Blockchain technology has realized the mapping of currency in the digital world, and has produced a series of homogenized encrypted digital currencies, which has created a wave of investment in encrypted currencies in recent years. Rather than the emergence of non-homogeneous token NFT, we see the possibility of mapping the entire real world.
Except currency, most objects in the real world are unique, and their traits and values are different. The characteristics of NFT can perfectly adapt to this situation and realize the generalization of different objects in the digital world. , Using the characteristics of the blockchain to be non-tamperable, open and transparent, and traceable to complete the mapping from the real world to the digital world, and then construct the long-awaited city of utopia-the meta universe.
However, due to the current technical bottleneck, NFT has not been able to achieve the above-mentioned idea perfectly. Due to the congested communication conditions on the chain, limited scalability, and high gas costs, the metadata and media data of NFT are not available. Completely stored on the chain, but chose to store under the chain, losing the protection of blockchain technology, this part of the data is not completely safe and reliable, which means that the current NFT has not been able to achieve encryption like Bitcoin . The reliability of currency is the same, but this is submerged in the enthusiasm for NFT, and it receives little attention.
According to data from coingecko, as of press time, the total market capitalization of the NFT market is 22.97 billion U.S. dollars, accounting for 1.2% of the global cryptocurrency market value, with a 24-hour trading volume of 3.25 billion, and it is still maintaining a strong growth momentum. The security behind the huge market value of NFT is very fragile. Due to the uncertainty of off-chain storage, NFT loss events occur from time to time. Once the corresponding metadata and media data become invalid, the NFT ownership certificate stored on the chain is just A worthless check without an acceptor. William Entriken, the author of ERC721, the most widely used NFT standard at present, once said: “Only if you trust the custodian who actually manages your assets, the ownership of your assets recorded on the ledger is valid.”
NFT is not safe now. Bitcoin and other cryptocurrency transaction information is completely stored on the chain, while NFT is different. Although its transaction process is also completed on the chain, due to its particularity, it often involves complicated Metadata and media data that require a large storage space are usually stored in the project’s own centralized server, third-party cloud server, IPFS, or MEFS (MEmo File System) and other NFT storage projects. These are complicated “Custodians” have different risk factors than on-chain storage.
In view of the fact that NFT storage has become the shortest piece of wood in the current NFT barrel, and as a key infrastructure of the meta universe, it will play an important role in the new social ecology in the future. This article will start from the underlying architecture of NFT, summarize the status quo of NFT storage, and delve into the opportunities and challenges faced by NFT storage.
The basic connotation of NFT
Basic concepts of NFT
The full name of NFT is Non-FungibleToken, and the Chinese name is non-homogeneous token. It is a non-homogeneous token derived from the Ethereum smart contract. As a unique digital asset, it has the characteristics of indivisible, non-tamperable, irreplaceable, and unique.
Relatively speaking, FT (FungibleToken) is also a homogenous token. Take Ethereum as an example. Every Ethereum is homogenous, there is no difference between them, and can be divided into smaller units. Each NFT has a unique and unique identifier, which cannot be interchanged or split.
NFT empowers creators in various fields with its unique characteristics, providing a more convenient and reliable way to confirm digital assets. Creators can easily prove the existence and ownership of digital works through NFT, including but not limited to pictures, videos, artworks, tickets and other forms. In addition, creators can also earn copyright tax during each NFT transaction circulation process.
Technical composition of NFT
Blockchain: Blockchain was first known as the distributed ledger of Bitcoin. Blockchain is a distributed and immutable database. It is essentially a list of recorded data and information and uses encryption protocols to protect the information. Blockchain provides a viable solution to the long-standing Byzantine problem.
Smart contracts: Smart contracts accelerate the execution and verification process of digital agreements. Blockchain-based smart contracts use Turing’s complete scripting language to achieve the compatibility of complex functions, and rely on consensus algorithms for execution to ensure consistency. Smart contracts make fair transactions that do not rely on third-party credit intermediaries possible, and can realize cross-industry, cross-field, and cross-ecological value interaction.
On-chain transactions: On- chain transactions need to be implemented through blockchain addresses and transaction instructions. The blockchain address consists of a fixed number of letters, numbers, and characters. It is a unique identifier similar to a bank account for users to send and receive assets. And there is a pair of corresponding public key and private key to verify the authenticity of the transaction.
