The rise in popularity of non-fungible tokens (NFTs) has aroused the need for enterprises to explore the best data storage options for NFTs. Unlike other types of digital files, NFTs are tied to blockchain, making it possible to prove whether a file is original or a copy. Thus, an organization must keep its NFTs safe from accidental loss or compromise. Arguably, NFTs’ value arises from their unique nature, and any accidents or breaches could lead to real financial loss.
Artists, musicians, and many others now issue digital works as NFTs with some selling for tens of millions of dollars. Tech entrepreneur Jack Dorsey even posted Twitter’s first-ever tweet as an NFT and earned nearly three million dollars from the sale. Additionally, companies have started to use NFTs for loyalty programs and tracking purchases as digital tokens become more and more prevalent.
Top Places for Storing NFTs
For secure storage, there are three most popular locations for NFT data storage: software wallets, the InterPlanetary File System (IPFS), and hardware wallets.
1. Software Wallets: Organizations store a digital key in software wallets for access to the NFT on the blockchain network. They can store NFT and cryptocurrency keys and act as an encrypted and password-protected vault. However, since they are often browser-based and tied to cloud services, they are susceptible to attacks by hackers or malware.
2. InterPlanetary File System (IPFS): The IPFS is safer than software wallets, due to its content identifiers (CIDs), which are hashed and stored locally on an organization’s device. To access the NFT, the CID hashes are essential for verifying ownership of the asset. However, if there is an accidental loss, such as a hard drive failure or corruption by ransomware, the organization may lose access to its NFTs.
3. Hardware Wallets: Hardware wallets provide offline storage for NFTs and remain inactive unless an organization uses them for access. They are usually encrypted and protected by a password or biometrics, making them the most secure option for NFT data storage. Nevertheless, the wallet could malfunction or be destroyed, spilling the contents or even being stolen.
Concerns and Risks
With each data storage method, there are risks associated. Research shows that software wallets are the least secure because they are browser-based and tied to cloud services, making them more prone to being hacked. IPFS may be more dependable than software wallets, yet the file system is at risk of corruption, leading to accidental loss, and losing access to the NFTs entirely. Hardware wallets are also risky since they could malfunction or get stolen.
In conclusion, NFTs are unique and incredibly valuable, translating to the need for secure storage for these digital assets. With the mentioned storage options, companies can protect their NFTs against hacking, accidental loss, and corruption. As a result, organizations that handle NFTs must decide on the best storage option to avoid financial losses or jeopardizing their NFTs’ safety.
According to https://www.techtarget.com/searchstorage/tip/Best-practices-for-NFT-data-storage
The material in this article is written on the basis of another article.