Let me not assume that we know what NFTs are, even though NFTs have been making rounds in the news this recent. For a recall, permit me to reiterate.
What Are NFTs?
Non-fungible token (NFT) is a non-interchangeable digital asset such as a piece of art, a photograph, song, video or just about anything whose ownership has been authenticated and stored on a database called a blockchain and which can be collected, sold, and traded on various online platforms.
The statement above is what we have known an NFT to be or should be. However, change is absolute and definitions can be modified to suit or alter discoveries. What if I told you NFTs maybe not stored in a blockchain?
NFTs Are Not Stored In A Blockchain Experts Say
There are growing misconceptions or controversies about how NFTs are stored. Two experts Jonathan Victor the Web3 storage lead at Protocol Labs and Alex Salnikov the co-founder of Rarible argue that NFTs are rather stored elsewhere but technically do not exist in the blockchain.
According to Victor, main chains are very limited in size and storing data on the blockchain can be very costly. Off-chain storage solutions are often introduced because of the large file sizes of assets. He continued by saying that NFT data can live anywhere from a hosted node or decentralized storage networks.
Salnikov also made a submission saying that since NFTs are a new concept, there can be a lot of misconceptions about how NFT storage works. He said that the transaction is confirmed by the blockchain, but the file is located somewhere else. He explained that:
“It is important to understand that the NFT living in a user’s wallet only points to the file it represents — the actual file itself, also known as an NFT’s metadata, is typically stored elsewhere.”that:
Despite this, the experts remarked that storage for NFTs can still be considered decentralized. Victor explained that their project NFT.Storage does this by using decentralized storage networks like Filecoin (FIL) and the InterPlanetary File System (IPFS). With this, they can store NFTs as a public good, similar to the internet archive.
He said “When we think about decentralization — I like to frame it in terms of whether there’s a single point of failure. Simply storing data off-chain doesn’t introduce centralization — so long as we’re doing it thoughtfully.”
Salnikov also shared that in the NFT marketplace Rarible, they stored NFTs using IPFS. However, to further enhance data integrity, the Rarible co-founder said that they integrated with NFT.Storage, which implements both storage on Filecoin and IPFS.
When asked about the future of the NFT space, the experts shared their predictions. Victor believes that there will be more digital goods represented by NFTs and more use cases will pop up. He also believes that the upcoming merge on Ethereum (ETH) may help boost NFT prices. On the other hand, Salnikov shared that their vision of the space is multichain and this is why they are trying to democratize the storage and access of NFTs.
According to these two experts when asked to share their thoughts about the future of NFTs, they echoed that it is a good idea to invest for now. Victor further cautioned investors not to put themselves in a situation where they would be forced to sell when they don’t plan to. He added that NFTs are often less liquid and advised investors to structure their portfolios in a way that they are not forced into a fire sale.
Meanwhile, Salinkov shared things that he keeps in mind like taking a step back and looking at the bigger picture. He explained that there will always be price volatility in the market, but looking from a broader perspective, the NFT value remains on the rise.
Disclaimer: This post only represent the thought of a few persons and they do not speak in the generality of the public. However, we won’t disregard the thought and submissions of these two experts.