Data encoding: Through data encoding, files can be compressed into an effective format to save storage space. When the NFT asset is confirmed, it is actually to confirm the hash value signed by the creator of the NFT. Others can copy these metadata, but they cannot prove their ownership.
The basic model of NFT
The underlying logic established by NFT is based on a distributed ledger, and its transactions rely on a peer-to-peer network. If the distributed ledger of the blockchain is regarded as a special type of database, then the NFT will be stored in this database. The actual storage status of NFT in China is more complicated. If this database has basic features such as security, consistency, integrity, and availability, then the entire NFT ecological closed loop mainly includes the following scenarios.
- NFT digitization: The creator of the NFT will check whether the file, title, and description are completely accurate, and then convert the metadata of the NFT into an appropriate format.
- NFT storage: NFT creators can choose between on-chain and off-chain methods to store metadata. On-chain storage costs are high, traffic jams, but metadata will permanently exist with the token, and off-chain storage limits are small but theoretically There is a risk of metadata loss. At present, the alternative solutions for off-chain storage include centralized data storage, IPFS, and decentralized cloud storage.
- NFT signature: The NFT creator signs the information including the hash value of the NFT data, and then sends it to the smart contract.
- NFT casting and trading: After receiving the complete information of the NFT, the smart contract can start casting and start the transaction process at the same time. Its main mechanism is formulated by the token standard.
- NFT confirmation: Once the transaction information is confirmed on the chain, the NFT minting process is completed, and the minted NFT will be permanently linked to a unique blockchain address to prove its existence. However, the actual content of the NFT is usually stored off-chain, and the ownership of the NFT belongs to two storage systems.
Key attributes of NFT
NFT is essentially a dApp, that is, a decentralized application, so it has various features from the underlying public ledger, which can be roughly summarized as the following:
- Verifiability: NFT’s pass metadata and ownership can be publicly verified. The premise is that metadata is stored on the chain. If it is stored off-chain, the off-chain storage system determines whether it can be publicly verified. Centralized storage cannot be publicly verified, and the device owner can change the data at will; IPFS can verify whether the data has been tampered with through CID, but cannot verify the storage status; MEFS and other distributed cloud storage systems can not only verify whether the data has been tampered with, but also Verify the storage and redundancy status of the data.
- Transaction transparency: The entire process of NFT from casting to selling to buying is open and transparent. However, the storage of NFT metadata and media data is not completely open and transparent. NFT creators will choose the storage method by themselves, but the security of most storage methods cannot be clearly assessed.
- Usability: The chain system on which the NFT depends will never be paralyzed. As long as it is an issued NFT, there is no possibility that it cannot be sold or purchased. The data stored under the NFT chain may be unavailable. At present, except for the complete risk control measures of decentralized cloud storage systems such as MEFS, centralized storage and IPFS have no controllable measures.
- Tamper-proof modification: NFT metadata and complete transaction records, once confirmed, are permanently stored, and only new information can be added, and past information cannot be modified. If metadata is stored in a centralized server, service operators can tamper with the data at will, and file systems such as IPFS and MEFS are non-tamperable.
- Easy to circulate: The information that each NFT user sees is updated instantly, eliminating the information barrier between the traditional producer-credit intermediary-purchaser, and the information is clear and easy to circulate.
- Atomicity: NFT transactions can be completed in an atomicity, consistency, isolation and durability (ACID) system.
- Tradability: NFT and its corresponding products can be traded and exchanged arbitrarily. The storage standard of NFT is the main support of its value, and the value composition of the NFT traded needs to be considered.
NFT risk assessment
The NFT system is a technology that is a collection of blockchain, storage and network applications. Its security guarantee is challenging. Each component may become a security shortcoming, causing the entire system to be attacked. This article uses the STRIDE method for threat modeling, from the aspects of Spooling, Tampering, Repudiation, Information Disclosure, Denial of Service (Dos) and Elevation of privilege, etc. Assess the possible risks of the NFT system.
- Counterfeiting: Counterfeiting corresponds to authenticity, which is the ability to impersonate another person or thing in the system. When users mint or trade NFTs, malicious attackers may use authentication loopholes or steal users’ private keys to illegally obtain ownership of NFTs. It is recommended to formally verify the NFT smart contract and use a cold wallet to isolate online data to prevent the leakage of private keys.
