The NFTs are essentially stored using two different types of storage: one is off-chain, and the other is on-chain. Before the development of blockchain technology, NFTs were seen as digital art copies, but the emergence of significant blockchains like Ethereum (1), Polygon (2), and others has given NFTs a more decentralized aspect.
As any project can store its collectible via an HTTP URL (3), NFTs are stored differently depending on the creator and the offering marketplace. Users can store NFT metadata and content anywhere on the internet. Any user who changes the URL puts the NFT in danger, which causes the author to shut down the NFT and forfeit all holdings.
Hackers may target NFTs and NFT marketplaces, which might cause user NFTs to vanish in an instant. On-chain NFTs are entirely written on the blockchain with a full smart contract and associated metadata. Off-chain NFTs are entirely kept in a separate database.
Off-chain, however, also reflects decentralized aspects, with users' NFTs being saved on decentralized storage networks like Filecoin FIL (4) and the IPFS InterPlanetary File System (5), which are widely accessible for public use, much like internet archives.
These NFTs are impervious to corruption and irreversible events attributable to blockchain technology. Understanding NFTs and being aware of the on-chain and off-chain components of holdings will eventually improve users' ability to collect NFTs on their preferences for the quality of the project.
Understanding on-chain and off-chain NFT storage
Consider the most recent NFT craze, the NFT PFP (6), which allowed users to upload NFT images to their social media profiles. These images could include major adjective-driven traits as well as a variety of settings, including clubs, graffiti, and many others, all with the promise of community and company airdrops. Which NFTs, though, are on and off the chains?
High-level NFT projects differ in two areas: smart contracts and the metadata of the actual artwork. A smart contract is typically present on a blockchain like Ethereum and functions as a set of rules and standards that facilitate transactions. The metadata of the actual artwork serves as a digital description of the content with a link pointing to the server hosting the digital artwork.
While digital art may occasionally be housed off-chain or simply not on blockchain technology, it may not always exist on a blockchain. Off-chain storage resembles centralized corporate servers or the InterPlanetary File System (IPFS). Still, the decentralized nature of the NFT remains unchanged even though these are for public use and corporate centralised purposes.
Centralized storage puts NFTs in danger of being lost if the server goes down, even though there are normally equivalent penalties for both approaches. Although IPFS uses a distributed architecture that makes it safer for users to locate data, if one storage node vanishes from one system while it is still off-chain, it gets respawned in another unidentified system.
However, the off-chain approach of storing NFTs is disrupted by the immutable nature of smart contracts, where rewriting to redirect the image is not possible. Although using on-chain NFT storage can be more expensive than storing on a proof-of-work blockchain like Ethereum, which calls for IPFS or Arweave to store the NFTs and offers the option of an identification code CID (6) linked to the content of the NFT that cannot be changed, in contrast to a URL, which can be changed and reused frequently.
On-chain NFTs are completely integrated into the blockchain and reside only there. In contrast, off-chain NFTs are stored elsewhere and have various storage choices, including the cloud, centralized hardware server storage, and IPFS.
Understanding software and hardware NFT wallets
So, for NFT creators to store NFTs is a different concept, but where individuals store NFTs is also a different concept that utilizes software wallets and hardware wallets to store individual NFTs.
These are typically desktop or mobile software programs designated for storing tokens like NFTs or cryptocurrencies. Because they link to the internet using a private key that is accessible and maintained online, these are often referred to as "hot wallets" or "digital wallets."
These wallets are often the ones that frequent users and new users generally prefer. A good example of a software wallet often referred to as synonymous is the MetaMask wallet (7). Additionally, there are other popular non-Ethereum software wallets like Sollet on Solona (8), Temple, and Kukai on Tezos (9), as well as other prominent Ethereum wallets like Trust wallet (10) or Coinbase wallet (11).
Although any great aspect inevitably attracts a negative aspect that leaves it open to the prospect of attack, this online, internet-connected software is particularly prone to hostile attacks. Major MetaMask users have encountered compromised assaults as a result of internet phishing scams, unintentionally clicking on malicious links, or downloading malicious files.
Users must be aware of these restrictions and realize that it is difficult to hack into these systems. Typically, this happens when a user accidentally shares their private key, copies and pastes their wallet address, clicks on malicious websites, or responds to spam emails.
This is typically a hardware device in the form of a hardware wallet that is physically present and may be cut off from internet connectivity to reduce the risk of hacking or fraud. These are ideally in the form of USB flash drives (12). Both NFTs and cryptocurrencies can be stored in these wallets.
The idea that hardware wallets are just used for storing tokens has been dispelled by many NFT users who have given them a try. These wallets also contain private keys, allowing them to operate entirely offline, secure with several seed phrases, and password-protected.
These vary significantly from software wallets in their ability to be completely unplugged from the internet. However, they have one significant flaw: if the hardware is damaged, lost, or corrupted, the user will never be able to retrieve it. Software wallet holdings are accessible from any physical system. These hardware systems must always be kept active for a long time.
How to identify NFT storage?
These easy methods will enable users to determine whether their NFTs are stored off-chain or on-chain and where they are stored.
All you need to do is open your digital wallet, pick NFTs, choose the NFT you want to evaluate, and then click the link next to "Asset Contract" to be taken to Etherscan.
Once the NFTs homepage has launched, scroll down to Details and select "Contract Address" in the left-hand column to be taken to the Etherscan.
Once the Etherscan screen has loaded, select "Read Contract" and then scroll down to "TokenURI" by selecting the "Contract" option that is located below the overview box. You can then type the token's ID number into this dropdown box to find the name of NFT. Click "Query" after entering the token ID. When a link occurs, it indicates that the NFT is probably off-chain if the link begins with "ipfs:/" or "https://api," followed by the project name, and is finished with a token number.