Elon Musk made a recent appearance on Joe Rogan. What followed was the usual winding conversation, which led to Joe shooting a Tesla truck with a compound bow, wearing a blonde wig, and, naturally, transitioning to the subject of NFTs. Elon Musk, certainly no expert on blockchain tech, pointed out to Joe that NFTs are, in general, not even on a blockchain. Many NFTs are JSON containers that point to URLs that host the image. Of course, if whoever is hosting the image goes down, then the NFT points to an empty URL. We have seen this happen a few times – one of the most prominent cases was 3LAU’s NFT album sold on NiftyGateway, which, as far as I am aware, has now disappeared.
Ever quickly, Taproot Wizards tweeted out a tongue-in-cheek clip claiming Musk is a wizard who explains why Ordinals are superior to NFTs. Although he never mentions Ordinals, he does point out the issues in NFTs. The difference between NFTs and Ordinals is obvious: Ordinals are stored fully on-chain, while NFTs are not always (although Etherscriptions store data directly on-chain, they are nowhere as popular as NFTs were).
Musk’s understanding of crypto is probably a good barometer for retail understanding. Musk is brilliant but spread pretty thin. But, if he understands the issues with NFTs, my guess is that other less-in-the-weeds crypto users are coming around to understanding it. And supposing their understanding has made them skeptical of NFTs. In that case, my hunch is that the new crop of digital artifact/collectible traders or buyers will probably come for Ordinals and Etherscriptions instead of existing NFTs with vulnerable architecture in the back end.
Putting data directly on a chain has drawbacks – particularly for Ordinals, chain bloat. But the narrative/meme of NFTs – but on-chain, is probably strong enough to affect the purchase decisions of new entrants to this market. As such, if you hold a bag of NFTs that point to URLs somewhere, you may be disappointed by how the market behaves when/if we get a large crop of new entrants.