- Tampering: Tampering corresponds to integrity and refers to malicious modification of NFT data. Blockchain is a powerful distributed ledger. The hash encryption algorithm it uses is pre-image resistant and secondary pre-image resistant. If the metadata of the NFT is stored on the chain, once the transaction is confirmed, the metadata of the NFT And ownership cannot be tampered with maliciously. But if it is NFT metadata stored off-chain and media data stored off-chain, these data may be manipulated. It is recommended to use a decentralized distributed cloud storage system to ensure the safety and reliability of data.
- Denial: Denial corresponds to non-repudiation, which means that the creator or owner of the NFT cannot refuse or withdraw after the transaction information is confirmed on the chain. The security of this process is guaranteed by the characteristics of the distributed ledger of the blockchain and the unforgeability of the signature, but the hash value involved may be stolen or replaced by malicious attackers. It is recommended to use a smart contract with multi-signature verification to avoid some risks.
- Information disclosure: Information disclosure corresponds to confidentiality, which refers to the disclosure of NFT related information to unauthorized users. Since in the NFT system, the state information of the smart contract and the transaction instruction code are completely transparent and anyone can openly access it, there are multiple risks of information leakage in this case. Even if only the hash value of the NFT is obtained, a malicious attacker can use the correlation between the hash value and the transaction information to do evil. It is recommended that NFT creators use privacy-protecting smart contracts to replace ordinary smart contracts to protect privacy.
- Denial of service: Denial of service corresponds to availability. It refers to a malicious attacker attacking dApp or raw data stored off-chain, causing it to deny service to the NFT system. Thanks to the high availability of the blockchain, users can call up the information they need at any time without worrying about denial of service by the system on the chain. However, due to the limited space and communication pressure on the chain, some NFT functions need to rely on off-chain systems to achieve, such as the storage of metadata and media data. Centralized network applications and storage systems are still at risk of traditional DoS attacks. Refuse to service the NFT system. It is recommended to use a new hybrid blockchain architecture or a decentralized decentralized cloud storage system.
- Privilege escalation: Privilege escalation corresponds to authorization, which means that an attacker obtains NFT-related permissions by exploiting vulnerabilities in smart contracts, or gains illegal permissions by attacking related systems under the NFT chain. NFT authorization is completely managed by smart contracts. A poorly designed smart contract will have authorization risks. At the same time, NFT metadata or media data stored under the chain may also have the risk of affecting permissions. For example, tampering or deleting metadata or media data stored off-chain will make the ownership of NFT meaningless. It is recommended that creators use mature and complete smart contracts when casting NFTs, store all data on the chain without considering the cost, or use a more reliable decentralized decentralized cloud storage system to reduce costs.
The current state of NFT storage
NFT product type
With its unique attributes, NFT has brought a certain degree of change to many fields including meta-universe, digital art, collectibles, games, DeFi, public utilities and sports. NFT products are summarized as the target group for studying the status quo of NFT storage.
Decentraland is a virtual reality platform based on Ethereum. Users can create content and dApps and monetize them. The created content can be interactively experienced by other users. The land in Decentraland is marked using the Cartesian coordinate system, and the community has permanent ownership, and they can completely control their own works.
Decentraland stores digital asset ownership and other tradable information on the Ethereum blockchain, while other similar scene status and user location information that require real-time interaction are stored on the user’s computer or the scene owner’s private server. Developers need to choose what information is worth storing on the chain because it requires a higher cost.
The Sandbox is a community-driven UGC platform where users can obtain ownership of their own digital land and creative content. Their works can be traded freely, thus truly becoming a part of this meta-universe created entirely by users. All elements in the meta-universe are self-driven by the community.
The Sandbox’s pass SAND uses the ERC-20 standard, and the confirmation and transactions of digital assets use the ERC-1155 and ERC-721 standards. This information is stored on the Ethereum blockchain. The actual media data of digital assets is stored on IPFS. At the same time, Amazon’s S3 cloud service is used to support the front end of the web page. The digital assets that creators have not cast will be stored on the S3 cloud server, and data privacy risks require further use of decentralization. The storage scheme is protected.
CryptoVoxels is a meta-universe world based on Ethereum. Users can build, develop and sell digital assets on the street, and their ownership will be permanently recorded on the blockchain. The style is similar to Minecraft, users can use custom pixel monochrome blocks to build their own land, while also providing users with the system’s native COLR token to add color to the land. At present, CryptoVoxels stores the media information corresponding to the digital works created by users on the land in the server operated by the company. It has stated on social media that it will consider transferring the data to a decentralized storage system.
