Why are ledgers important for storing NFTs?
Just as there are thieves and scammers in the “real world”, the digital world has the same issue with more and more criminals emerging from the comfort of their own homes.
Using a lot of computer skills and hacking codes, once they collect the relevant data, they can take whatever they want in order to steal money from the rich and the poor.
However, there are ways to prevent this and safeguard your computer and online accounts to prevent any situations of fraud or duplication from occurring. If you are wanting to invest in NFTs whether it is a small amount or hundreds of thousands of dollars, then it’s crucial that you are keeping both your money and any digital assets safe and secure to prevent any thieves or scammers from breaking into your account.
With the increase in interest in the digital art industry, it probably comes as no surprise that hackers are trying to find ways to infiltrate the blockchain systems in order to steal data and therefore the assets that they hold as well as users’ private keys, passwords and other important information.
Renowned NFT marketplace Nifty Gateway has been subject to hacking with several users claiming that their NFTs and credit card information has been compromised and stolen with the thieves using their credit cards to purchase new NFTs.
However, Nifty Gateway conducted an investigation that concluded that the compromised accounts in question had 2FA, known as two factor authentication, enabled, meaning that their accounts were the most vulnerable to access.
Therefore, it’s important to understand how cryptocurrencies and NFTs are stored safely so you can be certain that no one is going to hack into your account and steal any information or assets. The first piece of advice is to set up a secure crypto wallet on a secure site such as MetaMask which has the tools to ensure complete safety rather than setting up a crypto wallet on a platform such as OpenSea which may be compromised.
Doing this takes a bit more time but it will be worth it and ensure the safety of your assets. Marketplaces can compromise your security as they don’t give you full control over your private keys which are essentially the most important aspect of keeping your account safe.
All cryptocurrencies and digital assets and their entire history are logged on a blockchain which is a ledger controlled by hundreds of computers around the globe and can be accessed by anyone who has the private key. When a transaction is made relating to an NFT, it is then logged on the ledger and then given another private key so the transaction cannot be undone.
Once the private key has been changed, the NFT cannot be accessed to those who don’t have that new private key anymore. If a hacker gains access to your private keys then they will have access to your NFTs as well as any financial information connected to your account and will have the power to transfer any funds and NFTs in the account to another outside the platform.
Once this happens, it is impossible to get back your NFTs due to the transferring of private keys. This means that the safest way to prevent this is by storing your private keys in a crypto wallet that you can have access to only and is disconnected from any platform account you may have. It will make it more difficult for hackers to get in and get access to your data.
What are the different types of crypto wallets?
In order to buy or sell any NFT on the market, you will need a crypto wallet which can safely secure all of your digital assets and keep everything in one place. There are two different types of crypto wallets for you to consider which are software wallets, known as hot, and hardware wallets, known as cold.
Both have their advantages and whichever one you decide is entirely up to you depending on your own personal criteria and how you want to store your digital assets.
The first kind is software wallets which are the most common as they can be created instantly on the majority of platforms as well as online exchanges such as Binance. Software wallets are connected to the internet which makes them slightly less secure than hardware wallets as the private keys are exposed to some level of risk.
However, they are cheaper and easier to set up and transactions can be made much easier and simpler on a variety of platforms. They’re also a much safer option for purchasing NFTs with alternative payment methods such as credit cards.
For those who want to ensure maximum security then hardware wallets are the best option as the private keys are completely disconnected from the internet. This can make it more difficult to complete transactions on various platforms and more timely due to the process of connecting the hardware wallet to your online account.
Deciding which one is going to be the best for you can be tricky, but there is a third option that combines the best of both worlds as it incorporates easy and convenient use as well as maximum security. This is called a Ledger Nano which is a hardware wallet that connects with trusted online wallets such as MetaMask and MyEtherWallet.
When your Ledger Nano has been linked to your MetaMask wallet, all of your private information such as the keys controlling the NFTs is kept in the hardware wallet meaning that it is never entered online. The private keys are safe in a secure element chip whereas the hot wallet provides your full transaction history and can help you manage your purchases.
Once your Ledger Nano is connected to your MetaMask wallet, you can then easily buy and sell on all platforms such as OpenSea and Rarible easily and conveniently without worrying about any security breaches.
Whenever you are ready to buy and sell, all actions have to be confirmed by the Nano wallet so you can approve it which requires the private key connected to the hardware wallet. It’s very similar to online banking when you have to enter a one time password in order to approve particular transactions but with even more added security thanks to the Blockchain.
Using this combination of hardware and software wallets means that all of your important information is safeguarded and prevents any cases of fraud, thievery or duplication from occurring.
How do I connect my MetaMask Wallet to the Ledger Nano?
In order to keep your NFTs extra secure within your crypto wallet then you will have to connect your MetaMask crypto wallet to the Ledger Nano in order to prevent any cases of fraud or duplication.
The process is easy and will also keep your NFT assets and cryptocurrencies in the same place for extra convenience, rather than having multiple crypto wallets on various websites and getting confused as to which NFT is where.
The first step is to connect the Ledger Nano which can be done by connecting it to your computer using a USB cable and then opening your MetaMask crypto wallet in full screen using a browser such as Brave or Chrome. Then simply click the top right menu on the MetaMask wallet application and click the “Connect Hardware Wallet” option on the drop down menu.
The screen will then show you all of the hardware wallets that can be connected to your MetaMask wallet and the Ledger option should be selected and will then connect. A list will then be displayed showing all of the Ethereum accounts you have on your device.
If you don’t have any Ethereum accounts then create one. Once this is completed, select the Ethereum account you want to connect to and click “Import”.
Now you should be able to manage and transact all of your NFTs from your Nano hardware wallet. An extra advantage of this is that your Ledger Nano can also be accessed to other third party wallets meaning that all of your digital assets can be kept in one secure place. This will prevent thieves and scammers from having access to your cryptocurrencies and NFTs.
It’s unknown what the future of NFTs holds and whether they will hold any value in the long run, but they are proving to be an unbelievably great asset to invest in at the moment. Making sure that you do as much research into how they work is important and will help to clear up any confusion you may have as well as preventing any bad or missguided investments.
As with any investment, it’s important to only invest as much as you can afford to avoid getting into debt.
NFTs may be a digital asset but they can prove to be successful if the media content is rare and high in demand. Depending on the scarcity and the collectibility it has, especially if it contains content that has been created by a famous individual or institution, there is a lot of money that can be made on the resale market.
Having your NFTs stored on a ledger helps to prevent any cases of fraud of duplication happening and the unique aspect of the NFT itself means that even if other NFTs contain the same media content, it will still remain unique to you.
This is especially important to understand if you have invested in a first round of newly minted NFTs that haven’t been available for a long time on the market.