NFTs have become a mainstay in the world of Web3, as a fun and exciting form of online interaction, engagement, and digital marketing and an increasingly popular way to own and sell digital art, collectables, and other unique assets. We know that NFTs offer several benefits over traditional ownership models, with greater transparency and the ability to authenticate ownership, but they also come with their own set of risks. As with anything online, the need to secure information around NFTs should be a high priority for everyone exploring the industry.
If you've followed the NFT space at all, you'll know that some NFTs have been sold for staggering amounts of money. In many cases, that piece of digital art is a million-dollar asset. With that amount of value at stake, taking all available steps to secure an NFT is not just important, it's paramount. NFTs are also particularly difficult to recover if stolen. Unlike physical assets, which can be traced and recovered, NFTs can be virtually impossible to retrieve. The blockchain - where your NFT is stored - is a decentralized ledger system that cannot be modified or deleted. And because of this, tracking down a stolen NFT can be a major challenge.
The good news is that there are several ways to go about securing NFTs; reputable marketplaces, proper storage, and insurance are some of the various options available to owners. Let's take a look at what you can do to protect your NFTs with this comprehensive list of strategies and tools.
1. Use reputable marketplaces
When buying or selling NFTs, it's essential to use reputable marketplaces that have a track record of security and safety. Look for marketplaces that offer escrow services, which can help ensure that transactions are safe and secure.
2. Conduct extensive research
Before purchasing or selling an NFT, it's important to research the platform and individuals involved to ensure they have a good reputation and a history of secure transactions.
3. Draw up legal agreements
Creating legal agreements that outline the ownership and rights of the NFT can deter thieves and provide a legal framework for recourse in the event of theft.
4. Utilise smart contracts
Smart contracts can be used to restrict the transfer of NFTs to unauthorized parties. This can be achieved by creating a whitelist of approved addresses that can receive the NFT.
5. Create watermarks
Watermarking your NFT can make it easier to track and identify if someone steals it. There are several tools and software available that can do this.
6. Enable two-factor authentication
Two-factor authentication can be added to the wallet or account that holds the NFT, making it harder for hackers to gain access to the NFT.
7. Use cold storage
Storing your NFT in cold storage, like a hardware wallet, can provide an extra layer of security as it requires physical access to the device to access the NFT.
8. Use encryption
Encrypting your NFT can make it more difficult for hackers to access and steal it.
9. Be wary of phishing scams
Phishing scams are a common method for thieves trying to steal NFTs. Be sure to never click on links or download files from unknown sources, and always verify the authenticity of any emails or messages you receive.
10. Consider insurance
Just like physical assets, NFTs can be insured against theft or loss. If you own valuable NFTs, it may be worth considering insurance as an additional layer of protection.
With the amount of value attached to NFTs, not taking steps to secure your own is simply not worth the risk. And with so many security options available, protecting them is easy. As with any high-value asset you own, your NFTs must be treated carefully. At NEXA, we offer a full range of NFT services, including smart contracts, corporate wallets, and general NFT strategy, and help our clients with NFT best practices. Get in touch with us today and find out more about how we can assist you.