CryptoPunks is a series of pixel-style avatars with different characteristics, a total of 10,000 in total, which can be claimed for free through the Ethereum wallet at first, and currently need to be purchased through a second-hand trading platform. Initially, in order to save gas costs, CryptoPunks aggregated 10,000 characters into a picture, and stored the hash value of this picture in a smart contract on the chain, but did not disclose the storage location of its original media data. As NFT storage risks have received more attention, CryptoPunks spent 75M gas fees to store all avatars on the Ethereum blockchain.
Bored Ape Yacht Club is a series of ape avatars with different characteristics, a total of 10,000 in total, all of which have been cast and can be purchased through the second-hand trading platform. BAYC announced on its official website the TokenID, SHA-256 hash value and IPFS hash value of each avatar. At the same time, it also uses a decentralized storage system to back up the media data of each avatar, and also the backup information. It was publicized.
NBA Top Shot is a collection platform for NBA fans to collect and trade various highlight moments in NBA history. These highlight moments are cast into NFTs through the public chain Flow also developed by its development team Dapper Labs, and can be traded freely. Some descriptive data information of NFT is stored on the chain, and the video stream data corresponding to each NFT is stored in the centralized data center under the chain.
Gods Unchained is an NFT card game similar to Hearthstone based on Ethereum. Players can form their own deck to participate in game modes such as competitions and battle royale. Cards can be freely traded in the market. The player has ownership. At present, the ownership of the NFT in the game is stored on the chain, while the metadata and media data of the NFT card are stored on the company’s server, providing an API interface for use in smart contracts.
Axie Infinity is a pet-raising game similar to “Pokemon” based on the Ronin sidechain of the Ethereum. Players can collect, train and raise Axie fantasy pets in the form of NFT and own the pets. The project stores the ownership information of each Axie and its unique genetic data on the chain, and in order to meet the low latency requirements of the game, the media data is stored in the central server off the chain.
MyCryptoHeroes is an overhead world RPG game based on Ethereum. Players can collect heroes in the form of NFT and form their own hero team to fight. The metadata of the NFT involved in the project is stored on the chain, and the media data is stored on the server managed by the company.
NFT trading platform
Opensea is the earliest and currently largest NFT trading platform, occupying more than 90% of the trading market. Initially, Opensea also used centralized servers to store NFT metadata and media data. However, as the value of a single NFT continues to increase, data loss caused by centralized storage has also occurred from time to time. Opensea is now also a NFT creator. Provide decentralized storage solutions to choose from. Creators can now choose to use IPFS to decentralize NFT metadata and media data, but they need to pay for this choice.
Rarible is currently the second largest NFT trading platform. It supports ERC-721 and ERC1155 protocols. The project stores the metadata and media data of the NFT minted by the creator in the back end of the website, which is the centralized server. New buyers It can be called on the chain as needed.
SuperRare is an online art gallery that also has trading functions and has issued its own trading token RARE. The NFT auctioned by SuperRare did not show users very detailed technical information, such as smart contracts, tokenID, metadata, etc. This may be the reason why the market share of the platform has been low. Through query, SuperRare uses IPFS to store metadata and media data.
At present, the blockchain used by NFT mainly includes public chains such as Ethereum, Flow, and BSC, and side chains such as Polygon and Ronin.
Limited by the high gas cost and congested communication conditions on the chain, most NFT projects choose to store only NFT ownership data on the chain to ensure the non-tampering, traceability, and non-repudiation characteristics of ownership. The transaction does not require a centralized trust agency as an intermediary, and can be completed directly through a smart contract on the chain, giving NFT good liquidity, and using technology that is not controlled by any third party as a credit intermediary.
The media data representing the actual form of NFT is stored off-chain, and in some cases, some more complex metadata information is also stored off-chain, which is separated from the ownership storage system, which makes the ownership that is strictly protected by blockchain technology deterred. There was a shadow.
At present, the storage methods under the NFT chain mainly include four methods: centralized, centralized verifiable, decentralized, and decentralized repairable.
Most NFT projects do not have a market volume like Opensea, and many are in their infancy, and do not pay much attention to the security of off-chain data storage. The specific identifier in the smart contract can be used to return related metadata and media data. They usually use the URL running on the web server as the identifier. This server is run by the company or provided by cloud service providers such as Amazon. Centralized storage will bring risks such as tampering and denial of service.
