The FTX collapse highlighted many flaws in the crypto industry and NFTs were not spared. In November 2022, Solana engineer jac0xb.sol pointed out that the metadata and image resource of FTX-hosted NFTs pointed to a restructuring website that had information on bankruptcy proceedings. During the bull run, when tokens were making astronomical gains month on month, the core tenets of decentralization — proof of ownership and non-centralization — were paid lip service to. Now the centralized chickens have come home to roost.

How is it possible that NFTs secured by the almighty blockchain returned broken links? How can you avoid this happening to you as an NFT creator, collector, or trader?

To answer both questions, we will have to start with the basics. In this article, we will cover:

• What an NFT is
• How NFTs are stored
• How to verify that an NFT is decentralized
• Advanced NFT storage with RMRK

By the end, you will be better equipped to spot NFTs that are as immutable as a Bitcoin transaction and how to protect your NFTs from returning broken links.

We also made a video about this topic and you can watch it below. However, you should still read the article as it has some important information not covered in the video.

What is an NFT?

In simple terms, an NFT is a unique digital token stored whose ownership can be verified via the blockchain. But this is not helpful in understanding how FTX-hosted NFTs returned broken links. For that, we need to go a bit more technical.

In technical terms, an NFT is a sequence of data stored on the blockchain. Whereas fungible tokens are actual data that live on the blockchain, an NFT’s ‘data’ is usually a reference link that points to another data (like an image, video, PDF, etc.) on an external network. The proper term for this data is Unique Resource Identifier (URI).

One NFT can contain multiple URIs — one that points to the metadata (description of the NFT), and another that points to the image/audio/3D/PDF resource (what we all consider as the main NFT). With advanced NFTs, one NFT can contain an infinite number of resources (more on this later).

So, what causes some NFTs to return broken links? Because of the method of storage chosen.

How NFTs are stored

There are two main ways to store NFTs.

• Decentralized storage: this is the ideal storage mechanism as it aligns with the tenets of decentralization. It is achieved by using decentralized storage networks like IPFS, Crust, Arweave, etc.
• Centralized storage: this involves the use of storage entities like Google Cloud, AWS, and other centralized storage providers in the web2 world. Centralization occurs because it is only the project team that subscribed for said storage space that owns the rights to those NFTs. If this project goes under (like in the case of FTX), you lose access to your NFT resource.

If there are decentralized storage solutions, why are most NFT marketplaces and custodians (especially centralized exchanges) using centralized storage?

• Ease: in the early days of NFTs, decentralized storage solutions were not mature enough to be easily usable. Even now, it is probably still slightly more convenient to use centralized solutions.
• Power: this is the bigger reason why projects opt for centralized storage. By owning the rights to where the NFTs are stored, the project has more leverage over the users and the industry at large. It can blacklist competitors, go out of business, or censor users.

How to verify that an NFT is decentralized

Unfortunately, it is not very simple for people without some crypto background. That said, it doesn’t require any special skills, just the desire to know.

1. Go to the block explorer for the blockchain the NFT is on (i.e. Etherscan for Ethereum). Some marketplaces, like OpenSea, have a link to the contract address on the NFT or collection page.
2. Navigate to the contract address of the NFT and check that the tokenURI points to a decentralized storage network (ipfs, crust, arweave, etc.) and not a centralized server.

For example, this collection above points to a (centralized) website. If this website goes down, the metadata will go with it. Note that, in some cases, it is possible for a project to change the tokenURI.

It is possible, though it hasn’t happened yet, that a decentralized storage network may fail. In such an unlikely but probable scenario, how can you guarantee your NFTs are always alive?

Enter the power of RMRK’s multi-resource functionality for advanced NFTs.

Advanced NFT storage with RMRK

RMRK is an advanced NFT protocol that gives NFTs superpowers, one of which is the ability for one NFT to have more than one resource (theoretically, an infinite number of resources). While this feature is mostly used for extending the media capability of a single NFT (i.e. an NFT that is a PDF book is also an MP3 audiobook, a JPG book cover, and an MP4 video of the author), it can also be used to maximize the decentralization of NFT storage.

To maximize the decentralization of an NFT, you store it on multiple storage networks, both centralized and decentralized. In this way, an NFT can have 5 resources all of the same file (a JPG image file for example). Each of these files will then be stored on a different storage network — IPFS, Google Drive, Arweave, Crust, and AWS.

With RMRK’s multi-asset NFT feature, an NFT’s resource can be guaranteed 100% uptime unless a global disaster wipes out all storage networks at the same time. Even if, by some catastrophe, all are wiped out, the NFT issuer can always add new resources which token owners can accept or not.

Conclusion

Decentralized NFT storage is not that difficult. The only thing that gets in the way is ignorance and greed. As an NFT trader, you can protect yourself from the dangers of centralized NFT storage by paying attention to where your NFTs are stored. As an NFT creator, you can ensure your NFTs are decentralized by using marketplaces and protocols that utilize decentralized storage networks. RMRK’s flagship NFT 2.0 marketplace Singular is perfect as it:

1. defaults to decentralized storage with IPFS
2. has the multi-resource functionality to help you further maximize the decentralization of your NFTs so you never have to worry about downtime.

We came into this industry because we understand the dangers of centralization. We are the ones that must watch and guard against the failures of centralization repeating again and again. Don’t settle for centralization because it is slightly more convenient. If you do, someday you will be like the unlucky people with NFTs that return broken links.

About RMRK

RMRK is a next-generation NFT protocol that equips NFTs with superpowers, making it possible for NFTs to own other NFTs, change based on conditions, have multiple outputs depending on context, accept emojis, and more.

With these modular NFTs, RMRK enables the creation of the most advanced NFT projects the world has ever seen, while remaining compatible with archaic standards like ERC721 and ERC1155. You can explore this right now on Kanaria, RMRK’s flagship Modular NFT project; join the revolution in Skybreach, a truly decentralized metaverse; or trade advanced NFTs on Singular, the advanced NFT marketplace.

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