One of the arguments put forward by proponents of NFTs is that these tokens, being blockchain-based, allow freedom from the rules of third-party platforms. However, the dependence on the markets where NFTs are acquired is still present. To such an extent that, as we are already seeing, many of the NFT tokens are becoming unavailable because the servers of the websites where they are hosted have shut down.
This is not the case with all NFTs and it is not an inherent problem with these tokens, but it is a sample of the various problems that are arising as this tool becomes more popular. A bad implementation that can leave investments of thousands of euros in vain.
The vast majority of NFTs may disappear in the next few years if platforms go bankrupt
The usual mechanism for NFTs sold on platforms such as Niftygateway or Makersplace is to point to an internet URL or IPFS hash. Typically, the NFT points to an IPFS link maintained by the company where the token was purchased.
As a user, Jonty Wareing, explains, in the case of Beeple's work sold through Nifty, the NFT token is for a JSON file hosted on Nifty's servers.
This has a clear problem and that is that in the event of Nifty going bankrupt, the token would lose its value as it would not point anywhere. And it is not something that can be changed, since it is a value that is established during the creation of the token.
According to the user, all NFTs using this system will be anchored to the platforms where they were sold. And therefore, if these platforms disappear, so will those tokens.
Another type of solution is the one used by Christie's in the Beeple work sold for 69 million dollars. In that case, the NFT points to an IPFS hash. The user links to the metadata in this link, which is public. Metadata that is indeed independently hosted. However, the metadata itself is linked to Makersplace. So, in practice, although the IPFS solution would be more resilient to server changes, it still leaves the NFT tied to the platform to the extent that the metadata is so defined.
An IPFS hash that, as the thread describes, will only continue to display metadata files as long as a network node continues to host them. That is, in case the third-party platform stops working, the IPFS would surely stop working as well. Something that would already be happening, as different NFTs have been found with IPFS that are no longer hosted anywhere.
Given that many of the platforms selling NFTs are small companies, many buyers are likely to be surprised in a few years if these companies go out of business.
In contrast, the OpenSea platform has recently received a $23 million investment to strengthen its position as a priority marketplace for NFTs. If consolidated, NFTs sold through that site will offer extra peace of mind to its users, but perhaps spell the demise of other rival marketplaces. And thus many NFTs.
NFTs are experiencing tremendous growth in recent months, but there is still room for improvement in their implementation. Today, in many cases, they do not provide sufficient guarantees. And that should be a major wake-up call when the numbers involved are starting to get so big.
