Are NFTs too centralized? The FTX case reveals a need for decentralization

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Trouble continues for FTX users weeks after the exchange goes bankrupt. This time, it is no longer the cryptocurrencies that were on the platform that pose a problem, but the hosting of the media of the NFT.

NFT on FTX: too centralized?

When the FTX platform shut down its servers, it was no longer possible to log in to its account. The problem is that the NFT collections available on FTX were extremely centralized. The first to have paid the price are the collectors of Coachella’s NFT Collection. Indeed, without access to their account, they could no longer benefit from the advantages offered by their purchases.

Although the organization of the festival has assured to do its best to find a solution, the collection was created in a closed way. It therefore cannot be automatically listed on other open NFT marketplaces such as magic eden Where Opensea. Moreover, without the possibility of communicating with the teams of FTXit is impossible to recover possession of the smart contract.

A final problem is added to this list: the centralization of media hosting.

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Towards more decentralization for NFTs

Today, the connection on FTX redirects to the Kroll site which informs of the ongoing restructuring of the exchange. Only then, all the metadata relating to the image, video, gif or audio files of the NFTs were hosted centrally on their server. This therefore means that the media of any collection created on FTX are now inaccessible.

Tweet by jac0xb – Source: Twitter

According to ClubNFT, a project that promotes the use of IPFS as a media hosting solution for NFTs, today 40% of NFT collections on Ethereum are hosted this way… This figure is encouraging and proves that the community NFT continues to seek and find solutions to ensure the integrity and longevity of their collections.

The example of FTX is not isolated, other exchanges like Binance Where Crypto.com have a similar operation on their NFT marketplace. Hosting on IPFS is a first step, but maybe the future lies in on-chain media hosting?

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