NFTs (non-fungible tokens) are the latest trend in cryptocurrency. They took over the market and suddenly everyone wanted to learn, sell and invest in them.
Most people who get into NFTs believe that they are all about the arts. This idea could not be further from the truth. Those who know more about these unique tokens support the idea that anything can become an NFT, and they’re usually right.
However, the issue that worries most investors is the security of NFTs and NFT marketplaces. Cyberattacks happen on top crypto platforms, and there is a good chance that marketplaces will be attacked as well.
Brief history of NFTs
NFTs may be the latest trend, but they’ve been around for a while. The beginnings of NFTs date back to 2012 when they were created on the Bitcoin blockchain. The original concept was called Colored Coins, and it represented regular Bitcoins that were branded, and the brand would determine their use.
The first known Quantum NFT was created in 2014. In 2016, the developers continued their experiments by testing how Bitcoin works with NFTs. However, many did not like the idea of using the Bitcoin blockchain, and NFTs slowly shifted to Ethereum.
In 2017, NFTs found a home on Ethereum. Some of the first projects close to NFTs were CryptoPunks and CryptoKitties. However, the ERC-721 token has yet to be invented. Today, NFTs are exploding and various blockchains are adding marketplaces to help people monetize and trade them.
How do NFTs work?
Even though NFTs are tokens, they are different from cryptocurrencies. Non-fungible tokens are units of data stored on the blockchain network. Since they are not fungible, this means that NFTs cannot be interchangeable.
For example, the price of one NFT is never the same as the price of another, while the value of one Bitcoin is equal to the value of another. This makes each NFT unique.
An NFT cannot be replicated and it can only have one owner at a time. This is one of the reasons why artists have been so quick to release their art as NFTs. Although the media can be copied and shared alone, the owner/buyer of the NFT remains the sole owner.
How secure are NFTs?
There are a few things to consider before investing in NFTs. In general, NFTs are safe to own. However, they could be compromised. The niche is in its infancy, which leaves a lot of room for market manipulation and cyberattacks.
Additionally, NFTs are often worth a lot of money, making them and their owners targets for bad actors.
Overall, NFT on its own should be safe to buy, but it is the platform investors should be careful of. Malicious actors can spoof NFT platforms. This means that users may lose their credentials or have security issues.
On the other hand, the platform may be highly secure, but the owner of the NFT might accidentally trust a malicious link in their email, click on it, and have their NFTs stolen. Unfortunately, lost NFTs cannot be restored and investors often suffer losses.
Here’s how safe the nine types of NFT are.
1. Digital and Physical Art
Currently, art is the most popular form of NFT on the market. Plus, there are plenty of expensive works of art selling online, one of which is Beeple’s Everydays: The First 5000 Days. This piece sold for $69 million. GIFs also sell in the art category.
Some artists also scan their physical paintings to sell as NFTs instead of prints. The royalties are higher and they don’t have to worry about copyright.
When it comes to security, many claim that they can just upload the image and steal the NFT, but that’s not true. The NFT will always remain on the platform as a single item.
Digital art isn’t the only thing that can be turned into NFTs. For example, many NFT markets also support music files. While music has been fungible for decades, some artists have decided to end music distribution as we know it.
Additionally, musicians typically only earn a small percentage of their royalties. With NFTs, they can earn much more and earn almost 100%. In addition, NFT technology allows them to create unique musical pieces that change each time their owner returns to listen to them.
Music NFTs are generally safe to keep when sold by an original owner. Unfortunately, some platforms have been accused of stealing music from musicians and selling it as NFT without permission.
3. Video game items
Video games have been hugely popular for quite some time, and avid gamers will do anything to get shiny new armor or a unique character, including buying an NFT. Once an in-game virtual asset is turned into an NFT, it cannot be deleted or altered in any way, which guarantees ownership to the player.
Additionally, since in-game items are NFTs, they can have unique properties that no other in-game item has. This increases the level of excitement for players eager to collect the item or use it to win.
