Benefits of Decentralized Storage for NFT Projects

NFT collectors talk about where the artwork associated with the token is stored. This usually happens in one of three ways. Centralized storage, decentralized storage, or on-chain, meaning actually written to the blockchain.

Centralized Storage is the Status Quo

Centralized storage is something we’re all pretty familiar with because that’s the way the web has worked for as long as browsing websites has been a thing. When your favorite creator uploads a video to YouTube or shares an image on Instagram, they are storing those images in the centralized storage of those centralized services. If YouTube or Instagram ever decide to remove those files, they’re gone forever. You won’t be able to find them again (unless they were also uploaded to some other centralized service. The same holds true for centralized storage solutions for NFTs. If the media file associated with your NFT is hosted on a centralized service and the owner of that service stops paying the hosting company to store it, the media file is gone forever.

Decentralized storage solutions help address this issue because they don’t rely on a single point of failure the way centralized storage does.

IPFS as a Decentralized Storage Solution

One of the approaches to decentralization of file storage and hosting is the Interplanetary File System (IPFS). Typically file hosting works by uploading a file to the server of a single company. Using YouTube as an example, if you upload a video to YouTube, the only way to access that video is through a URL. Even when a YouTube video is embedded in a Facebook post, is where the video is coming from. If YouTube becomes inaccessible, that video is gone from both Facebook and YouTube.

IPFS works differently from centralized file hosting in that a single person or company might originate a file, but that file can be hosted by anyone. IPFS works by creating content identifiers, which basically are a unique ID that represents the content you shared. If the creator of an NFT originally shared the file via IPFS, you could also share it, and so could anyone else hosting an IPFS node. So by using an IPFS link to identify the media associated with an NFT, even if the original person who shared the file stops sharing it, any other IPFS node could decide to share that file and make it available.

On-Chain Storage is the Ultimate Decentralization

A few NFT projects have taken decentralized storage to the next level by putting the NFT metadata on-chain. This means that just like the NFT token, the image, video, or audio data associated with the NFT is written directly to the blockchain. As long as the blockchain exists, everything about the NFT continues to exist along with it with no additional technologies in the mix. Some well known examples of on-chain NFTs include Moonbirds and Cryptopunks.

While on-chain storage does represent the most permanent approach to storing NFT metadata, it is also the most complicated for many projects to execute. If you are evaluating the quality of a project, checking to see if they are using IPFS or Arweave’s “forever storage” is a solid signal the team is taking the project more seriously than someone who is hosting the images on the project’s web domain.