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KnownOrigin has announced its imminent closure, sparking new debates about the reliability and longevity of nft storage solutions.
KnownOrigin retires
KnownOrigin, since its inception in 2018 in Manchester, England, has been a major player in the digital art space, offering a way for artists to mint, sell and trade nfts.
The platform seemed poised for even bigger things when eBay nft-marketplace/” target=”_blank” rel=””>bought In June 2022, for an undisclosed amount, many industry observers considered it a strategic move for the e-commerce giant to enter the booming nft market.
The deal was expected to leverage eBay’s massive user base and KnownOrigin’s platform to create a new marketplace for digital collectibles. However, less than two years later, KnownOrigin is closing its doors.
Signs of the nft market’s troubles surfaced on February 20, 2024, when it laid off 30% of its staff, crypto.news reported. The layoffs followed a cooling off of the nft frenzy that had characterized the crypto space from late 2020 to mid-2022.
Months later, on July 17, the situation came to a head, when KnownOrigin announced through a series of posts on x that it would be shutting down its on-chain marketplaces and minter. It also redirected users to secondary marketplaces, including OpenSea and Magic Eden.
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The IPFS debate: on-chain and off-chain storage
While the full impact of KnownOrigin’s shutdown is still unknown, one of the things it has done is raise questions about the longevity and security of digital assets.
The news has also raised concerns about the sustainability of the InterPlanetary File System (IPFS) as a storage solution for nfts.
Digital artist Ella, also known as BrightLightArt, took to x after KnownOrigin's announcement to express her concerns. In her post, the artist stated: “Is eBay going to foot the IPFS storage bill forever? If they stop paying, art will eventually die.”
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Ella’s sentiment highlights a critical problem in the nft ecosystem: the misconception that nfts and their associated media are entirely on-chain.
The reality, according to technology experts, is more complex and less reassuring. According to them, most nfts are not stored directly on the blockchain, but instead contain metadata that points to an off-chain file stored on platforms such as IPFS.
While IPFS is a distributed file storage system that aims to be more resilient than traditional web servers, it still has its limitations. For example, if the entity responsible for hosting the IPFS node goes out of business or stops maintaining the node, the data could become inaccessible, causing the nft to lose its value.
<h2 class="wp-block-heading" id="understanding-what-you-own-with-an-nft“>Understanding what you “own” with an nft
In a previous post on x, Jonty Wareing, a vocal critic of the current state of nft storage, shared the results of an extensive analysis of how nfts reference the media they represent.
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His findings were illuminating. According to him, when you buy an nft, you are essentially buying a token that points to a URL on the internet or an IPFS hash. In many cases, this URL points to a JSON metadata file that includes information about the medium. This file, in turn, links to the actual medium hosted on a server controlled by the nft platform.
Jonty used the example of a Beeple artwork that sold on Nifty Gateway for $66,666. The nft points to a JSON file hosted on Nifty's servers. However, according to him, if Nifty Gateway were to shut down, the token would point to a non-existent file.
IPFS storage is not completely safe for nfts
The technologist also claimed that even nfts that use IPFS hashes for storage are only partially secure. While IPFS is a distributed file system, it only serves files as long as there is a node on the network that continues to intentionally host the file.
If the startup or entity responsible for pinning the file to IPFS goes bankrupt, as is the case with KnownOrigin, the file could disappear from the network, similarly leaving the nft pointing to an inaccessible file.
This reliance on third-party platforms for the longevity of nft data is a major vulnerability that needs to be addressed.
Jonty's assessment was blunt: “At present, nfts are built on a house of cards built by the people selling them,” said the digital researcher.
He also stated that all nfts sold so far are likely to be broken within the next ten years. This stark warning underlines the fragility of current nft storage solutions.
Sam (@cloudonshore), an ethereum engineer with extensive experience in IPFS, acknowledged the criticisms raised by Jonty, stating that the technology is still evolving and the industry needs better tools and practices to ensure the security and permanence of nfts.
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However, you should keep in mind that not all nfts face this problem. Some projects are completely on-chain, meaning they have a decentralized system for storing both the nft's metadata and its visual media.
Unfortunately, the biggest obstacle to more projects adopting such measures is the fact that full on-chain storage is not cheap, especially for projects with larger media files.
Possible solution and future considerations
The closure of KnownOrigin has sparked a wave of introspection within the nft community. In response to these concerns, some artists and collectors are advocating the use of storage solutions like Arweave. Unlike IPFS, Arweave is a blockchain-based storage solution that aims to provide permanent data storage for a one-time fee.
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When a file is stored on such platforms, it is stored on a decentralized network of computers, which theoretically guarantees its availability as long as the network exists. This makes it a more reliable option for storing digital art in the long term, although it still depends on the health and continuity of the underlying network.
Whats Next?
KnownOrigin’s shutdown should serve as a wake-up call for the nft community. It shows the importance of understanding how nfts are stored and the risks associated with current practices.
Additionally, as technology evolves, it will be imperative for nft platforms, artists, and collectors to advocate for and adopt more secure and sustainable storage solutions for digital art.
The reliance on off-chain storage solutions and the potential for data loss if these services go offline pose significant risks to the value and integrity of nfts.
It is hoped that the discussions sparked by this event can lead to significant improvements in the way digital art is stored and preserved, ultimately benefiting the entire crypto art community.
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