How to Store NFTs Safely: Decentralized Storage is the way to go
You have now created or bought your own NFT. I am sure you now want to know how to store the NFT, more so, how to safely store the NFTs. This is because the NFT craze has attracted all sorts of people including thieves and con artists with malicious intent. Or even hackers since the whole concept of NFTs revolves around software which can sometimes be manipulated.
This article will take you through the best practices and ideas to safely store your NFTs with a focus on decentralized storage.
Decentralization is…
To better understand what decentralized storage is you should be familiar with the concept of decentralization.
Simply put, decentralization is the process of distributing or transferring authority and power away from a central point to a larger network or localized system. This means that authority does not come from one central point but rather comes from a broad more connecting point with various stakeholders.
In the blockchain space, the concept of decentralization continues to grow as it offers greater security and encourages shared control of tokens.
What Exactly is Stored?
By now I assume you understand what an NFT is and how it works. Briefly, an NFT is made up of several components. For example, an image NFT is composed of the JPEG file, content, and metadata. The JPEG file will only exist on the smart contract. The content and metadata for the purpose of an NFT being unique are stored separately.
Therefore, the metadata is unique and holds the exclusive rights/proof of ownership, that the NFT is yours. This is what is stored and should be kept safe lest it goes missing and you can no longer prove that you own the NFT.
Decentralized Storage Explained
Decentralized storage is simply the storage of data on a spread-out network of servers or locations with different owners who stand to gain from keeping the data safe, secure, and accessible at all times. Due to the nature of smart contracts and how they work these entities have to adhere to certain practices to guarantee the safety and sustainability of the data stored.
Decentralized storage functions on two main principles:
A. File Storage — Saving data to allow it to be recovered for use at a later date.
B. Distribution — The data saved can be quickly accessed as needed.
Most platforms offering decentralized storage systems incentivize users to participate by distributing tokens native to the specific platform.
What does this mean for NFT collectors?
As a collector, this means that your NFT metadata is stored on multiple nodes on a decentralized network commonly referred to as a decentralized storage system. This means that different pieces/fragments of your file are stored on different nodes and no single entity in the network holds the complete file.
IPFS
The Interplanetary File System is a file-sharing system hosted within a peer-to-peer network and works in a decentralized manner. The IFPS allows NFT creators and owners to store their data in a secure, safe, verifiable, and persistent manner with a guarantee that the data will be available in the long run.
In the IPFS data is stored on multiple and different nodes. To access it you make a request and get the data from any node that has a copy of the data. After getting the data a cached copy of the data remains behind on the specific server to help out any other user that needs to access the same data.
How does the IPFS work?
Once you upload a file to the interplanetary file system, the file is automatically divided into smaller bits. The system generates a unique hash (code) known as a content identifier — CID. This process is known as content addressing. The CID is used to identify the data from then on.
In case you want to access your data, your node will search the IPFS system for the CID. After finding it, it will download it and cache a copy. This means that your data only exists on specific nodes. Files existing on the IPFS cannot be tampered with or altered in any way.
Popular Decentralized Storage Providers
Filecoin
Filecoin is a platform built within the IPFS network whose main goal is to provide storage facilities for a long-term basis. The platform allows entities with nodes that can store a large capacity of data to rent out space to users.
Filecoin has been able to solve one of the Interplanetary File System shortcomings which is data persistence. Data persistence refers to the availability and sustainability of data in the long run.
Through Filecoin users and storage owners negotiate terms of storage and either of the parties is penalized if they do not adhere to those terms. Collectors can store their data for a price on the Filecoin platform.
Integrating the IPFS and Filecoin’s persistence mechanism ensures that data stored is always readily available and can be swiftly accessed.
PPIO
PPIO is a decentralized cloud project that mainly focuses on the affordability of the storage service, the speed, and the privacy of data stored. The PPIO platform is a great tool for NFT data storage because:
· Very high quality of service. The platform is always undergoing continuous improvement to improve its services.
· Data delivery — Compared to its peers who have focused more on data storage PPIO has focused a lot on data delivery and distribution.
Storj
Storj is a decentralized cloud storage provider. The platform is solely built for the storage of large amounts of data and exists on the Ethereum blockchain.
After uploading your data to the platform, the data is broken down into new pieces of data which are then distributed to nodes on the Storj dcs in a decentralized manner.
However, the indexing of the Storj platform is somewhat centralized.
To buy or sell an NFT you would need a software crypto wallet. It is important to note that the “wallet” does not actually hold your NFTs. All your wallet does is create a private key which then allows you to access your NFTs which are stored on the respective blockchain.
To simplify this, crypto wallets work with the same concept as a debit card which does not hold your money but is simply used to access money that your bank holds.
Different Types of Wallets
When it comes to safely storing your NFTs you have an option of two types of wallets.
· Software wallets
· Hardware wallets
Software Wallets
To buy or sell an NFT you would need a software crypto wallet. It is important to note that the “wallet” does not actually hold your NFTs. All your wallet does is create a private key which then allows you to access your NFTs which are stored on the respective blockchain.
To simplify this, crypto wallets work with the same concept as a debit card which does not hold your money but is simply used to access money that your bank holds.
Software wallets are secure especially if they offer 2FA authentication. However, since they exist only online they are vulnerable to hackers. If someone was to access your private key, they would have access to your NFTs.
A good example of a software wallet would be Metamask. Metamask provides you with a 12 to 24-word private key and is compatible with most NFT marketplaces.
Hardware Wallets
Cold storage hardware wallets are the safest and most secure way of storing your NFTs. This is mainly because they are completely offline and the device is password protected.
In case the device is damaged or stolen the devices are programmed in such a way that the data is recoverable hence data cannot be lost.
Because of their offline nature, even when a user is online making a transaction the device cannot be hacked into. Good examples of hardware wallets would be Trezor and Ledger.
Can I keep NFTs on an NFT Marketplace?
The simple answer is no. An NFT marketplace only allows you to view NFTs which are on sale or the ones in your collection. This is why to transact in any NFT market place you are required to connect it with your software crypto wallet.
So…
Decentralized storage for NFTs seems like the best option. This is simply because it offers more security compared to software wallets and is not as expensive as hardware wallets. It is also flexible in that several copies of your data are stored on different nodes hence minimizing any chances of data loss.
