How to Store NFTs
When it comes to the world of cryptocurrency, safety, and security are paramount. Cryptocurrency users are well aware of the need to store their assets in secure locations where they are safe and protected from unwanted third parties. As such, NFT buyers are consequently wondering, how do I store my NFTs safely? It’s a great question and one that every NFT user should know the answer to, so let’s get to it!
When storing your digital assets, there exists an eternal struggle between safety and accessibility. Investors want to be able to access their assets quickly in the event they want to liquidate them or perhaps simply take a few moments to admire that awesome Disney NFT they just purchased. Similarly, buyers want to ensure that their assets are as secure as possible and completely protected from any third party that might want to steal or manipulate their assets. As you might have already guessed, both these things can not happen at the same time. As such, a balancing act must occur, and every user must decide which they value more, safety or accessibility.
One of the most popular options for storing NFTs (and cryptocurrency assets in general) is known as the “hot wallet.” This term is used to define wallets where the control of the private keys (the secret phrase that provides control over the asset) is in the hands of a third party (such as the exchange from which you purchased your assets). Any buyer that stores their cryptocurrency assets (NFTs included) on an exchange is storing them within a hot wallet.
Hot wallets provide a range of benefits as far as accessibility is concerned. They allow users to instantly view and liquidate their assets at any point. All that is required is an internet connection and access to your specific brokerage. As such, they are especially popular due to the ease with which investors can purchase and store their assets.
That said, hot wallets also offer the weakest levels of security when it comes to storing your assets. A simple Google search for “exchange wallet hacked” will yield untold numbers of horror stories about unsuspecting cryptocurrency users who lost their entire portfolios when their exchange of choice was hacked. As a result, these hot wallets are entirely unsuitable for those of you who wish to prioritize the security of your assets.
Cold wallets are the second option for storing your NFTs. As we noted above, hot wallets are those where the private keys which control your digital assets are held by a third party such as Binance or Coinbase. Cold wallets are the polar opposite of their warmer cousins in that the private keys are held by the owner of the wallet and can not be accessed by anyone who does not have access to these private keys.
Both Trezor and Ledger are examples of cold wallets that can be purchased by investors to store their assets. Users can purchase their NFTs on exchanges like NFTrade, Binance, or Coinbase and then transfer the NFTs to their cold wallets for safekeeping. Since the cold wallets are not connected to the internet, and the private keys are held by the individual user, the assets are as secure as possible.
Unfortunately, the eternal struggle is omnipresent, and this level of security comes at a price. Individuals who store their assets on a cold wallet will require access to the physical device in order to access their assets. This means that if you were away from the location where you store your cold wallet, you would be unable to sell or transfer your assets. However, if you memorize your private key, you can access these assets on any wallet interface.
Similarly, if they wished to liquidate those assets, they would need to transfer them back to an exchange in order to do so. While this may not seem like much of an issue, transferring assets can take time, especially if you are away from your cold wallet. In a market as volatile as NFTs, being unable to liquidate your assets quickly may prove to be a very expensive inconvenience. As such, these cold wallets are not suitable for those of you who wish to prioritize the accessibility of your assets.
When it comes to the storage of digital assets, there is no one correct answer. Ultimately, every individual user will need to determine which end of the eternal struggle they value most and make their storage decisions accordingly. In practice, especially for those buyers with large portfolios, a combination of these different storage options will likely be utilized.