In this article, I'll go over five NFT security tips to ensure the safety of your digital assets.
But why is this important?
The NFT space has lost over $50 million in NFT hacks within the first four months of 2022 alone. This is a staggering number, considering that the space only lost $7 million in 2021.
Most of these losses were due to hackers exploiting vulnerabilities in soft wallet codes, Discord and Twitter hacking, and stealth mints that drain funds from unsuspecting users.
Granted, you can't predict when a hacker will try and break into your wallet. But there are some NFT security tips you can follow to help keep your funds safe.
It's especially important if you're just getting started with NFTs.
Apply these NFT security tips to your wallet setup, and you should be good to go!
Use a hardware wallet
This is pretty obvious, but most NFT collectors tend to ignore it. If you need a secure NFT wallet, then Hardware wallets are your best option. They're easy to use, they're extremely secure, and they don't require any software or internet connection.
Hardware wallets like Trezor and Ledger have been around for years now, and they've proven themselves time and again as the best way to securely store NFTs. Since they save your private keys offline, hackers won't be able to access them even if they gain control of your computer.
You can get a hardware wallet for as low as $100 from their official sites or retailers, including Amazon, Best Buy, and Walmart.
Keep your wallet's seed phrase far from prying eyes
The second NFT security best practice is keeping your seed phrase away from people who shouldn't see it.
The seed phrase is what allows your wallet to generate new addresses and send transactions. It's also used to recover your wallet if you lose your device.
Since seed phrases are usually written down on paper or stored in a password manager, it's very easy for someone to steal them. If you do write down your seed phrase somewhere, make sure it's not easily accessible.
You can purchase a safe or mini vault and put your seed phrase inside. You can also create a unique password with a combination of letters, numbers, and symbols that no one else knows. Only use this password to log into your wallet, and never share it with anyone.
Use a burner wallet when minting a new project
A burner wallet can be your everyday Metamask or Coinbase wallet you use for transactions. The idea of a burner wallet has a dispensable wallet that you can use to mint projects without worrying about losing your funds.
Burner wallets are a great way to avoid NFT security issues because you only leave little amounts inside, which you use to mint and transfer NFTs from third parties.
Use a hot/cold wallet combo
If you want to take things a step further, consider using a hot/cold wallet combination. It's the same as using a burner wallet, only that you're combining it with a cold wallet.
Your hot wallet should be used only to sign contracts, complete transactions, and buy/sell NFTs. Then you should only use your cold wallet to receive NFTs and cryptocurrencies from your hot wallet.
This combo is one of the best NFT security tips because it ensures that you don't lose anything too valuable if your hot wallet falls victim to hacks. Your cold wallet and everything in it will always remain untouched by hackers.
Verify the permissions you're given when signing smart contracts
We're all guilty of skipping the terms and conditions section when signing up on a new site or app. Who has time to read through every single word in those boring stuff?
Well, when it comes to NFTs, you should have time to read these "boring stuff," particularly when granting permission to an unknown party.
Smart contract developers often ask users to grant certain permissions before allowing them to interact with their NFTs. For example, you might need to grant a smart contract permission to read your transaction history.
Scammers can take advantage of this by requesting permission to access "ALL" your wallet's content. One of the most important NFT security tips to remember is not to approve any request that sets approval for all. Always read the fine print carefully before signing any contract.
PRO TIP: Make it a ritual to review your permissions weekly and revoke any that aren't necessary anymore. This ensures that you don't get affected if a company or collection you previously connected to falls victim to a hack.
Conclusion
NFT hacks are becoming increasingly frequent. That's why knowing different security tips can help protect your assets from most common NFT scams.
Overall, stay away from suspicious mint links and stealth launches. Also, ensure not to interact with NFTs airdropped into your wallet from an unknown source. They might contain malicious code that can compromise your wallet's security.
Always practice the hot/cold wallet combo and verify the permissions you're granting when signing smart contracts. These two simple steps can go a long way towards protecting your assets.