How to store your million-dollar NFTs safely? Decentralized storage is your answer
Owning an NFT has become one of the biggest trends of 2021 but beyond that, it marks the transition of ownership towards digital immutable ownership.
While NFTs or Non-Fungible Tokens need no introduction, awareness regarding their core concept is still a major barrier to the sustainability of this space.
NFTs and Storage
NFTs represent ownership, but what exactly is owned? Is it the image you see, the copyrights to a digital asset, or just an entry in the ledger saying you own something?
In essence, buying an NFT allocates certain metadata to the user. This metadata represents the unique characteristics of a digital asset. Therefore, owning the metadata means that you own the digital asset being represented by it.
However, have you ever wondered where this metadata is stored?
There are different platforms available that facilitate the buying and selling of NFTs. Each of these platforms has its own structure in terms of technical implementation. From a number of characters, one of the most important ones is where the platform stores the data.
Most of the existing platforms choose to store the data on a centralized location such as a database or a cloud. When this data is about the user or their activity, it seems to be in sync with what the existing platforms do and no one really cares. But when this data is about the NFTs, the stakes are high.
The whole reason for integrating Blockchain is that decentralized storage of data is required to provide much-needed transparency, trust, and reliability in the current data-driven world.
Considering the importance of metadata for an NFT, the need for decentralized storage becomes paramount.
The need for decentralized storage
Consider a scenario where you buy a very rare NFT worth $1 Million. This NFT is in the control of a centralized platform. Later, you want to sell the NFT but when you open your account, it is not there.
The money you spent goes down the drain simply because the platform is keeping the data in their possession and even if you buy something, they hold it.
The NFT you bought was stored in the database of the platform and numerous possibilities follow. For one, what if the platform gets hacked? That’s not difficult to imagine. Other possibilities include manipulation, fraud, or even data loss.
Therefore, having centralized storage undermines the whole point of having a Blockchain-based system to induce trust and reliability.
The growing popularity of such platforms despite this shortcoming is a clear indicator of the lack of awareness in this space.
So what should you consider before buying an NFT? Decentralized storage.
Decentralized storage is the true component of the NFT space that should be available in every platform regardless of the technical structure.
The concept of decentralized storage says that the metadata or even the digital asset itself has to be stored on an anonymous network of computers. This data will be represented by a unique hash that can not be decoded or changed. This hash represents the ownership of the asset and acts as immutable proof.
One such decentralized storage system is IPFS or interplanetary file system which is a peer-to-peer network that uses concepts like content-addressing to map decentralized storage with original owners in a secured fashion.
Maintaining NFT Ownership
Does decentralized storage ensure the complete security of your NFTs? Absolutely not. Storage might be one of the major concerns but it is certainly not the only one.
Another crucial factor is where you maintain the reference of ownership. That is where wallets come into play. NFTs are just tokens that need to be stored in a cryptocurrency wallet. These represent a record on the Blockchain ledger which points to a hash on the decentralized storage.
Many platforms give the option of keeping NFTs on the platform which is another way of saying you can spend as much money as you want but you will never get the asset completely.
Possessing a digital asset should come with the advantage of trading it anywhere. Broader market visibility offering an unbiased ecosystem is one of the key reasons why the fourth industrial revolution and digitalization have become so important.
Therefore, rather than storing the NFTs on the platform, you should always store the NFT in your wallet. Storing in the wallet provides definite ownership, accessibility, security, and the possibility of listing on multiple platforms.