Nonfungible tokens (NFTs) have been praised as revolutionary blockchain-based technologies, but experts have pointed out misconceptions about where these tokens are actually stored. During an interview with Cointelegraph, Jonathan Victor, the Web3 storage lead at Protocol Labs, and Alex Salnikov, the co-founder of Rarible, discussed the storage of NFTs, the future of the NFT space, and investing in NFTs.
Victor highlighted the limitations of main chains in terms of size and cost when it comes to storing data on the blockchain. Due to the large file sizes of assets, off-chain storage solutions have been introduced. He explained that NFT data can be stored in various places, such as hosted nodes or decentralized storage networks.
Salnikov further emphasized that there can be misunderstandings about how NFT storage works since it is a relatively new concept. He clarified that while the transaction is confirmed by the blockchain, the actual file is stored elsewhere. However, both experts agreed that NFT storage can still be considered decentralized.
Victor elaborated on how their project, NFT.Storage, achieves decentralized storage by utilizing networks like Filecoin and the InterPlanetary File System (IPFS). This allows them to store NFTs as a public good, similar to the internet archive.
Salnikov mentioned that Rarible, an NFT marketplace, also utilizes IPFS for storing NFTs. To ensure data integrity, they have integrated with NFT.Storage, which combines storage solutions on Filecoin and IPFS.
Discussing the future of the NFT space, Victor predicted an increase in digital goods represented by NFTs and the emergence of new use cases. He also suggested that the upcoming merge on Ethereum may contribute to a boost in NFT prices. Salnikov shared their vision of a multichain NFT ecosystem and their efforts to democratize storage and access for NFTs.
When asked about investing in NFTs at present, the experts offered their advice. Victor warned investors against becoming forced sellers and recommended structuring portfolios to avoid being compelled into a fire sale. He acknowledged that NFTs are often less liquid. Salnikov advised investors to take a step back and consider the bigger picture, acknowledging that market prices can be volatile but asserting that the overall value of NFTs continues to rise.