NFTs or Non-Fungible Tokens are the hottest search terms and if you happen to use media in any way, you must have heard about NFTs. What are NFTs and how actually some pictures, gifs, and other media adhere to blockchain and become so expensive is a long debate.
One of the main features that discourage rug pull activities is the option to host the NFTs on IPFS (Interplanetary File System). Now why hosting on IPFS is important is very critical to understand. When a digital asset is created as an NFT, let’s say a JPEG file, this uploaded file resides on some system under a given address hosted on HTTP.
So What’s The Deal With IPFS?
Imagine you own a very rare Bored Ape Yacht Club NFT. The next day you check your collection and you find out that everything else is the same except the NFT has been replaced with some other – quite an opportunity to rug pull. The above address stores an NFT on a system which is not a very smart way to do it. Since that JPEG file resides on some server, anyone can change the content of the original file or even replace the file with a new image – no guarantees there. In the case of NFTs, the matter gets even more serious.
Opensea has once Rug Pulled to show the arbitrary value of these digital assets. IPFS solves this problem through content addressing where each asset has a unique hash. If the asset is altered in any way, the hash will also change, signaling there’s something fishy. This means that the image displayed will no longer be dependent on your hosting website.
NFTs are digital assets that have value for different reasons. NFTs are used as assets in blockchain games and Metaverse. Your gaming avatar, his shoes, hats, weapons, and even the game environment can be NFTs in Metaverse games. NFTs are also being used as PFPs on social media. Some NFTs are membership-based that allow member-only perks to the NFT HODLers – Bored Ape Yacht Club. It is a wide universe of promises, value, and digitalization through blockchain. So, securing these NFTs against every malicious attempt is very important.
Simple hosting on any website is exposed to a Rug Pull. The problem of hosting the NFTs can be solved through IPFS but the problem of double-spending remains. Double spending is the issue that enables the creator to only sell the item as many times as he or she wants. Even if we avoid the numerous double-spending, the creator still holds the right to create another similar item. Have you ever pondered if Da Vinci paints another Mona Lisa and how much will it be worth?
more to read
sources: cointelegraph, dwt
author: Rene Remsik, mnmansha
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.