The $65 Million NFT sold by Beeple recently has been found to not necessarily point to the artwork itself, but something more like a website hosting the file – which if that company goes out of business, the NFT can *poof* into thin air.
Been reading some of the happenings related to NFTs and what not and came across this Twitter thread here.
Out of curiosity I dug into how NFT's actually reference the media you're "buying" and my eyebrows are now orbiting the moon Short version:
The NFT token you bought either points to a URL on the internet, or an IPFS hash. In most circumstances it references an IPFS gateway on the internet run by the startup you bought the NFT from.
Oh, and that URL is not the media. That URL is a JSON metadata file Here's an example. This artwork is by Beeple and sold via Nifty: https://niftygateway.com/itemdetail/primary/0x12f28e2106ce8fd8464885b80ea865e98b465149/1
The NFT token is for this JSON file hosted directly on Nifty's servers: api.niftygateway.com/beeple/100010001
This isn't all NFTs, but many are falling into this/these categories.
THAT file refers to the actual media you just "bought". Which in this case is hosted via a @cloudinary CDN, served by Nifty's servers again.
So if Nifty goes bust, your token is now worthless. It refers to nothing. This can't be changed.
"But you said some use IPFS!" Let's look at the $65m Beeple, sold by Christies. Fancy. https://onlineonly.christies.com/s/beeple-first-5000-days/beeple-b-1981-1/112924
That NFT token refers directly to an IPFS hash (ipfs.io). We can take that IPFS hash and fetch the JSON metadata using a public gateway: https://ipfs.io/ipfs/QmPAg1mjxcEQPPtqsLoEcauVedaeMH81WXDPvPx3VC5zUz
So, well done for referring to IPFS – it references the specific file rather than a URL that might break! …however the metadata links to https://ipfsgateway.makersplace.com/ipfs/QmXkxpwAHCtDXbbZHUwqtFucG1RMS6T87vi1CdvadfL7qA . This is an IPFS gateway run by makersplace.com, the NFT-minting startup.
Who will go bust one day.
Obviously Makersplace may not go out of business anytime soon, but – obviously – if you're buying a piece of art for $65 Million (or any amount for that matter) — you don't want to rely on a company's existence in order to view your purchase.
Many NFTs are already unable to be viewed due to these problems. The thread continues on and can be read in easier reading format for anyone interested.
Edit: Clarification: the NFT was created by Beeple and sold by Christie's.