Home Ethereum Non-fungible tokens don’t live on the blockchain, experts say

Non-fungible tokens don’t live on the blockchain, experts say

Non-fungible tokens don’t live on the blockchain, experts say

Non-fungible tokens (NFT) are advertised as blockchain-based technologies, there are misconceptions about how they are stored according to two experts. They argued that these tokens technically do not exist on the blockchain but are in fact stored elsewhere.

In a Cointelegraph interview, Jonathan Victor, Head of Web3 Storage at Protocol Labs, and Alex Salnikov, Co-Founder of Rarible, discussed decentralized storage, the future of the NFT space, and investing in NFTs. .

According to Victor, mainchains are very limited in size and storing data on the blockchain can be very expensive. Due to the large size of asset files, off-chain storage solutions are introduced. He said NFT data can live anywhere from a hosted node or decentralized storage networks.

Salnikov also weighed in on the subject, saying that since NFTs are a new concept, there can be a lot of misconceptions about how NFT storage works. He said the transaction is confirmed by the blockchain, but the file is somewhere else. He explained that:

“It’s important to understand that the living NFT in a user’s wallet only points to the file it represents – the file itself, also known as an NFT’s metadata, is usually stored elsewhere. .”

Despite this, experts have noted that NFT storage can still be considered decentralized. Victor explained that their NFT.Storage project does this using decentralized storage networks like Filecoin (THREAD) and the Interplanetary File System (IPFS). Thanks to this, they are able to store NFTs as a public good, similar to Internet archives. He said that:

“When we think of decentralization – I like to frame it in terms of whether there is a single point of failure. Simply storing data off-chain does not introduce centralization – as long as we do it in a way thoughtful.

Salnikov also shared that on the Rarible NFT marketplace, they store NFTs using IPFS. However, to further improve data integrity, the co-founder of Rarible said he integrated NFT.Storage, which implements both Filecoin and IPFS storages.

Related: Worthless JPEG: Redditor turns NFT reviews into NFT

When asked about the future of the NFT space, experts shared their predictions. Victor believes there will be more digital assets represented by NFTs and more use cases will emerge. He also believes that the upcoming merger on Ethereum (ETH) can help drive up NFT prices. On the other hand, Salnikov shared that their view of the space is multi-chain and that’s why they are trying to democratize storage and access to NFTs.

When asked if it was a good idea to invest in NFTs now, the experts gave some of their advice. Victor warned investors not to put themselves in a situation where they would be forced sellers. He said NFTs are often less liquid and advised investors to structure their portfolios so that they are not forced into a fire sell.

Meanwhile, Salinkov shared things he keeps in mind, like taking a step back and looking at the bigger picture. He explained that there will always be market price volatilitybut from a broader perspective, NFT value remains on the rise.