So you finally did it. Either you succumbed to FOMO, or you decided to listen that that annoying little niece of yours who has been talking your ears off about how buying NFTs could make you rich. She did just buy a brand new 3 Series, so maybe she is unto something. And now, you are beginning to wonder – just what did you buy?
When you purchase an NFT, you are essentially purchasing ownership rights to the underlying digital assets. As storage is still relatively expensive (especially on the blockchain), most of the time, what you receive is a token that contains the metadata to the asset you now own. It would also contain a URL pointing to a file that contains data about the digital asset, its name, and a link to its storage location.
An NFT is essentially proof of ownership of the item you purchased, not the item itself. You are not purchasing the rights to the item – unless, of course, it explicitly says in the purchase agreement. You do not have the right to create derivative works from it – unless that can be covered under fair use. You can decide to sell it, to gift to, to will it out, and to even destroy it (burn, in crypto-parlance). After all, it is your property.
So, if the NFT is essentially the deeds to the house, what is the guarantee that someone will not load your house someday and run away with it in the middle of the night? Or demolish it? It all comes down to storage. While some marketplaces still use traditional centralized cloud storage systems to store the Tokens and files, more and more Marketplaces such as Mintbase are using decentralized blockchain storage solutions that ensure your NFTs can never be deleted. In fact, Mintbase uses Arweave, which also gives you the option to store your files for 200 years for a small one-time fee.
In the same way that the deeds lose value when the house burns down, so does the NFT when the asset is lost. This could happen if the host that kept the asset is compromised or shuts down. But you can “buy insurance” by using services like Arweave or Piñata which provide “permanent storage” for a price. You should also think of using a wallet to store your NFTs, such as the NEAR Official Wallet, MetaMask, or Keplr. Just make sure the wallet supports the protocol your NFT was minted on.
Like all things crypto, the responsibility for keeping your NFTs safe is yours and yours alone. If you lose your password, or if someone gains access to them and steals them, the loss would be yours to bear. Once you start investing in NFTs, you should make sure you improve your device and internet security to protect your assets from hackers as well as from unscrupulous individuals you may come across IRL. Also, make sure you always keep your passwords and/or passphrases safe so you don’t forget them and lose access to them. I mean, it would be really painful if you lost access to your $69 Million investment just because you forgot what your password is!