From MP3s to NFTs

Prologue

It’s the year 2000. On a Tuesday evening as my parents and siblings are preoccupied watching Kyle Chandler in the latest episode of Early Edition, I’m sitting in the dining room at the family computer getting it prepared for a busy night ahead. I will attempt to download three different songs on Napster simultaneously, praying the dial-up connection holds on long after everyone has turned in for the night.  

I can’t sleep. My head is swimming with unanswered questions: Are there still peers available? Did I lose my internet connection? Are these songs labeled correctly? Is Metallica going to sue me?!‍

Fast forward to 2022 and while the world is a very different place, variations of these same questions are still being asked when it comes to digital media and the applications we use to share and store it. Indeed, these questions have become particularly poignant when it comes to NFTs and the media associated with them.

‍Digital objects in a physical world

The advent and proliferation of computers created a new bifurcated reality for humans, which accelerated with the rise of the Internet. We now live in a sort of dual reality — half digital, half physical — with the dividing line increasingly blurred.

NFTs are now the latest digital abstraction to force people to question the reality of the digital. With NFTs, much of the focus remains on the public blockchain infrastructure that enables digital scarcity. But what the token looks like (or the media associated with it) is just as important to the story we tell ourselves about these digital objects. 

To preserve them into the future, artists who mint NFTs — and those who collect them — must build and maintain a strong bridge to the physical world. ‍

Let’s consider the problems that kept me awake at night all those years ago:

• Are there still peers available to download from? Availability

• Did I lose my internet connection? Storage

• Are these songs labeled correctly? Authenticity

• Is Metallica going to sue me?! Legality ‍

Someone else’s computer 

Napster was a major inflection point for digital media owing to its freely downloadable software that allowed users to download files directly from other users while bypassing the constraint of centralized, highly censorious servers. This facility was extended further with the release of BitTorrent, an open source communication protocol for peer-to-peer file sharing. As a protocol, BitTorrent enabled decentralization not only of peer discovery but also of software itself. The early peer-to-peer file sharing protocols laid the groundwork for the protocols and networks used today for NFTs. The two most popular systems, IPFS and Arweave, are leveraged to ensure data is available to NFT users and applications when needed.  

IPFS is a protocol that relies on a network of users hosting data that is similar to BitTorrent. According to the IPFS white paper, “IPFS is peer-to-peer; no nodes are privileged.” The key advantage of this federated structure is that the network does not rely on any special nodes, consensus between nodes, or a blockchain. Anyone can run an IPFS node and share the data that is important to them. The downside is that if data is not important to a node then it has no incentive to hold it. 

This leads to a problem that users of Napster and BitTorrent know all too well — the availability of data depends on its popularity. ‍

As a result, paid “pinning” services have emerged that are incentivized to hold data in their node only as long as they’re being compensated for it.

Arweave, in contrast to IPFS, is a blockchain protocol that relies on a network of miners to host user data. Data is added to the Arweave blockchain with transaction fees paid in Arweave tokens. Miners are rewarded for storing user data, and Arweave leverages the dynamics of a cryptocurrency network to incentivize miners to maintain not only data availability but also data permanence (long-term data storage). While permanence is the goal of Arweave, it relies on the success of the economic (Arweave-token) network to incentivize miners to continue to host data they don’t otherwise care about. It also doesn’t require miners to store all data on the network. From the Arweave yellow paper, “The Arweave protocol avoids making it an obligation to store everything, which in turn allows each node to decide for itself which blocks and transactions to store.”

IPFS and Arweave both solve the availability problem with redundancy. In other words, data is stored on multiple computers in the hope that at least one computer is available when it needs to be retrieved. They each have their drawbacks and require specialized software to integrate. This often leads NFT minters to use a third option — a traditional web server. As long as the web server is up and running, data is available to users via HTTP, the foundational protocol layer of the Web. This often provides quicker response times than either IPFS or Arweave. It’s also the easiest and most reliable data storage method for the average Internet savvy NFT minter to set up, so it’s not surprising that about 40% of NFTs have their media stored in this way. 

So what do all three of these storage methods have in common? The NFT media storage has been outsourced by the token holder to someone else’s computer.  

Not your JPEG, not your NFT

There’s a saying among crypto enthusiasts, “not your keys, not your crypto.” Self-custody is one of the key innovations of cryptocurrency and therefore, by extension, NFTs. Individual responsibility is paramount to the success of these networks.

In the days of Napster, you would never claim to possess an MP3 that you had not downloaded. But in the world of NFTs, the vast majority of collectors would claim to hold their NFTs even if they don’t store the media themselves. ‍

But in fact, they rely on platforms like IPFS or Arweave, or even the NFT minter’s own web server, to maintain its availability. Holding an NFT requires having the private key to the address that owns it and all the media the minter has associated with it. Applying this definition for “holding an NFT” helps to strengthen the bridge between the digital and “real” worlds. Not only does the collector hold the canvas with the artist’s signature (the token) but also the paint applied to the canvas to create the art (the media).   

What the hash!?

One area in which digital objects have an advantage over physical objects is the ease with which forgeries can be identified.   

Data integrity of the NFT media can be proven by collectors or anyone else who might be skeptical of a work’s authenticity. A popular method is to calculate a hash, or thumbprint, of an NFT media file or files. Indeed, a variation of this is employed by both IPFS and Arweave. That thumbprint is included with the NFT metadata written into the blockchain when the NFT was minted. Users can reproduce the hash locally from any media they want to authenticate to see if it matches.  

Many NFT minters and collectors place a high value on file hashes to authenticate the integrity of NFT media, but the more important means of authentication relies on correctly identifying the NFT minting address. While anyone can copy a thumbprint of a file, only the NFT minter can verify ownership of the minting address.

An NFT art forger (or copyminter) can easily reference an existing image and corresponding hash. What they cannot do is verify ownership of an address they don’t control.‍

Once the NFT minter’s address is identified, comparing file hashes becomes much less important to the authentication process. It would be akin to telling an artist that you don’t believe the art they’re exhibiting now is the same art that they included with the token when it was minted. This is demonstrated by the 40% of NFTs that rely on a centralized web server to provide the media which may or may not include the additional file hash. Indeed, many early NFTs minted between 2015 and 2018 do not include file hashes or even links to media, yet there is near unanimous agreement as to what they look like!

What an NFT is and what it isn’t

File sharing was a boon to existing business models in the entertainment industry. NFTs will also force people to rethink their ideas of ownership in the digital realm. That said, NFTs at their core are ownable digital objects. Any rights that ownership confers must be explicitly defined (and enforced) by the minter. Securitizing NFTs with roadmaps or with the promise of future utility (such as a VIP pass) can and should be viewed as simply one application of NFTs and in no way a requirement or necessity.

The crypto art NFT movement began when all utility was stripped away and all that remained was the token and the media associated with it.‍

Building bridges

NFTs took a giant leap forward in 2021 when they entered mainstream consciousness, and crypto culture continues to seep into everyday life as more and more people recognize NFTs as a new medium for art and collectibles. Preserving all that is now being created digitally — both the token and the media — will help to shape how NFTs evolve in the future. Relying on the cloud to store NFT media via protocols such as IPFS and Arweave shifts the responsibility away from those minters and collectors who care most about preserving it. But no one cares more about what your token looks like than you.

NFTs are more than signed receipts with media links. They are the token and the media. They are the date and blockchain on which they were minted. They are digital objects that exist in time and cannot be replicated. They are rare!