On-Chain vs. Off-Chain: What’s this all about, and what is the difference exactly?

by the MusicArt team

As you already know, NFTs, or Non-Fungible Tokens, are a new way to track and confer ownership of items in the digital world. These tokens can be anything from album or single cover art, to autographs, gig posters, and more. The process of taking your cover art, say, and turning it into a digital asset that can be bought and sold on a blockchain is called minting.

But if the value of an NFT comes from what it represents, (ie., an image, a video, or, say, a video game asset), how exactly do minters connect the NFT that they can buy and sell, to the thing that it represents? The answer is metadata.

Metadata is info about data. In the case of NFTs, metadata describes the NFT's essential attributes, like its title, a description of the token and, really, anything else its minter thinks is important. So when you mint an NFT you generate metadata that connects that NFT to what it represents.

The way that the blockchain works means that every transaction of an NFT is stored publicly, “on the chain,” so to speak, for all to see. That's the main benefit of blockchain: information is public, so it's nearly impossible to forge or erase. But an NFT’s metadata, that info or data that connects the NFT itself to the underlying thing the NFT represents, doesn't always have to be stored on chain. Should it be? And what exactly is the difference between an on-chain and off-chain NFT?

Understanding the answer means knowing, first off, that digital artwork can be stored in different ways. On-chain, all metadata is saved with the artwork and the transaction, on the blockchain, so if a buyer or a seller or anyone tries to find out what a particular NFT represents they will always see the same information everyone does. "Off-chain" means the metadata is stored in different places, usually a database controlled by an organization or a person. This means it may not always be visible when people are trying to find out what the NFT is.

So, to review, o n-chain means the metadata and the image are part of the blockchain and "off-chain," means the metadata literally not on any blockchain. Instead, the blockchain transaction will include a link that points to an off-chain server somewhere, that stores the metadata that connects the NFT to the underlying digital artwork.

What’s the downside of that? Well, as mentioned, "off-chain" storage is usually a database controlled by an organisation or a person. That off-chain server needs to be maintained. The servers must be kept up and running, all the time, so that the metadata is visible anytime someone wants or needs to confirm it. If the server goes down (or the company hosting it goes out of business) then essentially, the image and its metadata would be lost, even though the transaction itself will always be visible on the blockchain. And while there are duplicated off-chain servers to protect against this, the image and metadata are still not on-chain, and thus not always visible to all, as the transaction is.

Fortunately, our platform keeps all metadata and artwork on-chain, reducing this risk. Knowing the benefits of on and off-chain storage, makes you a more informed and savvy minter and collector.

Published at 12/2/2021, 3:37:43 PM

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