NFTs (Non-fungible tokens) are the latest trend in cryptocurrency. They took over the market, and suddenly everyone wanted to learn how to make NFTs, sell, and invest in them.
Most people who get into NFTs believe they are all about arts. That idea can’t be farther from the truth. Those who know more about these unique tokens stand behind the idea that anything can become an NFT, and they’re mostly right.
However, the question that worries most investors is the safety of NFTs and NFT marketplaces. Cyber attacks happen to the best crypto platforms out there, and chances are marketplaces can get attacked as well.
Brief History of NFTs
NFTs might be the latest trend, but they’ve been around for quite some time. The beginnings of NFTs go 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 marked, and the mark would determine their use.
The first known NFT Quantum was minted in 2014. By 2016, developers experimented further by testing out how Bitcoin would work with the NFTs. However, many didn’t like the idea of using the Bitcoin blockchain, and NFTs slowly moved to Ethereum.
In 2017, NFTs found a home on Ethereum. Some of the first projects that were close to NFTs were CryptoPunks and CryptoKitties. However, the ERC-721 token wasn’t invented yet. Today, NFTs are exploding, and various blockchains add marketplaces to help people mint and trade them.
How Do NFTs Work?
Even though NFTs are tokens, they’re different from cryptocurrencies. Non-fungible tokens are units of data stored on the blockchain network. Since they’re non-fungible, that means NFTs can’t be interchangeable.
For example, the price of one NFT is never the same as the price of another one, while the value of one Bitcoin is equal to the value of another one. This makes each NFT unique.
One NFT can’t be replicated, and it can have only one owner at a time. This is one of the reasons artists hurried up to post their art as NFTs. While the media on its own can be copied and shared, the owner/buyer of the NFT remains the only owner.
How Safe Are NFTs?
There are a couple of things to consider before investing in NFTs. In general, NFTs are safe to own. However, they might get compromised. The niche is in its infancy, which leaves a lot of space for market manipulation and cyber attacks.
What’s more, NFTs are often worth a lot of money, which makes them and their owners targets of bad actors.
Overall, the NFT on its own should be safe to purchase, but it’s the platform that investors should be careful about. Malicious actors can spoof NFT platforms. This means that users can lose their credentials or have security problems.
On the other hand, the platform can be highly secure, but the NFT owner could accidentally trust a malicious link in their email, click it, and get their NFTs stolen. Unfortunately, lost NFTs can’t be restored, and the investors often face losses.
Here’s how safe the nine types of NFTs are.
1. Digital and Physical Art
At the moment, art is the most popular form of NFTs in the market. What’s more, many expensive art pieces are selling online, one of them being Everydays: The First 5000 Days, by Beeple. This piece sold for $69 million. GIFs are also selling within the art category.
Some artists also scan their physical paintings to sell them as NFTs instead of prints. The royalties are higher, and they don’t have to worry about copyright.
When it comes to safety, many claim that they can simply download the image and steal the NFT, but that’s not true. The NFT will still remain on the platform as a unique item.
Digital art is not the only thing that can be turned into NFTs. For example, many NFT marketplaces also support music files. While music has been fungible for decades, some artists decided to end music distribution as we know it.
Moreover, musicians usually earn only a small percentage of their royalties. With NFTs, they can earn way more and earn close to 100%. Plus, the NFT technology allows them to create unique musical pieces that change every time their owner comes back to hear them.
Musical NFTs are usually safe to hold when they’re sold by an original owner. Unfortunately, some platforms were accused of stealing music from musicians and selling it as NFTs without permission.
3. Video Game Items
Video games have been quite popular for a while, and avid gamers will do anything to get new shiny armor or a unique character, including purchasing an NFT. Once a virtual in-game asset gets transformed into NFT, it can’t be deleted or changed in any way, which guarantees ownership to the player.
Furthermore, since in-game items are NFTs, they can have unique properties that no other in-game item has. This increases the level of excitement among gamers who are eager to collect the item or use it to win.
Like with other types of NFTs, in-game items are as safe as the platform they’re on. If the platform suffers a breach, NFTs can go to the wrong hands.
4. Trading Cards and Collectible Items
People were collecting cards even before the NFTs became popular. However, today, collecting physical cards got replaced by purchasing a rare NFT card. The cards remain the same; it’s only the tech that changed. Plus, once a person gets the card they were looking for, they know nobody else has it, and they can decide to keep it or sell it.
Additionally, anything that can be considered a collectible can be sold as NFT for as long as the items are properly formatted and posted on the marketplace.
When it comes to collectibles, hackers can get very sophisticated in targeting their victims. Ape_NFTs is the prime example of how hackers used a screen sharing feature to get access to his wallet and wipe out his whole collection.
5. Memorable Sports Moments
The NFT technology allows 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 last for about 10 seconds and might sell for up to $200,000. Besides the coolest sports moments as NFTs, there are sports NFTs that come with physical memorabilia that guarantees the item’s authenticity.
The security of the memorable sports moments also depends on the platform they’re posted on and their owners. These NFTs can also be stolen if the owner makes a mistake, or the platform suffers an attack.
The internet is filled with memes, and they’re everywhere, including the NFT marketplaces. What’s more, sometimes, the person on the meme is the actual seller of the NFT, which makes it even cooler to purchase and own.
Some popular NFT memes include Nyan Cat, Bad Luck Brian, Disaster Girl, and others. These sell from $30,000 to $770,000, and the Doge meme sold for an astonishing $4 million.
Regarding the security of meme NFTs, it’s the same as with digital art – nobody can download a JPEG and sell it as an NFT as the original will remain on the platform.
7. Domain Names
Domain names are possibly one of the strangest things people can purchase on the NFT marketplace. However, they’re quickly becoming commodities found on NFT marketplaces. One of the recent examples of domain names that sold for a high price of $100,000 is win.crypto.
Usually, the domain name is registered at a third-party company that manages it. However, the NFT marketplace cuts out the middleman and provides immediate ownership of the domain. There’s also no need for a renewal fee—the domain is purchased only once.
NFT domains are stored in a crypto wallet, meaning they’re as safe as any other funds in the same wallet. However, crypto wallets can still be hacked, which means that NFT domains aren’t perfectly safe either.
8. Virtual Fashion
NFTs entered multiple industries, including fashion. At the moment, 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 dropped a physical hoodie that comes with a code that shows an NFT.
If this hoodie gets stolen, the brand will send a new one to the owner with a completely new NFT code, and Overpriced will invalidate the previous code.
9. Other Online Items
As the NFT marketplace develops, chances are more items will join the list of things that can be turned into non-fungible tokens. For example, Jack Dorsey sold his tweet, which means that people might soon sell their TikToks or articles.
NFTs are a new trend, so they will likely grow in popularity and improve functionality, and marketplaces will remain open for all new items people want to sell.
The same rules apply to other online items that can be turned into NFT. These are safe in the wallet if the wallet owner doesn’t compromise it. However, if the NFTs are on sale, then the current owner needs to rely on the safety of the platform.
When people mention NFTs, art is the first thing that comes to mind. Still, NFTs are more than that. These tokens are unique and can be used to prove ownership of the sold item. This leaves space to sell other things like collectibles, fashion, or even memes.
Since NFTs are based on blockchain and today, almost anything can become digitized; we might soon see more items in marketplaces and expand the list of things that can become NFTs.
NFTs are usually considered safe. However, their owners also need to make sure they stay that way. One way to do it is to select the safest platform to sell the NFTs and not expose sensitive information about the wallet to anyone else. Good luck on the digital road to NFTs!