If you have recently decided to consider broadening your investment portfolio by purchasing some cryptocurrencies or even an NFT (Non-Fungible Token), keeping such assets firmly secured from cyber criminals’ prying eyes and techniques is essential. While there is very little that you can do to account for these assets swiftly rising and falling in value as the market continues to develop, several effective strategies, tools, and resources exist to keep your valuable data safe. Learn how to protect your cryptocurrency and NFT investments and how to keep such resources from being compromised.
What are NFTs, How are They Purchased and Identifying Legitimate Investments?
For those unfamiliar with the term, NFTs are digital assets that are either limited in number or completely unique and take many forms, including items for use in video games, videos, music, artwork, and others. Cryptocurrencies are considered to be fungible, which means they can be traded and swapped with each other much like physical currency and have equivalent value. NFTs cannot be freely traded on a one-to-one basis due to their unique digital blockchain signatures and subjective valuations.
It may be easiest to think of NFTs as the virtual equivalent of a collector’s item you are purchasing the exclusive right to own. Because NFTs can be uniquely identified by blockchain, it makes it very easy to facilitate token sales and transfer and validate asset ownership.
There are several options for purchasing legitimate NFTs, such as going directly to the company’s NFT website, like NBA Top Shot and GameStop or by perusing NFT marketplaces, including Coinbase, Axie, OpenSea, and Nifty Gateway. Before making any acquisitions, you should employ the services of a free blockchain explorer like blockchain.com to verify the location, storage, and ownership of the NFT to determine its legitimacy.
Depending on the payment methods accepted by the seller or marketplace, you may have the option of purchasing NFTs using traditional fiat currency, credit cards, bank account transfer, and simply using your own cryptocurrency to trade one digital investment for another.
How to Ensure Your NFTs and Cryptocurrencies Can be Safely Stored and Sold
There are three primary methods for safely storing digital investments: software wallets, hardware wallets, and paper wallets. It may come as a surprise to people looking to purchase some of the most technology-based holdings currently available, but many investors in NFTs and cryptocurrencies will attest that the safest method for storing digital assets is on paper. If the information for your cryptocurrency and NFTs are written down and locked inside a physical safe, vault, or security deposit box, it is almost impossible for them to be compromised by digital means. It is always a good idea to research the best cryptocurrency wallets regardless of which option you choose.
If you are not comfortable with the potential fragility of paper or lack easy access to secure physical storage, you may be interested in a more versatile option like a hardware wallet. For those who are unfamiliar, hardware wallets are specialized devices that resemble traditional USB drives and are used for storing your private keys or the data which authorizes the sale and transfer of your blockchain assets. Hardware wallets allow you to safely keep your private keys separated from the internet via “cold storage,” which keeps them in electronic form but completely cut off from the web. You should ensure that any hardware wallet will be compatible with your preferred operating system and PC and with any desired digital investments you wish to make.
Depending on how much you are willing to spend on a hardware wallet, you can benefit from some impressive security measures designed to keep your data private and protected. Such methods include using a touchscreen on the hardware wallet itself, gaining access through a series of randomly generated QR codes, or even creating a twelve-word sentence that keeps your NFTs, cryptocurrencies, and wallet under lock and key. Even if you end up losing your hardware wallet to an accident or theft, you will be able to keep your data protected and regain access to your valuable investment.
Software wallets are often considered a safer option than storing your cryptocurrency on an exchange where you could potentially lose the ability to access your investments, but they are by far the worst of the three options regarding security. Since you access software wallets via information stored directly on your PC, cybercriminals can employ several traditional techniques to gain access to your funds, including installing a keylogger to record passwords or compromising your network security.
Once you have your wallet arrangements in place, you must connect your wallet to an NFT Marketplace and upload the file into secure storage. Depending on your preferences, you can offer interested buyers several options for purchasing your NFT. These include a timed auction over a specific date range, an unlimited auction where bids are submitted until you deem one acceptable, or a fixed price to facilitate a faster sale. Once you accept the terms of the deal, the blockchain will be updated to reflect the sales terms and new ownership, and your account will receive the appropriate funds. Many marketplaces will charge you a percentage of the sale price as part of using the service, so keep that in mind when setting prices.
What is the Difference Between Purchasing or Investing in Digital Assets?
One of the most significant differences between owning cryptocurrencies versus investing in them may be your feelings concerning personal privacy and your opinion of centralized funds. People who purchase cryptocurrencies often tend to be invested not just in the assets but also in the future of private, decentralized financial services that are under the owners’ control. A purchaser of NFTs and cryptocurrencies can pay directly with cryptocurrency for goods and services if a given company accepts such payments, but they will need to cash out to fiat currency to see direct profits.
Investing in digital assets is similar to purchasing them but differs in two key respects: the availability of storage options and the lack of ability to pay using cryptocurrency. Unlike those who buy NFTs and cryptocurrencies, investors do not have the opportunity to store their assets using cold storage techniques like hardware wallets. Investing in cryptocurrencies through a more traditional financial brokerage service like Robinhood will likely require you to download and install an app with online capabilities, which comes with considerable risk to your finances and other valuable personal data. Investors also cannot pay directly with cryptocurrency and must convert them into fiat currency before they can make payments.
Before delving headfirst into purchases of digital assets, including NFTs and cryptocurrencies, potential buyers should be aware that such investments carry enormous risks in terms of financial volatility. Given the recent Crypto Crash that resulted in the loss of billions of dollars in value across the cryptocurrency market, the idea of there being a “stable coin” has certainly come into question. If someone tells you that putting your valuable money into a speculative asset will be guaranteed to deliver a return on investment, please remember the ancient wisdom of caveat emptor, or let the buyer beware.
Cryptocurrencies and NFTs are also commonly used by members of various criminal and terrorist organizations, both as a means of targeting potential victims as well as acquiring and distributing funding without significant oversight. This article should not be considered financial advice, and we cannot be held responsible for any unforeseen events, including crypto-related legislation, changes in prices or valuation of assets, and so on.