Purchasing and Displaying NFT Art at Home: Expert’s Advice
September 7, 2022
Nothing beats an explosion of blockchain news to leave you wondering, “Um… what’s going on here?” That’s how I felt when I read about Grimes being paid millions of dollars for NFTs or Nyan Cat being sold as one.
The situation has only gotten more complicated in the year since NFTs became popular. Images of apes have sold for tens of millions of dollars, headlines about million-dollar hacks of NFT projects abound, and corporate cash grabs have only gotten worse.
All of this news may have left you wondering: what exactly is an NFT?
After consulting with a group of NFT experts, I believe I’ve figured it out.
Okay, let’s start with the basics.
What is an NFT?
An NFT is a Non-Fungible Token (a unique digital token), which many see as a certificate of authenticity, or a deed or proof confirming you own the right to display the above art on your wall or in your wallet (digital wallet). It might give you the right of ownership of the copy you bought (for your private use) but not necessarily over the ownership of the original artwork. Production rights and copyright are automatically retained by the artist unless otherwise specified in the contract. Regardless, non-fungible means ‘irreplaceable’ since each token is unique. And ‘Unique’ creates scarcity which, in turn, increases the market value for NFTs.
An NFT is technically an ERC-721 token on the Ethereum Blockchain. Another meaning of ERC is a ‘collectible’. The artwork is minted into the ERC-721 token. This token contains:
The historical information of any transactions plus artist information (including the artist’s public key) plus the number of likes (see the tiny ‘heart’ symbol above the image in the NFT).
A unique identifiable number = the token ID (click ‘chain info’)A picture of the art
A smart contract (the NFT is effectively a smart contract – you don’t need humans to sign signatures). Standard copyright law applies, and more specific conditions can be added to the description section.
A list of unlockables (additional optional extras e.g., a table mat or even a jigsaw with the art printed on it accessible via a link in the description.
NFTs can include art (paintings, graphics, videos, GIFs, songs, poems, tweets, posts even video games, virtual real estate, books), even birth certificates, and an awful lot more. Fungible means ‘replaceable by another identical item’. Non-fungible means are irreplaceable or unique. Another way of thinking about NFTs is as a process of documenting authorship and ownership.
Paul Smith from PR Smith
How can I minimize the risks of investing in NFTs?
Non-fungible tokens are taking the digital work with the many benefits they offer to both creators and investors. However, as NFTs are a relatively new asset class, they come with a unique set of risks. Before you invest in the market, you need to understand how to minimize the risks involved. Whether you are collecting NFTs for investment reasons or just for the love of art, there are two important steps you must always take into consideration: the security of the transaction and the storage of the NFTs.
One of the main NFT risks threatening investors is scams. Malicious actors may impersonate popular platforms, wallets, or well-known artists and sell fake artworks to unsuspecting customers. For this reason, it is always important to do your research on which wallet you are transferring your money to and where you are getting the money from. Checking the provenance of the work can also help you avoid falling victim to scams. Platforms usually provide guidance on how to make sure that the artwork was minted by a real artist.
Once you have purchased an NFT, you can move it to cold or warm storage. The warm storage, such as Coinbase or MetaMask, is connected to the internet, making it easier for hacking to take place. Even if the platforms use the most advanced security measures, with the failure to securely store passwords, hackers can easily steal users’ non-fungible tokens. If you want to secure sensitive data, we recommend using cold storage or hardware, such as Ledger or Trezor. These options are safer as all key information is on the device, protected by password or touch authentication, and more difficult for threat actors to access. The only risk of storing your NFTs in hardware storage is the loss or damage to the device. For this reason, many users own two cold storages, which is probably the best solution to protect your assets.
Agnes Flora Ferenczi from Kate Vass Gallery