The NFT market is in its early stages of development, so it still has unresolved issues. For example, sometimes the media file from the NFT is stored on the servers of the company that issued the token. If it closes or goes bankrupt, then instead of valuable digital art, the user will own a token with a “404 Error”.
This article will tell you how to choose a safe NFT, as well as what to look for when buying. For NFT holders, we will show you step by step how to verify and secure your token.
We will give you 5 tips on how to choose a safe NFT before purchasing. As an example, we will use tokens from the OpenSea marketplace. It is the easiest way to find the information you need.
Checking the trading history
Some creators sell NFT’s to themselves in order to inflate their value. Using the addresses of past owners and purchase dates, you can determine that the price of the token is artificially high.
In the “Trading History” section, select the “Sales” filter to display only sales. There are 3 signs that an NFT is being artificially overpriced:
- Buyers have not made any transactions before. This information is visible in the “Activity” tab on the account page.
- Transactions were made in a short period of time.
- The same account bought the token several times.
Not all sites for creating NFT’s require mandatory verification of identity. For example, on OpenSea, anyone can upload a token on behalf of Elon Musk. The account will be named “Elon Musk” and the link will lead to the official Twitter page. But if you follow this link, you won’t find the tweets in which Musk talks about the NFT release on OpenSea.
If the NFT is created by a well-known artist or a public person, then he can go through account verification. Then a verification checkmark will appear next to its name, as in Instagram or Twitter.
Another way to make sure that the NFT is original and not created by a scammer is to check the specified links. Even if they lead to verified social media pages, search them for NFT releases or links to marketplaces. If you do not find such information on the indicated pages, then most likely the creator is a scammer.
Smart contract verification
Smart contracts are responsible for issuing NFTs. These are programs that describe the rules for creating tokens and how to use them. You can find out which contract is responsible for the issuing of the NFT in the “Contract Address” line in the “Details” section.
If you click on the Contract Address, the smart contract page will open in the Etherscan blockchain explorer. It is impossible to assess the security of a contract without programming knowledge.
But if you go to the “Comments” tab, you can read the reviews of other users. Negative comments will be cause for concern. Perhaps the project is already closed or the developers are not fulfilling their obligations.
Media file from NFT
The Ethereum blockchain, on which most NFT’s are built, was not designed to upload files to the blockchain. Therefore, ERC-721 and ERC-1155 tokens contain only a link to the media file. And the images or videos you buy as NFT can be stored anywhere. We will show you how to check where the NFT media file is stored.
Some tokens on OpenSea have a “Metadata” line under the “Details” section. If it says “Centralized”, then the media file is stored in the centralized storage, but the creator of the NFT cannot change it. If it says “Editable”, then the creator can change it. But the problem is that not all NTF’s on OpenSea have such a line in the “Details” section.
In order to find out information about NFT, you need a token ID. It is written below the “Contract Address” line in the “Details” section. This is the serial number of the NFT in the smart contract. Sometimes the Token ID is not displayed in full because it contains too many digits.
In this case, the easiest way to find the full Token ID is in the URL bar — these are the last digits in the link starting with the last “/” symbol.
The Contract Address and the Token ID will be needed to find out how securely the file from the NFT is stored.
To view information about NFT, use the CheckMyNFT website. The service only supports ERC-721 tokens. This method is suitable even for those users who have never encountered program code before.
CheckMyNFT home page with fields for entering the Contract Address and the Token ID
Enter the Contract Address and the Token ID in the appropriate fields and click “Check My NFT”. The service will find information about the token and will assess the security of file storage. There are 3 possible options:
- «💔Poor» — means that the file from the NFT is hosted centrally. The storage owner can change or delete it.
- «💛Medium» — means that the file from the NFT is stored on the IPFS nodes. No one can change it, but there is a chance that it will be removed.
- «💚Strong» — means the file from the NFT is stored on the blockchain. The likelihood that it will be changed or removed is minimal.
How to secure NFT
There are blockchains that are designed for storing media files. For example, the Arweave blockchain stores files from the Hashmasks, Avastars and Autoglyphs NFT collections. These projects use 2 blockchains: Ethereum for the token and Arweave for the media from the NFT.
An alternative solution is blockchains created specifically for NFTs. For example, the creators of the Foil Network blockchain have developed a new standard for a non-fungible token called Pure NFT. With it, both the token and the media file are stored in the blockchain.
This is possible thanks to the fees optimization and high block capacity. For example, uploading a file with a resolution of 7000×7000 and a size of 15 MB to the Foil Network blockchain cost $1,500. By comparison, uploading a file of several kilobytes to the Ethereum blockchain will cost thousands of dollars in gas fees. And for a megabyte you will have to pay almost a million dollars.
After the creation of NFT, it is no longer possible to replace centralized file storage with decentralized one. However, if the media file from NFT is stored on IPFS, then the level of its security can be increased. The IPFS2Arweave website allows you to upload data from IPFS to the Arweave blockchain for free. Thus, Arweave becomes an additional node on the IPFS network. The file will be simultaneously stored in both the IPFS network and the Arweave blockchain.
On the CheckMyNFT website, you can do it with one click. After checking the NFT, it is enough to click on the “Upload to Arweave (for free)” button. After a couple of seconds, the safety rating will increase from «💛Medium» to «💚Strong».
CheckMyNFT site tab that offers increased security for NFT
If the NFT standard differs from ERC-721, the CheckMyNFT website will generate an error. Ask an acquaintance who knows a little about programming to help you. He will need to manually upload the link to the IPFS file from the NFT code to the IPFS2Arweave website.
In this article, we examined the points to look out for when assessing the reliability and protection of NFT:
- trading history helps to identify artificial price cheating;
- verification mark and external links give you the opportunity to verify the authenticity of the NFT;
- using the Contract Address and the Token ID, it is possible to find out the file storage location from the NFT.
For those who already have an NFT, we’ve shown how to increase the security of a token using the CheckMyNFT and the IPFS2Arweave websites.