Where Are NFTs Stored?
With news about everything from tweets to digital artwork selling for millions of dollars as NFTs, it’s no surprise more people are jumping on the NFT bandwagon. But getting into blockchain brings up a lot of questions: How do NFTs work? How to display NFT art? What to look for in a good NFT project? etc.
Among these queries is one concept that everyone needs to understand to keep their NFTs safe and secure: storage. It’s a common misconception that NFTs are kept on the blockchain. While the smart contract and information about the NFT are stored on the blockchain, the actual piece it references is stored elsewhere - usually on the platform where it was created or purchased.
What Are NFTs?
NFTs or “non-fungible tokens” are virtual representations of an asset. It’s basically a record, like a contract, stored on the blockchain that directs you to where its associated content can be found. NFTs can represent any digital or physical asset, including images, music, and real estate. You can even create your own NFT content, such as artwork made using a no-code NFT creator like we have here at NightCafe.
Unlike cryptocurrency, NFTs are unique and non-interchangeable. This means you can’t swap them out for another one, nor are they divisible. You can buy, sell, or transfer NFTs, but that only changes the ownership. Buying, selling, or transferring an NFT gives the details of the record to someone else, without ever moving it from the blockchain.
How Are NFTs Stored?
NFTs are references to the digital signatures established during the minting process (or creation). This manifests as a code or smart contract, which is permanently stored in the blockchain. The contract contains information on the NFT’s owner, address, purchase history, etc.
The content associated with the smart contract is stored elsewhere, usually where it was created or purchased. For example, if you create NFT artwork on NightCafe and mint it, you own it. This is provable through a smart contract stored on the blockchain. The artwork itself, however, can be stored anywhere on the internet.
Can I Lose My NFTs?
Because NFTs are permanently stored on the blockchain, you can’t technically “lose” them (though, you can lose access to them). However, it’s possible to lose the content of that NFT forever. This is because the content can be stored anywhere on the internet. If that location (e.g. URL) somehow disappears, then so will the artwork, music, etc.
How to Safely Store NFTs
There are quite a few different ways to store your NFTs, each of which offer their own benefits, with hardware wallets being the most secure option.
Software wallets are password-protected digital wallets like Metamask or Coinbase. These keep your NFTs safe, especially with their encrypted transactions. That said, they’re still susceptible to hacking.
Interplanetary File Systems (IPFS)
An IPFS or interplanetary file system is an off-chain storage solution option for NFTs. It uses an identification code (CID) linked to the content of your NFT, which can’t be modified.
All of the important data about your NFT is stored directly on your computer. You can get notifications every time anyone tries to access the data, reducing the risk of hacks.
The only caveat of using IPFS is that it can be difficult to protect your NFTs if your computer is hacked. Plus, if the IPFS goes down, so do your digital assets.
Hardware wallets store NFTs offline, but you can still connect them to the Internet and use them as hot wallets - without the risk of being hacked. They’re also password-protected, making them extra safe. These are typically considered to be the best solution when it comes to storing NFTs safely and for the long term.
The Importance of Safely Storing NFTs
NFTs are extremely valuable nowadays, so it’s essential to understand how to properly store them to ensure they’re always safe, just as you would with any physical works of art. You wouldn’t want the Mona Lisa displayed on a sidewalk, much like you wouldn’t want your one-of-a-kind NightCafe-created artwork kept somewhere it can easily be stolen. So after creating or purchasing an NFT, make sure you take the proper steps to store it somewhere safe.