How Do On-chain NFTs Help Refining How NFT Projects Approach Web3? – DataDrivenInvestor

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Dec 8
Ever since NFTs’ popularity spread far and wide, there have been talks that portray these blockchain-powered tokens as the ultimate cure the world needed to stay true to humanity’s spirit.
But are all NFTs truly stored on the blockchain? If so, how can anyone hack and steal NFT items worth millions of dollars? If these questions pop up in your mind quite often, trust me, you’re not alone! In fact, most NFT skeptics are driven by these questions without knowing the whole story, unlike you, who will get exposed to the concept of on-chain NFTs that will certainly pack some punches for the Web3 world.
Although I might like to say “Yes,” at least to please some, they aren’t in most cases. Most collections do not use the concept of on-chain NFTs. Instead, they use several external options to store data. Here, data refers to the item itself (whether an image or artwork) and the metadata (descriptions, editions, and characteristics).
Coming back to how most projects store NFT data, they tend to hold smart contracts on the blockchain and most data off-chain. Servers, cloud infrastructure, and IPFS (Interplanetary File Storage) are commonly used by NFT projects to hold their data. While having some degree of blockchain protection is good, what’s more good than having all the protection possible?
Even though this is a complicated question to answer in a world where almost 89% of people are unaware of blockchain technology, my answer as a Web3 enthusiast will be a “Yes.”
But how? Talking of the contemporary methods NFT businesses use to save data, servers have earned a negative reputation in recent times owing to multiple data breach scandals, apart from struggling to store high-volume data such as images.
Coming to cloud infrastructure, although the need for physical server rooms is eliminated, the scope for hacks and outages still exists, eliminating them from being the saviors of Web2 to Web3 transition, despite their ability to handle data files of huge size.
IPFS tends to solve these issues (at least for now) through distributed storage across the world and based on the peer-to-peer working mechanism. While this is potentially enough (most NFT projects proudly use it), there is room for improvement.
Firstly, the NFT should be cached from the IPFS facility if a user wants to access it, despite having the smart contracts on-chain. If the system goes down for some reason, it becomes impossible for anyone to retrieve the NFT asset, rendering the purchase useless.
On the contrary, on-chain NFTs harness the power of blockchain technology to the fullest to store all NFT data using a primary method of computing. They contain data (including NFT metadata and the actual asset) in low memory-intensive states using formats such as Base64 and SVG (Scalable Vector Graphics).
Storing NFTs on-chain can be helpful for NFT holders even if the classical doomed mishap of project developers evading the community occurs. On a positive note, if a project decides to become completely decentralized, on-chain NFT assets can be instrumental in shifting it from developer-run to community-run without hiccups.
Despite being a newer concept (on the basis of taking shape), there are more than a handful of NFT projects utilizing on-chain storage. Let’s see some examples.
Here, we should not forget the fact that utilizing on-chain storage incurs high gas costs, although things are greener on the other side post the process.
Despite spending a considerable chunk of their budget on on-chain NFT generation, the above projects have tasted success as businesses due to many reasons. By using blockchain networks’ power to the fullest, decentralizing projects becomes easier for ventures (yes, they can still be part of partaking in the community). Also, they can have utmost security without the fear of breaches and random outages (no, blockchain outages don’t count here). All in all, a venture can gain immensely by going for on-chain NFT assets.
Henceforth, we can say that making use of on-chain NFTs can be ideal for ventures to stay true to Web3’s core aspects while earning handsomely in a flurry of different ways. The space is free to explore, making it perfect for niche businesses to jump into the Web3 realm quickly. If you are an entrepreneur looking to harness the efficiency of blockchains through on-chain NFTs, this is the ideal time to begin. Working with seasoned professionals in NFT development is suggested to bring the best possible output for your venture.
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