When buying an NFT one of the first questions that come up is where to store it. A legitimate question as an NFT is worth money and no one wants to leave their money in an unsecure place. In the past there have already been multiple reports of hackers stealing NFT art worth hundreds of thousands of dollars. So how do you make sure your NFT is in a safe place? There are several answers to this question:
The most common way to store an NFT is in a wallet. There are multiple types of wallets, each type different in its level of security. Depending on your personal use case the type of wallet that makes sense for you doesn’t necessarily have to be the most secure one as these types of wallets also have some drawbacks.
What is a wallet?
A wallet is a software tool built on the blockchain that manages assets like cryptocurrencies and NFTs. It can also serve as your “ID” on the blockchain to sign your artwork as authentic when you want to sell it. Because this signature happens on the blockchain and is therefore decentralized, the security of the system is not dependent on single servers or computers that can be compromised.
When downloading a wallet you get two 42-character keys, one public key and a private key. The public key is your wallet address, this key is what other people need to send something to your wallet. The private key serves as a password to your wallet and should by now means be shared with anyone!
Leaving your art on the marketplace
Some marketplaces offer their users a digital wallet directly on their website, but the safety of your stored NFT’s is highly dependent on the security level of your account. Leaving your NFT’s on the account of the marketplace you bought them generally bears the highest risk.
I can not recommend to store any funds or NFT’s on these kind of wallets!
The marketplace Makersplace for example uses their on-site wallets only to sign artwork you want to sell as authentic. Many other marketplaces don’t even offer wallets on their website but require you to connect your own personal wallet for higher safety.
In a recent report the marketplace Nifty Gateway confirmed that multiple accounts on their website have been compromised. After confirming the issue a spokesperson of Nifty Gateway blamed the users for not securing their accounts with the recommended two-factor-authentication.
Their website offers a smart contract wallet with your account to let you buy NFT’s more user friendly using a credit card. However this backfired after hackers gained access to multiple accounts and were able to buy, sell and send NFT’s to their own wallet addresses.
This example shows us that the biggest risk factor for security breaches is still the human. So when you open an account for a marketplace, make sure to select a strong password and enable two-factor-authentication.
In general that leaves us with 2 types of wallets. Hot-Wallets and Cold-Wallets:
Hot-Wallets
The most common way to store an NFT is using a personal digital wallet that you connect to your NFT marketplace account. This means Hot-wallets are connected to the internet and can still be a target for hackers, even though an attack will hardly be successful under normal circumstances.
On the other hand it is very easy to access your wallet making it a good pick for regular NFT traders. It also deattaches you from any marketplaces, meaning even if your account gets compromised your NFT art is still in a safe place. With that being said the by far most popular wallet to store your NFT’s is called Metamask.
Metamask
Metamask started out as a browser extension that lets you directly connect to decentralized apps. In 2020 they released their mobile app, offering a simpler design. Some of the features Metamask offers include:
acceptance for 7 out of the 12 biggest NFT marketplaces including Opensea, SuperRare and Foundation.app
acceptance for some of the biggest NFT games including Sorare, Splinterlands and Axie Infinity
web extension, desktop and mobile app
free of charge
Trust Wallet
An alternative to Metamask is TrustWallet. In general it has similar features to Metamask and is more mobile oriented.
over 5 million users
mint your own NFT’s
mobile and desktop app
supports both Ethereum and Binance Smart Chain NFTs
Cold-wallets
If you have some valuable NFT assets and would like to take an extra step for more security then you should take a look at cold-wallets. Cold-wallets are offline wallets meaning they are immune to hacker attacks. Keep in mind that most marketplaces still require you to have an online wallet for trading. One Cold-wallet that I can recommend is called Leder Nano.
Ledger Nano
Ledger Nano is a range of offline wallets that can connect to third-party wallets like Metamask. The neat thing about this is you can manage all your assets easily in the hot-wallet while the private keys to your NFT’s are securely locked up in your offline wallet. Now when you want to make a transaction it has to be approved using the private key in the Ledger Nano.
own mobile app
install up to 3 applications
Trezor
Trezor is another cold-wallet that can also be connected to Metamask and works similar to the Ledger Nano.
starting from 49,00 € (excl. VAT)
offline backup for hardware losses
OLED screen
supporting 1000+ coins
Conclusion
In my opinion the best wallet to use for the average NFT enthusiast is MetaMask. It offers high security while still allowing for a smooth user experience on many of the most popular NFT marketplaces and games. If you own NFT’s of high value or just like to have the extra security to sleep better at night, I suggest investing around 60 € into a hardware wallet. The two wallets I presented can easily be integrated with Metamask, making for an all around smooth and secure user experience.
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