NFT Wallets Explained (for Beginners)
Are you looking to join the new and exciting world of NFTs? Most NFT marketplaces will require you to use cryptocurrencies to make purchases on their platform. In order to participate, you’ll need the right tools.
One of the essential tools is an NFT wallet. You can’t really go shopping without your wallet, and you won’t be able to collect NFTs without an NFT wallet.
Once you learn what an NFT wallet is and how it works, you’ll be able to buy, store, and manage all your NFTs with ease.
What’s an NFT Wallet?
NFT wallets are digital wallets that allow you to store NFTs alongside cryptocurrencies. They can be software applications or pieces of hardware and allow you to digitally store your NFTs. NFTs are digitally native, as they’re recorded on a blockchain - digitally distributed, decentralized ledgers that store information across a network.
NFT wallets are essentially digital versions of a wallet; the only difference is that access to the funds are facilitated through the use of a digital address and private key. A digital address is a set of letters and numbers that you share to send and receive NFTs. A private key is a set of letters and numbers that allows you to access and manage your crypto funds – like a password that you shouldn’t share with anyone. When you create an NFT Wallet, both a private key and an address are generated automatically.
How do NFT Wallets Work?
A digital wallet address works like an email address, and a private key works like a password giving you access to that address.
The complexity of private keys make NFT wallets much harder to hack. Storing these digital assets in NFT Wallets provides added security for users.
NFT Wallets also make transferring NFTs easier because they provide you with a central location to store all your digital assets, regardless of where you originally purchased the NFT.
From there you can send NFTs to anyone, and even integrate your wallet with various sites - like marketplaces where you can use it to make purchases, or even social media platforms, like displaying an NFT as your Twitter profile picture.
NFT Storage Options
There are a few different types of wallet options for NFTs. You’ll want to make your choice depending on the amount of NFTs you plan to own and your desired security level.
Hot Wallets vs Cold Wallets
Hot wallets and cold wallets are the two primary types of NFT wallets. Cold wallets are usually pieces of hardware and more secure because they aren’t always connected to the internet, and therefore can’t be easily hacked.
Hot wallets are connected to the internet and of greater convenience because they don’t require physical hardware, but are more vulnerable to being hacked.
There are pros and cons to both hot and cold wallets, and the choice of which type to use is dependent on the collector’s preferences for purchasing and storage.
InterPlanetary File System (IPFS)
The InterPlanetary File System is a peer-to-peer global storage network. You can think of it as an external hard drive spread across the world on different nodes that connect and maintain the network. Many people share these nodes and certify the data’s fidelity.
Storing your NFTs on IPFS can prevent modifications from being made by a centralized authority. So if your NFT data is stored on IPFS, it would remain on IPFS even if an NFT marketplace crashes, fails, or goes bankrupt. You’re not solely dependent on a company storing your digital assets.
IPFS is supported by major NFT marketplaces like Opensea and seen by many as essential to the digital economy.
Choosing an NFT Wallet
Some marketplaces are currently only compatible with certain wallets. In these instances, the choice is made for you. When you can choose the wallet, there are few things you will want to consider.
As we mentioned, you don’t always have the option to choose your NFT wallet because of marketplace requirements. For example, the popular NFT project NBA Top Shot is built on the Flow blockchain and you must use the Dapper wallet to store the NFTs.
However, many NFT marketplaces allow you to pick and choose from a variety of different NFT wallets. Because most NFTs are built on the Ethereum blockchain, the vast majority of NFT wallets are compatible with Ethereum.
Consider Cryptocurrency Holdings
If you plan to take part in crypto trading in addition to holding NFTs, you should also ensure your wallet can store the coins you’d like to own and/or trade. Similar to how wallets need to be compatible with NFT marketplaces, wallets also need to be compatible with the cryptocurrencies you own.
For example, if you hold Bitcoin, you won’t be able to hold that cryptocurrency on an NFT wallet that caters mainly to the Ethereum blockchain (like MetaMask). In that case, you’d need two separate wallets - one for crypto and one for NFTs.
Many wallets cater to multiple blockchain networks such as Ethereum, Solana, or Avalanche. Other wallets may require you to manually add different blockchains.
Popular NFT Software Wallets in 2022
A majority of the NFT world is on the Ethereum blockchain, and MetaMask is one of the most popular wallets of choice for easily accessing the Ethereum ecosystem. MetaMask was created by the company Consensys, which was founded by Ethereum co-founder Joseph Lubin.
Many popular NFT marketplaces and projects recommend using MetaMask directly on their website and make it a requirement for participating in their marketplace.
Trust Wallet is a blockchain agnostic crypto wallet that’s the certified wallet of Binance. You can hold cryptocurrency from some of the biggest blockchains including Bitcoin, Ethereum, and Solana.
Trust Wallet also allows you to store NFTs from the Ethereum (ETH) and Binance Smart Chain (BSC) networks. Trust Wallet may add support for NFTs from other blockchains, but for now these are the main two networks that are supported.
Coinbase is known as one of the world's largest crypto exchanges, but they also offer a wallet that can be used for NFTs. This wallet has access to some of the most popular blockchain networks like Bitcoin and Ethereum, but isn’t integrated with Binance Smart Chain, meaning you can’t store any BSC tokens on the Coinbase Wallet.
MathWallet is a multichain NFT wallet with similar functionality to MetaMask. It can be viewed as a MetaMask alternative for those looking to participate on the Bitcoin blockchain. Both MathWallet and MetaMask are integrated with hardware wallets (most notably the hardware wallet Ledger) and both platforms have access to the BSC and ETH blockchains.
Notably, several popular NFT marketplaces such as Opensea and Rarible don’t integrate with MathWallet.
Dapper is an NFT wallet created by Dapper Labs, the company behind NBA Top Shot NFTs. You can only use Dapper for storing NBA Top Shots because their entire ecosystem was built on the Flow blockchain, which was created specifically for NBA Top Shot.
Dapper does still have a legacy Ethereum-based wallet as a Chrome extension and OpenSea also offers an integration with this wallet.
Q: How do I get an NFT Wallet?
A: Anyone can sign up for an NFT wallet by visiting the company’s specific website and creating an account following their instructions. In order to use an NFT wallet you typically need to convert fiat to cryptocurrency and use that cryptocurrency to purchase and store any desired NFTs.
Q: What is a cold NFT Wallet?
A: A cold NFT wallet, or hardware wallet, is not connected to the internet at all times and is therefore much harder to hack - thus providing better security. A hot NFT wallet is a software wallet that lives on the internet.
Q: Can an NFT Wallet be Hacked?
A: Software NFT wallets, or hot wallets, can in theory be hacked, especially if your computer has been compromised in some way. In order to fully minimize the risk of being hacked, be sure to never expose your private key to the public, and try to memorize it.