As with other types of NFT, in-game items are only as secure as the platform they are on. If the platform suffers a breach, NFTs can fall into the wrong hands.
4. Trading Cards and Collectibles
People were collecting cards even before NFTs became popular. However, today the collection of physical cards has been replaced by the purchase of a rare NFT card. The cards remain the same; it is only the technology that has changed. Also, once someone gets the card they were looking for, they know no one else has it and can decide to keep it or sell it.
Additionally, anything that can be considered a collectible can be sold as NFT as long as the items are properly formatted and released to the market.
When it comes to collectibles, hackers can get very sophisticated in targeting their victims. Ape_NFTs is the best example of how hackers used a screen sharing feature to gain access to his wallet and wipe out his entire collection.
5. Memorable sports moments
NFT technology enables sports fans to create and sell memorable sports moments. These are short videos of the best moments in sports history, like game-changing touchdowns or slam dunks.
These videos are around 10 seconds long and can sell for up to $200,000. Apart from the coolest sports moments like NFTs, there are sports NFTs that come with physical memorabilia that guarantees the authenticity of the item.
The safety of memorable sports moments also depends on the platform on which they are published and their owners. These NFTs can also be stolen if the owner makes a mistake or if the platform comes under attack.
The internet is full of memes, and they are everywhere, including in NFT marketplaces. Plus, sometimes the person on the meme is the actual seller of the NFT, which makes it even cooler to buy and own.
Some popular NFT memes include Nyan Cat, Bad Luck Brian, Disaster Girl, and others. These sell for $30,000 to $770,000, and the Doge meme sold for an astounding $4 million.
When it comes to NFT meme safety, it’s the same as digital art – no one can upload a JPEG and sell it as NFT because the original will remain on the platform.
7. Domain names
Domain names are probably one of the weirdest things people can buy in the NFT market. However, they are quickly becoming staples found in NFT markets. One of the recent examples of domain names being sold for the high price of $100,000 is win.crypto.
Generally, the domain name is registered with a third-party company that manages it. However, the NFT market removes the middleman and provides immediate ownership of the domain. There is also no need for renewal fees – the domain is only purchased once.
NFT domains are stored in a crypto wallet, which means they are as safe as any other funds in the same wallet. However, crypto wallets can still be hacked, which means NFT domains aren’t perfectly safe either.
8. Virtual Mode
NFTs have entered several industries, including fashion. Right now, Gucci, Reebok and Puma are experimenting with virtual fashion, which is one step away from turning products into NFTs.
Some fashion NFTs are also tied to a physical item. For example, NFT-based fashion brand Overpriced launched a physical hoodie that came with a code indicating an NFT.
If this hoodie is stolen, the brand will send a new one to the owner with a brand new NFT code, and Overpriced will invalidate the previous code.
9. Other Online Items
As the NFT market expands, there is a good chance that more items will join the list of items that can be turned into non-fungible tokens. For example, Jack Dorsey sold his tweet, which means people might soon be selling their TikToks or items.
NFTs are a new trend, so they are likely to grow in popularity and improve their functionality, and marketplaces will remain open to any new items people want to sell.
The same rules apply to other online items that can be turned into NFTs. These are safe in the wallet if the owner of the wallet does not compromise it. However, if NFTs are for sale, the current owner must rely on the security of the platform.
When people mention NFTs, art is the first thing that comes to mind. Yet NFTs are more than that. These tokens are unique and can be used to prove ownership of the item being sold. This leaves room to sell other things like collectibles, fashion, or even memes.
Since NFTs are blockchain-based and today almost anything can be digitized; we may soon see more articles on markets and expand the list of things that can become NFTs.
NFTs are generally considered safe. However, their owners must also ensure that they remain so. One way to do this is to select the safest platform to sell NFTs and not expose sensitive wallet information to anyone. Good luck on the digital road to NFTs!