A lot of NFTs are more centralised than collectors realise — Here is what you need to know about your new digital assets
NFTs have been marketed as a radical, new form of digital ownership that is independent of the whims of centralised corporations. Unlike digital goods in mobile games, which are traditionally tied to the server’s lifespan, NFTs are said to be truly “ownable.” In other words, you own the art as long as you own the token.
Despite the fact that NFTs are “decentralised,” majority of the primary NFT marketplaces, such as SuperRare, Rarible, and OpenSea, have centralised elements similar to any other webstore.
When you purchase an NFT, the token is stored on the blockchain; however, because on-chain storage of large files is prohibitively expensive, the art or media that the token represents is typically stored off-chain.
While the token portion of NFTs is fundamentally decentralised, the platform or artist who mints it determines the storage method for the metadata and media that an NFT hashes to. As a result, depending on the storage method chosen, the media aspect of many NFTs may rely entirely on companies maintaining centralised servers. The token will often point to either an HTTP URL metadata file or an IPFS hash.
This is a problem for collectors who want to ensure that they retain ownership of their NFT even if the centralised company that issued it ceases operations.
NFTs that rely on HTTP URL metadata files will never be completely “ownable” because they will always rely on the issuing organisation continuing to operate their server.
IPFS, or InterPlanetary File System, is a data-sharing and storage protocol based on a decentralised peer-to-peer network. This enables content-addressable storage (CAS), in which content can be hashed (cryptographically encoded) and referenced.
In theory, media stored with CAS via a protocol such as IPFS can be completely decentralised while remaining verifiable and unalterable. But reality is more complicated. This means that even if an NFT refers directly to IPFS-stored media, that media may still be dependent on a specific centralised marketplace’s IPFS node remaining operational.
One potential solution for older NFTs linked to centralised URLs could be for those centralised marketplaces to allow token owners to burn and re-mint those tokens with IPFS functionality. However, this is probably easier said than done.
As things stand, aside from NFTs where all assets are fully on-chain, the “centralised” NFT market will most likely go through some significant growing pains in terms of sustainability and permanence. Nonetheless, the space is more active than ever, and solutions are on the way.
The sooner that centralised NFT marketplaces acknowledge and embrace change, the better.
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