Experts Say Immutable Tokens do not Live on The Blockchain

According to two experts, there are misconceptions about the storage of blockchain-based technologies (NFTs). Technically, they argued that these tokens do not exist on the blockchain, they are actually stored in a different location.

In a Cointelegraph interview, Protocol Labs Web3 storage lead Jonathan Victor and Rarible co-founder Alex Salnikov talked about decentralized storage, the future of NFT space, and investing in NFTs.

According to Victor, mainchains are limited in size and storing data on the blockchain can be expensive. Off-chain storage solutions were introduced due to the large file sizes of the assets. He said NFT data can live anywhere from a hosted node or decentralized storage networks.

Salnikov also stressed that there can be many misunderstandings about how NFT storage works. He said the transaction was confirmed by the blockchain, but the file is elsewhere. He explained this:

“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.”

Storage for NFTs can Still be Considered Decentralized.

Despite this, experts noted that storage for NFTs can still be considered decentralized. Victor explained that the NFT.Storage project does this using decentralized storage networks such as Filecoin (FIL) and Interplanetary File System (IPFS). With this, they can store NFTs in the public domain, similar to an 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 said that in the NFT market, they store NFTs using IPFS in Rarible. Also, the Rarible co-founder said that to improve data integrity, they have integrated with NFT.Storage, which implements stores in both Filecoin and IPFS.

Related : NFTs Have Real World Use Cases Not All Are Valuable

Experts shared their predictions about the future of the NFT field. Victor believes that more digital products represented by NFTs will become available. He also believes that the upcoming merger in Ethereum (ETH) could boost NFT prices. On the other hand, Salnikov shared that their vision of space is multi-chain and therefore they want to democratize the storage and access of NFTs.

Experts, gave advice on whether investing in NFTs is a good idea. Victor warned investors not to put themselves in a situation where they would be forced sellers. He said NFTs are generally less liquid and advised investors to structure their portfolios so that they are not forced into a fire sale.

Meanwhile, Salinkov shared what was on his mind, like taking a step back and looking at the big picture. He explained that there will always be price volatility in the market, but from a broader perspective, the value of NFT will increase.

Experts
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