Fact Sheet - NFT
Updated: Mar 23
DISCLAIMER - The information on this page is not intended as financial or investment advice. The Demystify Cyber team are interested in the technology behind NFTs and how they can be used practically both in the metaverse and as an emerging technology that can work in conjunction with existing systems. This is for fun and educational purposes for those interested in technology. For financial or investment advice, please contact a financial advisor.
What is the definition of an NFT?
An NFT is a non-fungible (digital) token. When something is fungible it means it can be replaced with an identical item, when it is non-fungible it means it is a one-of-a-kind. An NFT is a digital asset that is unique, it is authenticated and stored in a blockchain making the provenance digitally assured. They are minted (similar concept to minting a physical coin) on blockchains based on widely accepted token standards.
Unlike cryptocurrencies, NFTs don’t have monetary (more specifically innate) value, their value is in the eye of the beholder. For example, if you are a Diego Maradona fan and you could buy the ticket to his infamous “Hand of God” match, you would be more likely to spend money on this compared to someone who is not a fan of Diego Maradona. In this example, the NFT is the ticket to the match.
NFTs are currently most commonly known for their art, so we will focus on NFT art in this post. Even though they are most commonly known for art, it’s worth knowing that there are a range of uses for NFTs and they will be a key part of the evolving metaverse in the future.
For consistency, we will refer to Solana-based NFTs throughout this post. Solana is currently the most common blockchain used for NFTs due to the high speed and low cost of transactions.
Where can I see or buy NFT art?
The most common exchanges for Solana based NFT art are Solsea (solsea.io) and Solanart (solanart.io). While browsing your chosen exchange, you will see that NFTs are usually part of a Collection.
An example of a collection is below:
Below is an individual piece of art within the collection:
From an original illustration by A. Turner
The token address for this NFT is Ftt5bY2hvWxfWrLYfqYKrNgjgnXdXqyMTbbH8c7EewQ2 and can be found by searching that token address on Solscan (Solscan.io) which is an explorer used to search the Solana blockchain. This is the actual minted token explained earlier.
How do I buy NFT art?
To buy NFT art, you will need a wallet with the relevant cryptocurrency. As we are focusing on Solana based NFTs in this post, you will need:
1. A Solana-base crypto currency wallet
Phantom wallet (phantom.app) is a free and easy to use Solana wallet.
2. Solana cryptocurrency
In our NFT giveaway blog post we explained how to install Phantom and also how to purchase Solana. Please check that post for those steps.
Are NFTs secure?
NFTs are a digital asset that need to be protected by cyber security practices like any digital asset that is accessible via the internet. The blockchain is decentralised by design which limits law enforcement’s ability to respond to crimes conducted on the blockchain, this means there is extra imperative on the user to ensure their digital assets are secure because it is unlikely that your digital assets could be recovered or the criminal apprehended if you are victim of a cyber attack.
The following fundamental cyber security practices still need to be applied and contributes to reducing the risk of your NFT collection being impacted by cybercrime:
Always backup your wallet’s secret phrase in a secure location
Use unique and complex passwords (best managed by a Password Manager)
Consider using wallets with multi factor authentication (MFA)
Keep your computing devices up to date with relevant security patches
Perform regular anti-virus scans on your computing devices
Be wary of scams - while the NFT is verifiable, users can still fall susceptible to social engineering scams.
In some cases, NFTs purchased by individual art lovers may become inaccessible. When a user purchases an NFT, they actually get a reference to the file where the artwork is stored. This artwork is not actually logged into the blockchain, it can be stored anywhere. NFT platforms may decide to close their windows whenever they want. As a result, a user cannot display his file although it still exists (Hacken, 2021)
In conclusion, NFTs are a fascinating new technology that will grow in usage in the future.
While the NFT art ecosystem will continue, the recent hype surrounding NFT art will likely subside and more practical NFT use cases will be seen in the metaverse, augmented reality and hybrid NFT/physical assets.
NFTs are not inherently secure so you will need to apply the same cyber security considerations to NFTs as you would with any digital asset.
NFT investing for wealth growth is risky - do your research!
We hope you find this technology as fascinating as we do and we hope we helped you take the first step to understanding NFTs and their use cases.
Contact us at hello[at]demystifycyber.com.au if you have any questions!
Hacken. (2021, December 29). Are NFTs Safe? How to Ensure Security of Your NFTs? Hacken. Retrieved January 7, 2022, from https://hacken.io/researches-and-investigations/are-nfts-safe-how-to-ensure-security-of-your-nfts/ .
Written by C. Byrnes
© C. Byrnes 2021 https://www.demystifycyber.com.au/
Provided for general information and education purposes