The rise of popularity of non-fungible tokens (NFTs) has raised questions about the permanency of the digital artefacts and, more specifically, how to store the metadata and media file off-chain without removing the security and permanency of a blockchain.
The research evaluates three decentralized storage providers and analyzes how suitable they are for storing data related to NFTs. The research question is how to store the data related to NFTs in a permanent and immutable way and at the same time to make sure that the token holder has true ownership and control over the data. The research in the field of NFT is limited and previous research has not covered the issue of storing NFT-related data off-chain.
The research covers three decentralized storage networks, Arweave, Storj and IPFS together with Filecoin. The research is conducted by analyzing whitepapers, yellow papers and any additional materials produced by the projects behind the services. The criteria based on which the services are evaluated are permanency, immutability and data retention and availability as they are properties which the literature finds important for NFTs.
All the three services succeed in addressing the immutability of the data. Arweave used blockchain-like structure, Storj uses encryption and distribution of pieces of data and IPFS uses content addressing (hash functions). The financial incentive structures of the storage services are working in theory and therefore create trust for the permanency of data storing. However, the services need enough participants on both sides to operate properly. Technological development creates the biggest risk for data permanency as it is likely that the current way of data storing becomes obsolete in the future.
The key finding of the research is that there are clear and often significant lacks in the decentralization. This study indicates that even though all the decentralized file storage services are relatively well developed and build and aim to bring decentralization to the file storage services, to truly develop a decentralized service is extremely difficult. The owners of NFTs need to make compromises and evaluate themselves what option is most suitable for them and their needs. There is no fail-safe way to store data permanently but even with faults decentralized storage services are better option for storing data related to NFTs than centralized storing services.