Centralized and verifiable
Take CryptoPunks as an example. It initially stores the integrated image of the product in a centralized server, and then stores the encrypted hash value of this image in a smart contract for verification. The advantage of this is that the image can be verified through the hash value to ensure that no modification has been made, giving the NFT media data the non-tamperable characteristic. However, the media data itself is stored in the central server, instead of backing up the entire network node like on-chain NFT ownership storage, there are many risks such as data loss and denial of service.
The centralized and verifiable off-chain storage method is an optimization of the centralized method, but there are still many risks, and it cannot well solve the high-reliability storage requirements of NFT and even Metaverse for the right data ontology.
As a representative project of decentralized storage, IPFS has gradually been accepted by the NFT industry. IPFS aims to provide a decentralized addressing supplement to the traditional centralized HTTP. Take Bored Ape Yacht Club as an example. Its metadata and media data are stored in IPFS. IPFS provides redundant backup and stable content addressing. As an addressing network running on multiple nodes, it solves the previous centralized storage The pain point of URL address invalidation avoids relying on centralized service providers.
IPFS, a decentralized addressing method, has further improved the storage method of NFT metadata and media data, but as an addressing system, it cannot provide sufficiently safe and reliable storage services, even if the CID address remains in the system. Exist, but the corresponding specific data does not match the stability. The reason is that the network nodes in IPFS are self-driven to back up the content. If only a single node or a small number of nodes back up the corresponding content, these nodes are damaged or offline, the stored data will disappear, and the CID can only point to a blank.
Decentralized and repairable
The decentralized and repairable storage system, as a new possibility for NFT to solve off-chain storage, is gaining wide attention both inside and outside the industry. Decentralized distributed cloud storage projects such as Filecoin, Memo, and Arweave are also actively exploring for NFT enthusiasts. Provide better storage optimization solutions, among which Filecoin and Memo respectively launched NFT storage projects based on their respective storage ecosystems.
NFT.Storage is an NFT storage project based on the Filecoin ecosystem launched by Protocol Labs. The NFT stored through this project will be stored in IPFS or Filecoin. Currently, the capacity of a single storage data is limited to less than 100MB. Its repair function is based on Filecoin’s incentive mechanism. Through the scoring and verification system of storage nodes, damaged or missing data can be discovered and repaired in time. However, the storage in IPFS is provided by Protocol Labs, which requires more network nodes to participate and further decentralization. The storage in Filecoin has not yet been connected to the main network and is provided by test network nodes, and there is a risk of loss due to network reset.
Metastorage.org is developed based on the MEFS storage file system. The NFT storage project of the Memo ecosystem. The NFTs stored through this project will be stored in IPFS and MEFS. MEFS is a storage system developed by Memo Labs. There is no limit to the amount. Its repair function is based on the MEFS storage system, using multiple copies and erasure code redundancy mechanisms, while providing open verification methods. The KEEPER role in the system is responsible for matching users with verified and challenged nodes, and continuous evaluation and maintenance. Although the MEFS overall repair mechanism is decoupled from the blockchain, it still requires the participation of a larger range of nodes in the Memo system to provide support for the MEFS system and form a stable ecology.
The decentralized repairable storage system is expected to become the future solution for NFT storage, making the storage of NFT metadata and media data more compatible with the storage of ownership. At present, the product technology and scale are still in its infancy, and the degree of implementation needs to be further observed.
Opportunities for NFT storage
Meta universe value support
Generally speaking, meta-universe refers to a virtual world built using a series of technologies including the Internet and VR. Decades ago, this concept was born but has not been implemented yet. With the rapid development of the blockchain, the meta-universe has ushered in the possibility of becoming a reality. The blockchain provides an ideal decentralized environment for the meta-universe world, and the emergence of NFT also provides a feasible way for the confirmation of digital assets. path. Restricted by the current blockchain technology, the actual content of NFT needs a storage method that matches its ownership storage, and demand forces the development of technology. The decentralized cloud storage industry dedicated to solving the problem of NFT storage will usher in a broad market. Space to break through the current security bottleneck of NFT centralized storage.
In this virtual reality promoted by the blockchain, participants can have a very broad and rich imagination, such as enjoying games, displaying self-made art, owning and trading virtual property, etc. In addition, users have the opportunity to profit from the unique virtual economic system. They can purchase land controlled by a decentralized organization, build it freely in the form of NFT, rent the building to others for compensation, or raise and breed rare pets and sell them for profit.
