What kind of wallet to use when buying NFTs? And what other additional security concerns should you have?
Blockchain wallets and Metamask
A wallet is used to store a private and public key. It is basically a piece of software that stores the private/public keys and allows the users to sign transactions in order to send a transaction and allows users to receive transactions using their public key or wallet address.
An example of a Bitcoin wallet, in this case, a paper wallet. The perfect wedding gift!
There are different kinds of wallets, and they have different security levels: online wallets, mobile/desktop wallets, cold storage wallets or hardware wallets, and paper wallets are the most common wallets.
There are also a number of additional ways to secure private keys such as paper wallets, cold storage and multi-signature wallets to keep the private keys offline and secure. These wallets are less susceptible to theft because they can be stored offline. On the other hand, a hot wallet is a wallet that has the private keys stored online and thus more susceptible to be hacked and stolen.
Hardware wallets such as Trezor and Ledger are considered the most secure ways to store private keys.
There’s a saying in the Bitcoin community: “You keys, your wallet. Not your keys, not your wallet.”
Now let’s go back to the NFTs. Most of the NFT marketplaces interact very easily and seamlessly with Metamask, a browser-based wallet. Metamask is very simple to install and use and connects directly to the NFT marketplace.
The wallet will interact with the blockchain to sign the transaction, and the private/public key in your wallet will be associated with the ownership of your NFT. For this reason, it is also quite important to keep the private keys secure.
Although Metamask is seen as a fairly secure wallet, it is important to keep it even more secure if you store valuable NFTs or cryptocurrencies. A good and safer alternative to Metamask is a hardware wallet like Ledger or Trezor. They are both compatible with the most common NFT token standards, including the ERC-721 token standard. Either way, please never forget to backup the wallets and write down the seed phrase.
Personally, if I have anything worth more than 500 US dollars, I would store it in a hardware wallet like Trezor or Ledger, but it’s up to you to decide. Maybe for you, 500 dollars is just peanuts, but I would advise you to keep secure anything that you consider more than peanuts.
It seems that people really believe that NFTs can be worth quite a lot of money and through the recent NFT history we can see multi-million dollar deals like Beeple’s $69 Million sale! If you are buying anything expensive, better to keep it very secure!
To use Metamask in conjunction with a hardware wallet, you can use Metamask to interact with the NFT platform and the hardware wallet to keep your private keys. This is a much more secure way of storing the private keys that basically are used to transact NFTs and other blockchain assets.
You are welcome!
Additional NFT security
It’s essential to have a few additional words regarding security. Some security best practices need to be addressed. This is a space where scammers and hackers will try to get a piece of your pie, and consequently, you need to be extra careful. This is not an exhaustive list. I assume that you know the cybersecurity basics.
- Use a hardware wallet in conjunction with Metamask. Never use Metamask alone if you have valuable items
- Make sure that you are connected to the correct website. Scammers may clone the original website changing the address just slightly to try to steal your crypto
- Never share your private keys with anyone
- Do some due diligence on the NFT seller to understand if he is a legitimate seller
- So some due diligence on the artwork too. There are people digitizing and selling artworks that they don’t own
- If necessary, contact the artist to check if he authorized tokenizing his art
I found an NFT for the sale of an artist that I follow, Chuvabak on OpenSea. However, because I know his work, I found it suspicious and sent him a message asked if he has authorized the NFT to which he replied “no”.
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Disclosure: views expressed are purely personal and do not reflect any organisation’s views or thoughts the writer of this article may be affiliated or associated with. This is NOT financial advice and I’m not recommending anything. This article is only for educational purposes.
Keeping your NFT purchases more secure was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.