On April 24th, the NFT community was rocked by a sudden tidal wave, as RTFKT’s CloneX NFTs appeared to have disappeared. Users quickly found themselves unable to view the images connected to their precious digital goods. The culprit? A Cloudflare account downgrade that revealed just how bad the centralized NFT infrastructure is. This incident serves as a stark reminder of the risks lurking beneath the surface of the seemingly immutable world of NFTs.

This was a huge problem caused by Cloudflare accidentally changing RTFKT’s account to a free tier. This downgrade caused an immediate blackout, since the CloneX NFTs, which were hosted on Cloudflare’s servers, were suddenly not available to view or own. Anyone who attempted to view their NFTs were greeted with an error message that pointed out this violation of Cloudflare’s terms of service (ToS). To learn more, they were invited to visit cfl.re/tos. Speculators began to take aim at RTFKT’s business strategy of using Cloudflare. They worried that might not be sufficient to handle the very intense traffic demands required to serve up images for such a sought after NFT collection.

This incident underscores a fundamental problem within the NFT ecosystem: the reliance on centralized platforms. Marcin Kowalczyk, a blockchain regulatory analyst, makes a key observation. He breaks it down showing that over 31.68% of NFTs are dependent on centralized infrastructures. This reliance introduces a central point of failure, putting NFTs at risk of data loss, downtime, and even censorship. As seen with the CloneX blackout, this scary and centralizing future is clearer than ever.

The Perils of Centralized NFT Hosting

The CloneX incident isn't an isolated case. Creating NFTs that are only accessible through centralized hosts has already led to disasters. This dramatic dependence on centralized platforms raises a host of dangers.

Real-World Examples of Centralized Hosting Failures

  • Data Loss: The NFT "Quantum," sold for a staggering $1,472,000 USD, became inaccessible online just days after the sale, a chilling example of the fragility of centralized storage.
  • Bug-Induced Data Loss: In September 2021, an OpenSea bug resulted in the disappearance of at least 42 NFTs, valued at around $100,000 USD, further highlighting the risks associated with centralized platforms.
  • Vulnerability to Attacks: Centralized content delivery networks (CDNs) can be disrupted or prevented from hosting content, including NFTs, as demonstrated by reports of attacks on CDNs.

These tragic and preventable incidents underscore the failings of all centralized systems. Technical glitches, policy changes, and sometimes even malicious attacks can quickly derail it. These missteps threaten to undermine the very accessibility and value that can make NFTs so appealing.

Why Decentralization Matters

The CloneX incident along with other widely recognized use cases highlights the importance of decentralized storage solutions for NFTs. Decentralization removes the single point of failure that is a feature of centralized systems. Through the distribution of data across a network of nodes, decentralized storage platforms provide greater resilience, security, and longevity.

Actionable Steps for NFT Holders

The CloneX incident should be a wake-up call to all NFT holders. Therefore, it’s of the utmost importance that you take a proactive approach to ensure the security and longevity of your NFT assets. Here's how:

  1. Investigate Storage Methods: Determine where your NFT's metadata and associated files (images, audio, etc.) are stored. Is it on a centralized server or a decentralized storage network?
  2. Review Project Documentation: Scrutinize the NFT project's documentation to understand their storage strategy and contingency plans in case of unforeseen events.
  3. Verify Ownership History: Assess the NFT's ownership history to ensure its authenticity and legitimacy.
  4. Consider Decentralized Alternatives: If your NFT relies on centralized storage, explore options for migrating its metadata and files to a decentralized platform.

Exploring Decentralized Storage Options

Luckily, there are a number of decentralized storage technologies available that provide much better options than centralized hosting. Here are a few popular options:

  • Arweave: This platform is designed for permanent data storage, with a one-time payment ensuring long-term accessibility. RTFKT's migration to Arweave following the Cloudflare incident demonstrates the growing recognition of this solution.
  • IPFS (InterPlanetary File System): A Web3-based distributed file storage protocol that allows users to store and share files in a decentralized manner, with no single point of failure.
  • Storj: A decentralized cloud storage platform that offers S3-compatible storage, with features like durability and availability rates of 99.95%, and a cost-effective pricing model starting at $4.00 per TB per month.
  • Aleph.im: A decentralized storage tool that allows users to securely access off-chain data, with a focus on providing a secure and decentralized alternative to traditional cloud storage solutions.
  • Filebase: A simplified decentralized file storage protocol that offers a free plan, as well as integration with Ethereum.

The CloneX incident is an important reminder for the broader NFT ecosystem. It shines a light on some incredible centralized hosting risks and the dangers of prioritizing centralized hosting over decentralization, resilience, and general project sustainability. NFT holders must take proactive steps to ensure the security of their assets. By proactively exploring decentralized storage options, they can do a better job protecting the longevity and value of their digital collectibles. The Twitter incident emphasizes just how important user trust is. Today, crypto-native NFT holders expect projects to prioritize protecting and ensuring long-term access to their digital assets. deliciousNFT.com will continue to bring you the juicy side of the decentralized metaverse. Get educated and get ready as the NFT space keeps changing every day!