The meta-universe ecosystem covers all the projects of the meta-universe discussed in the previous section. Most of these projects are still in the early stages. Blockchain is usually used to record and ensure the ownership of users’ digital assets, and the media corresponding to the ownership Most of the data is still stored in centralized servers or IPFS, and has not been protected to match the ownership, which also puts a certain risk on the integrity of digital assets. Without a complete and reliable storage closed loop, the use of blockchain technology to protect ownership will also be meaningless.
Infrastructure of the P2E game industry
Recently, P2E games have ushered in an explosive period, and they have received extensive attention from players and capital markets. In particular, Axie Infinity overtook NBA Top Shot to become the NFT project with the highest market value. It can be seen that NFT has great potential in the game industry. Some of the existing crypto games are CrytpoKitties, Cryptocats, CryptoPunks, Meebits, Axie Infinity, Gods Unchanged and TradeStars. A very attractive feature of this type of game is the “reproduction” mechanism. Users can raise pets themselves and spend a lot of time breeding new offspring. They can also buy limited edition/rare edition virtual pets and then sell them at high prices.
Due to the value circulation characteristics of P2E games, the current storage methods cannot meet their high security requirements. Distributed cloud storage systems such as Memo are infrastructures that are more suitable for NFT high-value storage.
The additional rewards attract many investors to join the game, which makes NFT even more important. Another exciting feature of NFT is that it provides ownership records of items in the game. Players can have personal exclusive game items, which promotes economic identification in the ecosystem and benefits both developers and players. Players and game developers as NFT publishers can earn royalties every time NFT is sold on the open market, completing a virtuous cycle of feeding back the ecology.
The reliability of NFT storage will determine the growth ceiling of the P2E game industry. When the industry develops to a certain extent, various hidden dangers in the NFT storage link will eventually receive more and more attention, and various game projects will eventually invest a certain degree of NFT storage is improved to reduce risk.
Huge capital market
The existence of NFT creates a mutually beneficial business model. While players and developers profit from the second-hand NFT market, the blockchain community has also largely expanded NFT, including various types of digital assets and prosperous virtual assets. Economic activity. Traditional online economic activities rely on centralized companies that provide trust and technology. Although blockchain has developed several financing channels, such as ICO, IFO, and IEO, its trial scenarios are still very limited. NFT has greatly expanded the additional attributes of blockchain, such as uniqueness, ownership, and liquidity. With the help of NFT, blockchain has rapidly expanded its application range. This allows everyone to be linked to a specific event, just like patterns in our real life. To achieve this vision, the storage method of NFT is an important part. FT means that the amount of data corresponding to the homogenized token is small and stored directly on the chain. NFT also requires a more reliable storage method.
For example, buying tickets is a common economic activity. When buying tickets in the traditional event ticketing market, consumers must trust the third party that provides the service. Therefore, consumers are at risk of being deceived or the tickets purchased are invalid. These tickets may be fake, forged, or can be cancelled. In extreme cases, the same ticket may be sold multiple times, or some tickets that do not support transfer may circulate in the market.
NFT-based tickets are issued by the blockchain to prove the right to enter any sports or cultural activities. NFT benefits from the double spending, tampering, and forgery problems that the blockchain has already solved in the FT stage. The unique characteristics of the distributed ledger give NFT tickets a clear advantage over traditional tickets. An NFT-based ticket is the only one that cannot be used. Falsified, which means that the ticket holder cannot resell the ticket again after it has been sold. NFT, a blockchain-based smart contract, provides a transparent ticket trading platform for consumers, event organizers and other stakeholders. Consumers can buy and sell NFT tickets from smart contracts without relying on any third party.
The storage methods of media data corresponding to these NFTs are equally important. High-value transactions require high-security infrastructure as support. With the diversification and complexity of NFT forms, the NFT storage industry will also grow with the development of NFT ecological projects. .
Protect digital property rights
Digital collectibles include various types, from trading cards, wine, digital images, videos, virtual real estate, domain names, diamonds, cryptocurrency stamps, intellectual property and other physical objects. Let’s take the field of art as an example. First of all, artists in the traditional way have few channels to display their works. The acquisition of traditional channels requires capital and network resources, as well as a lot of energy. Due to lack of attention, the price cannot reflect the true value of his work. Even their works published on social networks will be charged by platforms and advertisers for intermediary fees, platform and advertising fees.
