NFTs are notable for many reasons, but mainly because each is unique and non-replicable. It’s just like your house, car, or phone – there can only be one of them. Hence, where do the tokens go after buying them to ensure their uniqueness?
NFTs go to a blockchain after you buy them. They should remain safe there, like cryptocurrencies. However, a digital wallet will grant you access to the tokens by providing a private key to their address. If the private key gets into the wrong hands, the safety of your NFTs is compromised.
Continue reading this article if you plan to buy NFTs soon because learning how to store them safely is vital. Thieves & hackers can target them if you’re too naive.
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Where Are NFTs Stored After You Buy Them?
From what we understand, only one person can own an NFT. Thus, there must be some form of secure storage for it. After an ownership transfer from the seller to the buyer, where does the token go next?
NFTs are stored either online or offline after you buy them. Online storage is mainly a decentralized blockchain, where they are essentially as safe as cryptos, but you can also keep them off-chain in an InterPlanetary File System. Offline, they are safe in special hardware called ‘cold storage.’
I will elaborate more on these three NFTs storage options below:
1. Storing NFTs on Decentralized Blockchain
Decentralized blockchains are the primary storage (both online and offline) for NFTs today.
Before the tokens’ popularity, blockchains stored mainly cryptos, especially those gifted to the ‘miners’ who secured them. However, their safety also enables them to keep NFTs intact.
To ‘reach’ the block where your NFTs will stay, you need to create an online software wallet that provides a user-friendly interface. It must be compatible with the particular blockchain your potential NFTs are based on.
Via smart contracts, the NFTs will successfully switch ownership to yours after a sale. The wallet will now display it as yours.
On your directive, it will share your collection with third-party NFT marketplaces and other websites for the public to view and confirm your ownership.
The wallet will also help you trade NFTs stored in the blockchain whenever you decide to.
Therefore, against common misconception, NFTs are not stored in software wallets but in the blockchain. The wallets only provide the medium to display them to prove your ownership and transfer them to others.
Here are some popular blockchains that support non-fungible tokens:
1. Ethereum
Ethereum is the most popular blockchain that supports & stores NFTs. Its smart contracts ensure that all transactions are seamless without any intermediaries.
Before, the blockchain used the Proof-of-Work (PoW) system to facilitate transactions, but it consumed too much energy. Today, it uses a Proof-of-Stake (PoS) mechanism, consuming less power.
Some popular Ethereum-based NFT projects include:
- Bored Ape Yacht Club
- CryptoPunks
- Axie Infinity
- Art Clubs
Some of the most renowned NFT marketplaces like OpenSea, Rarible, and Nifty Gateway trade Ethereum-based ones. (Click here to read the complete guide on how to buy NFTs on OpenSea!)
2. Solana
In terms of popularity, Solana is far behind Ethereum, but people still enjoy its fast-paced transactions.
It uses a Proof-of-Stake (PoS) and a Proof-of-History (PoH) system to validate transactions and create new blocks. They not only remove the complex puzzles that help quicken trades but demand low fees for them.
Like you must use ether to buy Ethereum NFTs; you must use SOL to buy Solana-based ones. They include:
- DeGods
- ABC (AbarakaDabra)
- Okay Bears
- Kikiverse
You can find them in marketplaces such as OpenSea, SolSea, and Solanart.
3. Flow
Unlike other blockchains, Flow has always focused on NFTs, decentralized apps, and games. It is most famous for facilitating NBA Top Shot, which hosts tokenized highlight clips.
The NFL and UFC have also inventively launched their NFT marketplaces powered by Flow.
The blockchain only uses the PoS system to verify transactions; hence the transaction fees are low. Moreover, they are quicker as the developers from Dapper labs were exploring ways for Flow to complete about 10,000 transactions per second.
Marketplaces that trade this blockchains’ NFTs include:
- OpenSea
- Blocktobay
- Foundation
- Rarible
2. Storing NFTs on InterPlanetary File Systems
NFTs can also be stored online in an InterPlanetary File System (IPFS). It is a peer-to-peer hypermedia protocol that supports file storage off-chain.
Juan Beret, the founder of Protocol Labs, also designed this file-sharing system in 2015. However, Pinata Cloud, the most successful IPFS-based wallet, was launched in 2018. Over 70,000 users have about 45 million files stored in the system.
Instead of blockchain’s standard location-based addressing, IPFS uses content-based addressing to store NFTs. Each NFT, when added, has a Content Identifier (CID) to locate it and not an HTTP link prone to hacking.
No one can tamper with your NFTs here because the CID is its permanent record. Any new version of your token will get a new CID.
Moreover, it is decentralized, so you can enjoy all the related benefits, like intermediary-free processes.
3. Storing NFTs on Hardware Wallet
You can also store NFTs offline in a unique hardware wallet known as cold storage. Experts consider it the most secure option because the tokens are offline, away from potential hackers’ reach.
Except such thieves are with the device physically, it is impossible to steal the content.
It is noteworthy that the cold storage doesn’t actually contain the NFTs but private keys to gain access to them. Thus, they are like software wallets technically but way more secure.
If you are considering buying hardware wallets for NFTs, the most popular one is Ledger.
It’s the most expensive of the other NFT storage alternatives, but consider it if you envision buying several tokens. Better safe than sorry.
Conclusion
Just like your house or car, NFTs are notable because there can only be one of them!
If you’re wondering where NFTs go after you buy them and what is the proper way to store your tokens to keep them safe, this is exactly what we’ve discussed in this article.
In short, NFTs go to secure token storage after you buy them, and there are three major ones:
- Decentralized Blockchains: These are the primary NFTs storage, but not all blockchains support them. You can locate, access, and trade them via online software wallets.
- InterPlanetary File System: The decentralized system stores NFTs off-chain and employs various strategies to ensure security.
- Hardware Wallets: They safely store the details to access the NFTs on-chain in a hardware device. Since the cold storage is offline, they are more secure from online hackers.
Becoming a millionaire investing in NFTs, however, doesn’t happen overnight, unfortunately! It’s always recommended to create a steady flow of income so you can invest in a diversified portfolio, and never invest more than what you cannot afford to lose! (Click here to attend the FREE training on creating an online empire!)
Thanks for going this far! If you found this post inspiring and useful, share it with your friends, please! (Virtual high fives and hugs to all my sharers out there!)
Cheers,
Odeh Ahwal
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