On-chain NFTs are tokens completely written on the (Ethereum) blockchain, implemented with metadata and smart contract both existing on the blockchain.

Now that… was a confusing definition! Let’s break things down a little bit more.

For starters, on-chain NFTs are written and stored on the blockchain. Basically, the “information” of these NFTs is all written on the mainnet, and this information is then stored on the blockchain. This information also includes things like the transaction hash of the generated NFT, which makes it even more unique.

Next, we should take a look at smart contracts. Smart contracts are programs that execute themselves when certain criteria are met, native to the Ethereum blockchain. In most cases, they could be used to generate on-chain NFTs or could point to locations where the NFTs are stored.

The metadata of NFTs is its core information. Such things as the NFT’s unique traits, where the digital copy is stored, the description of the NFT, and much more. This metadata is integrated with the on-chain NFT itself, so this “information” lives on the blockchain as well.

So, this is just the basics of what on-chain NFTs are about. Let’s find out more about the off-chain NFTs, so you can get a better understanding of the underlying differences.

In the previous section, we established what on-chain NFTs are. If you could take away just one thing from the aforementioned, it should definitely be that on-chain NFTs live and breathe on the blockchain.

Well, off-chain NFTs don’t. Off-chain NFTs are not stored on the blockchain, thus earning the name “off-chain”. But if off-chain NFTs don’t exist on the blockchain, then where do they go?

There are many options available for off-chain storage. You could go with storage on Cloud (Google Cloud, iCloud, etc.), centralized hardware server storage, or IPFS. However, this could pose several problems that on-chain NFTs will never face.

Traditionally, people will go with Cloud storage as that is the easiest and cheapest form of storage. However, cloud storage is usually internet-dependent, as your NFTs will technically be stored on the internet. Cloud-based storage is also dependent on the host (let’s say Google), so you don’t get full control of what you’re storing.

Another option for serious investors is off-site server storage. When you’re using a Cloud storage system, your host is providing the server storage service for you. With your own servers, you can use it to store the off-chain NFTs. But physical servers are expensive to buy, run, and maintain — it probably isn’t worth it just for a collection of NFTs.

Both of these options have one crucial flaw: security. It’s difficult to put the full trust of your NFT project into a reasonably-hackable Cloud, or centralized servers which could shut down any moment and lose your NFTs.

So that’s where the IPFS (InterPlanetary File System) comes in. As its name should suggest, IPFS is a more secure method of storing data, using a P2P storage network that is distributed and decentralized. So just in case one storage location fails, there is a good chance that you’ll find your NFT distributed to another location.

Back to the on-chain vs off-chain topic… IPFS still isn’t the perfect solution.

One crucial difference between on and off-chain NFTs is the nature of their smart contracts. While on-chain NFTs have in-built smart contracts, off-chain NFTs have smart contracts for the sole purpose of linking people to the storage location of the digital art.

This means that if there’s a disruption with the off-chain storage system/network, the “link” provided by the smart contract will be useless. After all, who wants to be redirected to an image “not available”?

Still, on-chain and off-chain NFTs exist to serve different purposes. Before we make a judgment call, let’s go through a few examples of promising on-chain NFT projects!

Yes, I very much believe so. While off-chain NFTs are usually cheaper and more widely used in projects, on-chain NFTs certainly have a brighter future ahead.

Having your metadata, smart contract, and NFT itself all on the Ethereum blockchain, you won’t have to rely on anything else for your NFTs’ survival. As long as the blockchain exists, your NFT collection remains intact.

On top of that, this puts more value into your NFT. With on-chain tokens meeting Ethereum network requirements and being, literally, a part of the blockchain, there is better liquidity of the digital asset.

Also, as more NFT projects hop on the on-chain art bandwagon, the movement will undoubtedly get more popular. We can hope for innovative solutions like OCM Genesis, cutting gas fee costs so on-chain NFTs are more cost-friendly to buyers.

Ultimately, the choice is yours. Between on-chain NFTs and off-chain digital copies, I’d 100% choose the future.

ETH:

https://etherscan.io/address/0x66bd44ecc5f2bfdc9a6c8f17ec99ea8eb1dbc713#code