NFTs convert their works into a digital format with comprehensive rights. Artists do not have to hand over ownership and content to agents, which provides them with the possibility of obtaining high profits. Typical examples include Mad Dog Jones’ REPLICATOR for $4.1 million, Grimes’s works sold for a total of about $6 million and other works from and other great crypto artists, such as the well-known Beeple and Trevor Jones. NFT has done a good protection for the property rights of artworks, and its corresponding actual content, such as metadata and media data, does not have a safe and reliable industry storage standard. Distributed storage systems such as Memo are expected to solve this problem.
In addition, artists cannot obtain royalties from the future sales of their works under traditional circumstances. In contrast, NFTs can be programmed so that the artist will receive a predetermined royalty fee each time his digital work is exchanged in the market for each sale of his digital work. This is a An effective way to manage and protect digital masterpieces. In addition, some platforms, such as Mintbase and Mintable, have even established some tools to support ordinary people to easily create their own NFT works.
The media data of these digital collections is actually the ontology of the NFT they cast. Losing the ownership and royalty rights of the work itself will be meaningless, and the NFT itself will also lose its value. Traditional collection behavior is usually accompanied by higher storage costs. Collections in the digital age obviously require better storage solutions.
The challenge of NFT storage
In order to achieve the development of the above-mentioned NFT storage applications, just like any new technology, a series of obstacles must be overcome. This article discusses some typical challenges from the perspective of usability, security, regulation, and scalability, including system-level problems and human factors caused by blockchain-based platforms, such as regulators, regulations, and social factors.
Usability refers to judging a specific product by measuring the effectiveness, efficiency and satisfaction of users when testing a specific product. Most NFT projects are built on Ethereum. Therefore, it is clear that the main shortcomings of Ethereum have been inherited. We discussed three main challenges that have a direct impact on the user experience.
Scarce redundancy mechanism
Through the previous analysis, NFTs currently mostly use centralized data centers and IPFS for storage, and the redundancy mechanisms of these two methods are not very reliable. Centralized data centers usually use multiple copies of redundancy to copy multiple copies of files for redundancy, which is costly. IPFS does not have a self-running redundancy method, although the CID corresponding to the file is broadcast on the entire network, and the data of the file itself is stored locally on the node, and other nodes need to spontaneously back up. As the incentive layer of IPFS, Filecoin has not fulfilled the mission of incentivizing nodes for backup. Most of the stored data in network nodes are invalid data stored for incentives. The MEFS system developed by Memo uses a storage method that combines multiple copies and erasure codes, and uses data shard storage and risk-aware repair technology to achieve a high-durability redundancy method at low cost.
Slow confirmation speed
NFTs usually send transactions to smart contracts to achieve transparent and reliable management, such as casting, selling, and exchange. However, current NFT systems are tightly coupled with their underlying blockchain platform, which makes their performance very low. Bitcoin only reaches 7 TPS, while Ethereum only has 30 TPS, which leads to extremely slow confirmation of NFTs. Solving this problem requires redesigning the blockchain topology, optimizing its structure or improving the consensus mechanism. The existing blockchain system cannot meet these requirements. This also determines the status quo of storing complex metadata and “huge” media data in an off-chain system.
High gas fee
High gas fees have become a major problem in the NFT market, especially when large-scale NFT forging requires metadata to be uploaded to the blockchain network. Every NFT-related transaction is more expensive than a simple transfer transaction. Because smart contracts involve computing resources and storage to be processed. Complicated operations, high congestion pressure and high cost greatly limit the widespread adoption of NFTs. In most cases, the transaction costs generated by casting NFT are much higher than the current value of NFT. Store NFT-related data off-chain as much as possible is currently the mainstream solution to adjust this serious imbalance, and it brings Various risks.
Storage security and privacy issues
Data from users is the top priority of any system. However, these data, stored off-chain but associated with on-chain tags, face the risk of losing contact or being abused by malicious parties.
- Inaccessibility of NFT data
In mainstream NFT projects, most of the encrypted hash values are used as identifiers instead of real media data, which are then recorded on the blockchain to save gas consumption. This makes users lose confidence in NFT, because the original file may be lost or damaged. Some NFT projects have begun to cooperate with specialized file storage systems, such as IPFS, which allows users to address content through hash values. As long as someone on the IPFS network is hosting it, users can successfully obtain the hash The content corresponding to the value. Nevertheless, such a system still has inevitable shortcomings. When users upload NFT metadata and media data to IPFS nodes, there is no guarantee that their data will be replicated in all nodes. The data is stored on IPFS. There may be only one node hosting the content and no other nodes backing it up. If the only node storing it is disconnected from the network, the data may become unavailable. DECRYPT.IO and CHECKMYNFT.COM have reported this problem. The Memo project is trying to use the developed MEFS system to make up for this shortcoming of IPFS.
