What You Need to Know About NFT and IPFS

June 17, 2022

If you’ve minted NFTs, chances are almost certain that your tokenization service uploaded your intellectual property to IPFS. Okay, so what the heck is “NFT and IPFS,” and why does it matter?

What is IPFS?

“The InterPlanetary File System (IPFS) is a protocol and peer-to-peer network for storing and sharing data in a distributed file system. IPFS uses content-addressing to uniquely identify each file in a global namespace connecting all computing devices.

Sound familiar? Let me give you an analogous definition…

BitTorrent is a communication protocol for peer-to-peer file sharing (P2P), which enables users to distribute data and electronic files over the Internet in a decentralized manner” 

Heck, Wikipedia even says, “IPFS allows users to host and receive content like BitTorrent.”

Anyone can sign up to run an IPFS node. And they do. Tens of thousands of people globally have downloaded the software and are happy to host (custody) our content on their personal computers.

Now, while this technology marvel sounds amazing to engineers and decentralization evangelists, it appropriately terrifies anyone who cares about the integrity of their intellectual property.

The Breakdown Between NFT and IPFS

Remember that an NFT is really just a key that unlocks data in a filing cabinet (database). 

Eventually, your personal health records, thanks to the CURES Act requiring hospitals, insurance companies, and healthcare institutions to open their databases via APIs, will be unlocked via an NFT. Do you want your X-rays, MRIs, prescriptions, and other information stored on countless personal computers worldwide? No, of course not. And the same goes for content creators; nobody wants their music, film, art, photographs, writings, games, real estate deeds, contracts, or other intellectual property distributed across countless personal computers that are owned and operated by people who aren’t paid, aren’t supervised, and aren’t regulated.

Scary. And at the moment, it’s pretty much the only option in the NFT world. This is partly why it’s still a bit too early for people who care about their IP to jump in and start tokenizing music, art, film, real estate, and other valuable content. Using a BitTorrent (er, IPFS), they are essentially just giving away the thing they’ve spent a career building.

So what’s the solution? Easy…ensure that the content your NFT unlocks is held in private data storage with Google Cloud, and overseen by a regulated financial institution. Thus the data is in a resilient database system that is compliant with PCI. SOC2. HIPPA and other security and privacy standards. And it is overseen by a trusted company or bank such that it is SOC2 certified, staffed by professionals, and subject to annual audits by the banking commissioner, as well as independent financial, security, risk, and BSA audits.

Using a “centralized” regulated custodian instead of a network of tens of thousands of unpaid “decentralized” custodians may not be cool, but it will protect your content.

The Fortress Solution

Is the team at Fortress Blockchain Technologies building this solution and delivering it via APIs? Of course, we are.


Want to learn more?