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The Hidden Dangers of IPFS in NFT Metadata Storage: Considering the Potential Benefits?

IPFS implementations that are not properly utilized can result in art being unavailable, leaving NFTs as tokens with no value. This issue has been a common experience for several prominent platforms, including Ascribe, Digital Objects, Editional, and FTX. Despite the success of eBay’s KnownOrigins marketplace, there are still many NFTs that need to be addressed about IPFS. The latest examples highlight the importance of taking a more comprehensive approach and emphasize the potential risks involved.

This situation highlights the need for maintaining a constant supply of NFT metadata, particularly for valuable digital art. IPFS, which was first created by Protocol Labs in 2015, is designed to provide ‘a decentralized, resilient and permanent storage’ option for storing and sharing data within the NFF ecosystem and appears to be an ideal solution for managing metadata such as photographs, videos, and other digital assets.

By attaching metadata to the IPFS network, creators can theoretically preserve their work’s accessibility and immutability while avoiding link rot caused by expired or broken links. However, this is not always the case. NFTs are left without the fundamental metadata that gives them value, making them unappealing objects with no intrinsic aesthetic value.

Furthermore, IPFS requires a network of nodes, which can be unstable and potentially cause outages. The recent case of eBay’s KnownOrigins marketplace is reminiscent of previous attempts to resolve the issue by using outdated or incorrectly configured IPBS links. XCOPY’s highly sought-after digital art and other NFTs are at risk of being made unavailable, potentially causing financial strain for these marketplaces, artists, or collectors.

To address these risks, NFS must prioritize maintaining metadata integrity and making it more accessible to the public through alternative methods like Arweave or Filecoin, which offer decentralized storage solutions that provide an alternative option to IPFS. In many cases, these solutions offer additional features such as incentivized node operation and built-in redundancy to ensure the long-term availability of metadata.

Furthermore, marketplaces and creators must adhere to best practices for IPFS implementation, which include regular link maintenance, backup and redundancy strategies, and contingency planning for nodes outages or link rot. In this way they can reduce the risk that metadata becomes unavailable, and preserve the value and integrity of NFTs.

As the NMT market continues to evolve, it is essential to understand IPFS and its limitations in order to effectively manage them. By being cognizant of these risks and taking proactive steps to ensure that metadata remains permanent and accessible, marketplaces, creators or collectors can preserve the value and integrity of their digital assets in perpetuity.

In essence, the recent KnownOrigins marketplace incident serves as a clear example of how improperly implemented IPFS can pose significant risk on eBay’s behalf. In an ever-evolving NFT ecosystem, it is imperative that stakeholders prioritize the preservation of metadata and take proactive steps to ensure the ongoing availability and sustainability of digital assets.

For more information on the potential benefits and risks of IPFS in NFT metadata storage, read our article on “IPFS in NFT Metadata Storage: Understanding the Benefits and Risks”.