Nonfungible tokens (NFTs) have been touted as blockchain-based technologies, but according to two experts, there are misconceptions about where they are actually stored. Jonathan Victor, the Web3 storage lead at Protocol Labs, and Alex Salnikov, the co-founder of Rarible, delved into the topic of decentralized storage and the future of NFTs in an interview with Cointelegraph.
Victor pointed out that main chains have limited storage capacity, making it expensive to store data on the blockchain. To overcome this challenge, off-chain storage solutions have been introduced for NFTs, which can be stored anywhere from a hosted node to decentralized storage networks. He emphasized that the data associated with NFTs exists outside the blockchain.
Salnikov echoed this sentiment, highlighting the misconception surrounding NFT storage. While the transaction itself is confirmed on the blockchain, the actual file is stored elsewhere. However, both experts agreed that NFT storage can still be considered decentralized. Victor explained that their project, NFT.Storage, achieves this by utilizing decentralized storage networks like Filecoin and the InterPlanetary File System (IPFS), storing NFTs as a public good similar to the internet archive.
In the case of Rarible, Salnikov shared that they also utilize IPFS for storing NFTs. However, to ensure data integrity, they have integrated with NFT.Storage, which combines storage on Filecoin and IPFS.
Looking ahead, Victor predicted that NFTs will represent a wider range of digital goods, leading to the emergence of more use cases. He also believed that the upcoming merge on the Ethereum network could potentially boost NFT prices. On the other hand, Salnikov envisioned a multichain future for the NFT space, with a focus on democratizing storage and access for NFTs.
When asked about investing in NFTs, the experts offered their advice. Victor cautioned investors against becoming forced sellers and recommended structuring portfolios in a way that avoids being compelled to engage in a fire sale. He noted that NFTs tend to be less liquid. Salnikov advised taking a step back and considering the bigger picture, acknowledging that price volatility is inevitable in the market but emphasizing that the overall value of NFTs continues to rise.