Web3 executives are advising creators to carefully weigh the benefits and drawbacks of on-chain versus off-chain storage for non-fungible tokens (NFTs), as each option presents unique advantages and challenges. In 2022, it was standard practice for NFTs to be stored off the blockchain, with blockchain-based NFTs merely pointing to external data storage locations. Jana Bertram from the Rari Foundation highlighted the vulnerabilities of this approach during the FTX bankruptcy, where NFTs hosted on FTX displayed blank images instead of the intended artwork due to off-chain storage issues.
The introduction of Bitcoin ordinal numbers, however, has shifted the landscape. These ordinals allow for on-chain storage of NFT data within the Bitcoin network, ensuring permanence but also sparking debates over the appropriateness and impact of NFTs on the Bitcoin network. This advancement has left Web3 creators contemplating the most suitable storage method for their NFTs, balancing between on-chain and off-chain options.
Witek Radomski, co-founder and CTO of Atlas Development (Enjin), points out that off-chain storage is more economical for handling large data volumes, whereas on-chain storage offers a secure, immutable repository. Radomski suggests creators assess the importance and needs of their NFTs to determine the ideal storage solution. Furthermore, he highlights hybrid solutions like Filecoin and the InterPlanetary File System (IPFS) that offer decentralized storage alternatives. These, he notes, are specially tailored for storage purposes, unlike Bitcoin, and offer decentralization benefits at a lower cost.
