Blockchain-based technologies known as nonfungible tokens (NFTs) are often misunderstood when it comes to their storage, according to two experts. Jonathan Victor, the Web3 storage lead at Protocol Labs, and Alex Salnikov, co-founder of Rarible, discussed the storage of NFTs, the future of the NFT space, and investing in NFTs in an interview with Cointelegraph.
Victor explained that storing data on the blockchain can be expensive due to the limited size of main chains and the large file sizes of assets. As a result, off-chain storage solutions have been introduced, allowing NFT data to be stored anywhere from a hosted node to decentralized storage networks.
Salnikov added that there are misconceptions about how NFT storage works because it is a new concept. He clarified that while the transaction is confirmed on the blockchain, the actual file is located elsewhere.
However, both experts agreed that NFT storage can still be considered decentralized. Victor mentioned their project NFT.Storage, which uses decentralized storage networks like Filecoin and the InterPlanetary File System (IPFS) to store NFTs as a public good, similar to the internet archive.
In the NFT marketplace Rarible, Salnikov explained that they store NFTs using IPFS, but to enhance data integrity, they have integrated with NFT.Storage, which utilizes both Filecoin and IPFS for storage.
When discussing the future of the NFT space, Victor predicted that there will be more digital goods represented by NFTs and an increase in use cases. He also believed that the upcoming merge on Ethereum may contribute to a boost in NFT prices. Salnikov shared a vision of a multichain NFT space and expressed their efforts to democratize storage and access to NFTs.
Regarding investing in NFTs, Victor advised caution, urging investors not to find themselves in a situation where they are forced to sell. He noted that NFTs can be less liquid and recommended structuring portfolios to avoid being forced into a fire sale.
Salnikov emphasized the importance of taking a step back and considering the bigger picture when dealing with price volatility in the market. He highlighted that, overall, the value of NFTs continues to rise.