In addition, an NFT may also point to the wrong file address. If this is the case, the user cannot prove that he actually owns the NFT. All in all, relying on an external system as the core component of the NFT system is fragile.
- Anonymity and privacy
Most NFT transactions rely on their underlying Ethereum platform, which only provides pseudo-anonymity, not strict anonymity or privacy. Users can partially hide their identities. If the connection between their real identity and the corresponding address is known to the public, all activities of the user under the exposed address can be observed. The existing privacy protection solutions, such as homomorphic encryption, zero-knowledge proofs, ring signatures, and multi-party calculations, have not been applied to NFT-related solutions on a large scale due to their complex encryption primitives and security assumptions.
Similar to other types of blockchain-based systems, reducing expensive computing costs has become the key to protecting the security and privacy of NFT data.
Similar to the situation of most cryptocurrencies, NFTs also face obstacles such as strict management from the regulatory authorities, and how to properly monitor this new technology in the corresponding market is also a challenge. This article discusses from two typical aspects.
- Legal aspects
The legal and policy issues faced by NFTs cover a wide range of areas. Potential related areas include commodities, cross-border transactions, KYC (Know Your Customer) data, and so on. Before entering the NFT field, it is very important to understand the relevant regulatory review and litigation. In some countries, the legal requirements for cryptocurrency are strict, and the same is true for NFT sales. Difficulties in governance must be overcome to mint, trade, sell or buy NFTs. Legally, users can only trade derivatives such as stocks and NFTs on authorized exchanges. Some other countries, such as Malta and France, are trying to implement appropriate laws to regulate the service of digital assets. They require buyers to follow complex and even contradictory terms. Therefore, conducting due diligence is a step that must be carried out before investing in NFTs assets.
- Taxable property
Products related to intellectual property, including art, books, domain names, etc., are considered taxable property under the current legal framework. However, NFT sales are not yet within this range. Although a few countries, such as the United States, tax cryptocurrencies as property, most regions in the world have not yet considered the taxation of crypto assets. This may greatly increase financial crimes under the cover of NFT transactions to avoid taxation by the corresponding regional governments. Individual participants are taxed based on any capital gains related to NFT property. In addition, transactions such as NFT-for-NFT, NFT-for-IP, and Eth-for-NFT should all be taxed. In addition, higher tax rates should be applied to high-margin property or collectibles. Therefore, it is recommended that NFT-related industries seek more advice from professional tax authorities after undergoing profound changes.
The scalability of the NFT program includes two aspects. The first is to emphasize whether a system can interact with other ecosystems. The second point is whether the NFT system can be updated when the current version is abandoned.
- NFT interoperability
The existing NFT ecosystem is isolated from each other. Once users choose a type of product, they can only trade them within the same ecosystem because of the underlying blockchain platform. At present, if you want to cross-ecological transactions, you need to complete it through a third-party transaction platform similar to Opensea. Breaking away from the trust organization of the original blockchain platform will increase the cost of trust. Interoperability and cross-chain communication have always been obstacles to the widespread promotion of dApps, and cross-chain communication can only be achieved with the help of external trusted parties. In this way, the characteristics of decentralization will inevitably be lost to some extent.
Fortunately, most NFT-related projects use Ethereum as their underlying platform. This means that they share a similar data structure and can exchange under the same rules. While the storage methods of NFT projects are different, how to maintain decentralization and a unified risk structure is an important topic in the future.
- Updatable NFTs
Transitional blockchains generally update their agreements through soft forks and hard forks, which illustrates the difficulties and trade-offs in updating existing blockchains. Despite being a general model, the new blockchain still has strict requirements, such as tolerating specific confrontational behaviors and staying online during the update process. The NFT program closely relies on its underlying platform and is consistent with them. Although the data is usually stored in separate components (such as IPFS and MEFS file systems), the most important logic and tokeId are still recorded on the chain, and it will be necessary to update the system appropriately.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-status-quo-opportunities-and-challenges-of-nft-data-storage/
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