader crypto market faces several headwinds from Celsius’s liquidity woes to UST depeg, the NFT market has seen active volumes. The floor prices of many collections have tumbled which offers a good entry opportunity into the space. However, rug pulls are increasingly common and we must take steps to secure our beloved NFTs.
NFTs (Non-Fungible Tokens) are digital assets with metadata stored on the blockchain representing ownership of the assets. Therefore, if you want to Protect and Store Your NFTs, there are 2 types of wallets that we can use: Hot wallets and cold wallets. Given the prevalence of scams, we will also look at how to secure our NFTs with good practices.
What Are Hot Wallets and Cold Wallets?
Two examples of hot wallets are Coinbase Wallet and Metamask which are normally represented in mobile apps. The main goal of hot wallets is that they can make every day’s NFT transactions. Then, cold wallets such as Ledger and Trezor are wallets that are not connected to the internet and are generally more secure in protecting your NFTs.
On the other hand, every wallet comes with a private key and a public key. This means that users can move NFTs out of wallets and sign transactions. Therefore, users can not share private keys. Moreover, the public key is a wallet address that you can share with anyone to receive NFTs.
How Can We Protect Our NFTs?
Outlined below are several good practices we can adopt to keep our beloved NFTs safe.
- Establish a strategy to Allocate your NFTs: For small amounts of NFTs (<$1000), you can store them in your hot wallets. However, for larger amounts of NFTs (>$1000), you should get a cold wallet from Day 1, set them up, and store them. For a detailed setup of cold wallets and recommendations, look at this Twitter thread.
1/ On How To Secure Your NFTs
Where are your NFTs out in the metaverse?
How do you store them?
How do you keep people from stealing them?!
How do you pass down your Grails to your grandkids?Let’s find out!
— 6529 (@punk6529) November 19, 2021
- Have different NFT wallets: An advice that I came across often is to always use a burner wallet address when minting degen NFTs projects. Ideally, you should have one address that stores your NFTs and another with an adequate amount to mint/purchase your NFT. That way, you protect yourself against malicious contracts.
Conclusion
While a hot wallet provides convenience to you, it is generally not as secure as a hardware cold wallet. You always want to have the right balance between security and convenience to Protect and Store Your NFTs. Hence, it is important that we select the right wallets (ideally both hot and cold wallets) for our needs before diving right into the exciting world of NFTs!
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