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If you are considering buying a NFT with centralized metadata, read this article before making your decision. You’ll thank me later.
Visualize this scenario. You go to OpenSea, find an interesting NFT, click on it, scroll down to the details section and see this image. Metadata? Centralized? What does this mean? Before fully answering these questions there is some background information that needs to be explained, but in short centralized metadata means that you do not truly own the contents of that NFT.
A *NFT is a unique token stored on the blockchain, and think of the blockchain as a decentralized network of computers.
Technically a NFT is a smart contract that follows the ERC-721 token guidelines but that is unnecessary technical jargon for now.
NFT metadata is a link stored in a NFT that points to a database that stores attributes about a NFT, for instance image, name, description, and more.
Right now, you might be wondering why NFTs link to their metadata instead of storing all of the linked information on the blockchain. This is because storing data on the blockchain is expensive. Hence, the bulk of the information is stored on a separate server or *node and linked back to NFT.
Node is a fancy way of saying computer
Centralized metadata occurs when a NFTs metadata link to data stored on a central server like AWS or Google Cloud. When data is stored in this manner, the NFT owner is trusting that Amazon, Google or whoever owns the server will keep their NFT’s metadata on their server. Thus, as mentioned earlier in the article, the owner of the server is the true owner of the NFT, not the person who spent 1 ETH on OpenSea to purchase it.
Decentralized storage systems, the most popular being IPFS (InterPlanetary File System), attempt to solve the problems of data ownership for NFTs and user generated data in general. IPFS is a peer-to-peer network of nodes or computers that lends storage space to people. Typically metadata is stored on IPFS by paying a node to temporarily store that information via the filecoin blockchain.
The benefit of IPFS compared to centralized servers is when uploading information to IPFS, no matter the computer the data is stored on, the link to retrieve the data is the same. This concept is called content-based search. Thus, if one IPFS node stops storing a NFT’s metadata, all the owner has to do is find another IPFS node in the world and pay them to store the NFT’s information. On the other hand, in a centralized server, the information in the NFT is lost when the server owner stops supporting it.
Side Note: You might be thinking that IPFS is not much different from centralized data storing because you continuously pay another person to store your data, and you would be right to an extent. Fortunately, there are other decentralized storage systems attempting to solve this problem. So stay tuned for an article about that!
With all that said, centralized metadata still has a use case. It is a way to create dynamically changing NFTs. Let's say you buy a Kevin Durant NFT and it is announced tomorrow that Kevin Durant has been traded to the 76ers (unfortunately he stayed with the Nets). Well that NFT metadata that has a picture of Kevin Durant in a Nets jersey would be outdated. With IPFS’ content based search, the NFT will always have a picture of Kevin Durant in a Nets jersey. Nevertheless, with centralized metadata, the NFT can be updated to have a picture of Kevin Durant in a Sixers jersey.
The purpose of this article is not to convince you to not buy NFTs with centralized metadata. Instead, the point was to inform you what buying an NFT with centralized metadata means. If you are considering buying a NFT with centralized metadata, just understand you do not truly own that NFT.
https://twitter.com/theRealSiddhu
https://lenster.xyz/u/siddharthgowda.lens
https://www.linkedin.com/in/siddharth-gowda-030134100/
If you are considering buying a NFT with centralized metadata, read this article before making your decision. You’ll thank me later.
Visualize this scenario. You go to OpenSea, find an interesting NFT, click on it, scroll down to the details section and see this image. Metadata? Centralized? What does this mean? Before fully answering these questions there is some background information that needs to be explained, but in short centralized metadata means that you do not truly own the contents of that NFT.
A *NFT is a unique token stored on the blockchain, and think of the blockchain as a decentralized network of computers.
Technically a NFT is a smart contract that follows the ERC-721 token guidelines but that is unnecessary technical jargon for now.
NFT metadata is a link stored in a NFT that points to a database that stores attributes about a NFT, for instance image, name, description, and more.
Right now, you might be wondering why NFTs link to their metadata instead of storing all of the linked information on the blockchain. This is because storing data on the blockchain is expensive. Hence, the bulk of the information is stored on a separate server or *node and linked back to NFT.
Node is a fancy way of saying computer
Centralized metadata occurs when a NFTs metadata link to data stored on a central server like AWS or Google Cloud. When data is stored in this manner, the NFT owner is trusting that Amazon, Google or whoever owns the server will keep their NFT’s metadata on their server. Thus, as mentioned earlier in the article, the owner of the server is the true owner of the NFT, not the person who spent 1 ETH on OpenSea to purchase it.
Decentralized storage systems, the most popular being IPFS (InterPlanetary File System), attempt to solve the problems of data ownership for NFTs and user generated data in general. IPFS is a peer-to-peer network of nodes or computers that lends storage space to people. Typically metadata is stored on IPFS by paying a node to temporarily store that information via the filecoin blockchain.
The benefit of IPFS compared to centralized servers is when uploading information to IPFS, no matter the computer the data is stored on, the link to retrieve the data is the same. This concept is called content-based search. Thus, if one IPFS node stops storing a NFT’s metadata, all the owner has to do is find another IPFS node in the world and pay them to store the NFT’s information. On the other hand, in a centralized server, the information in the NFT is lost when the server owner stops supporting it.
Side Note: You might be thinking that IPFS is not much different from centralized data storing because you continuously pay another person to store your data, and you would be right to an extent. Fortunately, there are other decentralized storage systems attempting to solve this problem. So stay tuned for an article about that!
With all that said, centralized metadata still has a use case. It is a way to create dynamically changing NFTs. Let's say you buy a Kevin Durant NFT and it is announced tomorrow that Kevin Durant has been traded to the 76ers (unfortunately he stayed with the Nets). Well that NFT metadata that has a picture of Kevin Durant in a Nets jersey would be outdated. With IPFS’ content based search, the NFT will always have a picture of Kevin Durant in a Nets jersey. Nevertheless, with centralized metadata, the NFT can be updated to have a picture of Kevin Durant in a Sixers jersey.
The purpose of this article is not to convince you to not buy NFTs with centralized metadata. Instead, the point was to inform you what buying an NFT with centralized metadata means. If you are considering buying a NFT with centralized metadata, just understand you do not truly own that NFT.
https://twitter.com/theRealSiddhu
https://lenster.xyz/u/siddharthgowda.lens
https://www.linkedin.com/in/siddharth-gowda-030134100/
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