Since non-fungible tokens (NFTs) are advertised as blockchain-based technologies, there are misconceptions about how they are stored, according to two experts. They argued that these tokens do not technically exist on the blockchain, but are actually stored elsewhere.

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In an interview with Cryptooshala, Jonathan Victor, Head of Web3 Storage at Protocol Labs, and Alex Salnikov, co-founder of Rarible, discussed decentralized storage, the future of the NFT space, and investments in NFT.

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According to Viktor, main chains are very limited in size, and storing data on a blockchain can be very expensive. Due to large asset file sizes, offline storage solutions are being introduced. He said NFT data could be stored anywhere, from a hosted node or decentralized storage networks.

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Salnikov also spoke out on the topic, stating that since NFT is a new concept, there can be many misconceptions about how NFT storage works. He said that the transaction was confirmed by the blockchain, but the file was somewhere else. He explained that:

“It’s important to understand that an NFT living in a user’s wallet only points to the file it represents – the actual file itself, also known as NFT metadata, is usually stored elsewhere.”

Despite this, experts noted that storage for NFTs can still be considered decentralized. Victor explained that their NFT.Storage project does this with decentralized storage networks such as Filecoin (FIL) and the Interplanetary File System (IPFS). Because of this, they can store NFTs as a public good, similar to the Internet Archive. He said that:

“When we think about decentralization, I like to frame it in terms of having a single point of failure. Simply storing data offline does not lead to centralization—if we do it thoughtfully.”

Salnikov also shared that on the NFT Rarible marketplace, they store NFTs using IPFS. However, the co-founder of Rarible said that to further improve data integrity, they have integrated with NFT.Storage, which implements storage on both Filecoin and IPFS.

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When asked about the future of the NFT space, experts shared their predictions. Victor believes there will be more digital goods represented by NFTs and more use cases. He also believes that the upcoming Ethereum (ETH) merger could help boost NFT prices. On the other hand, Salnikov shared that their vision of the space is multi-chain, which is why they are trying to democratize NFT storage and access.

When asked whether it is worth investing in NFT now, experts gave some advice. Victor warned investors not to get into situations where they would be forced to sell. He said NFTs are often less liquid and advised investors to structure their portfolios so that they are not forced into a sell-off.

Meanwhile, Salinkov shared things he remembers, like taking a step back and looking at the big picture. He explained that there will always be price volatility in the market, but in a broader perspective, the value of NFTs continues to rise.