The fervor for Non-Fungible Tokens (NFTs) has encountered a rollercoaster ride, peaking and currently experiencing a downward trend that commenced last year. This downward trajectory has drawn significant scrutiny, with even prominent figures like Elon Musk joining the chorus of critics, presenting a perspective that has ignited enthusiasm among Bitcoin enthusiasts.
Elon Musk discusses NFTs with Joe Rogan
During a recent appearance on the widely popular “Joe Rogan Experience” podcast, Elon Musk, the CEO of Tesla and SpaceX and the owner of Twitter, expressed reservations about many NFTs not being completely stored on the blockchain. His concern revolved around the fact that some NFTs essentially function as URLs to JPEG images hosted on external servers, potentially posing risks to the safety and availability of the artwork. Elon Musk highlighted the need for more secure storage of NFTs, proposing that the image or JPEG should be encoded within the blockchain.
He underscored the risk of losing the image in case the company hosting the artwork goes out of business, shedding light on a notable downside observed in various NFTs. Criticisms like this were common during the initial boom of NFTs, especially when hefty sums were paid for assets like Bored Ape and CryptoPunks avatars in 2021. An illustrative incident occurred when FTX, a crypto exchange, encountered issues with its NFT marketplace and associated items after its servers faced disruptions late last year. However, Musk’s observations don’t uniformly apply to all NFTs.
While numerous projects on Ethereum, the leading blockchain network for NFTs, do store their artwork on-chain, certain decentralized storage platforms offer NFT owners the ability to secure their art in the event of server failures. Elon Musk’s remarks also shine a light on a prevalent misconception about NFTs. It’s vital to note that the NFT itself isn’t the artwork; rather, it serves as a proof of ownership linked to digital art, interactive game items, or even physical assets. Some NFTs are housed on decentralized blockchains, ensuring their immutability and resistance to censorship, while others represent ownership of tangible items.
Redefining the security and integrity of NFTs
Interestingly, there exists a unique niche where all artwork and media are fully on-chain—Bitcoin’s Ordinals protocol. This distinct system empowers users to “inscribe” art and media onto the Bitcoin blockchain. Unlike Ethereum and similar blockchains relying on smart contracts, Ordinals links artwork to a single satoshi, the smallest unit of Bitcoin, providing a unique inscription number. This method ensures that assets are permanently embedded in the blockchain, guaranteeing their durability as long as the Bitcoin network remains operational.
Musk’s comments prompted advocates of Bitcoin and proponents of Ordinals to emphasize the superiority of this approach compared to conventional NFTs on Ethereum and other platforms. They lauded the ability of Ordinals to directly inscribe and store assets on the most secure open-source monetary network globally, underscoring the sheer number of inscriptions on the Bitcoin blockchain. Supporters of Ordinals, galvanized by Elon Musk’s remarks, underscored the elegance and permanence of this system in contrast to the challenges faced by NFTs stored off-chain.
This sentiment resonated widely across social media, with various figures in the cryptocurrency space endorsing Ordinals as a more robust solution to address the drawbacks of traditional NFT storage. This resurgence in the debate surrounding NFT storage has refocused attention on potential solutions and drawbacks of different systems, as the community strives to find the most secure and reliable method to safeguard digital assets.