Crypto Gloss

IPFS

IPFS (InterPlanetary File System) is a peer-to-peer distributed protocol for storing and sharing data in a decentralized network. Created by Juan Benet and released in 2015 by Protocol Labs, IPFS uses content addressing — identifying files by a cryptographic hash of their content (called a CID, Content Identifier) rather than by a server URL. If two people have the same file, they have the same CID; and any node in the network that has the file can serve it to any requester.

IPFS is foundational infrastructure for Web3: it is how NFT images and metadata are typically stored, how decentralized applications distribute frontend files, and how protocols like Filecoin build economic incentive layers for persistent decentralized storage.

How It Works

The following sections cover this in detail.

Traditional Web (Location-Based Addressing)

You want a file → Ask a specific server at a specific URL → Server returns file

“`

If the server goes down, the file is gone. If the URL changes, the link breaks.

IPFS (Content-Based Addressing)

You want a file → Request CID (hash) from the network →

Any node with that content returns it

“`

The file’s identity is its content. The content cannot change without changing the CID. If even one node holds the file, it’s retrievable.

Content Identifiers (CIDs)

  • CIDv0: Qm... format (SHA-256, 46 characters)
  • CIDv1: bafy... format (flexible encoding, base32)

You share the CID; anyone with IPFS can retrieve the file. The content at a given CID can never change — if you change the file, you get a new CID.

Pinning

NFT Metadata and IPFS

The intersection of IPFS and NFTs is critical:

When an NFT is minted, the smart contract stores a token URI — a link to the token’s metadata JSON file (containing name, description, image URL, attributes). There are three models:

  1. Centralized hosting: https://api.myproject.com/token/1 — If the API goes down, all metadata disappears. NFT becomes worthless/broken.
  1. IPFS URI: ipfs://QmXyZ.../1.json — Content-addressed, immutable. But if no one pins it, it may not be retrievable.
  1. IPFS + Pinning service: ipfs://QmXyZ.../1.json pinned on Pinata or nft.storage — Best practice: immutable and persistently served.

The NFT permanence problem: Many “blue chip” NFTs store metadata on centralized servers. If the project’s company shuts down, those NFT images and attributes disappear. IPFS doesn’t solve storage permanence by itself (that requires active pinning), but it provides immutability — the content cannot change.

Filecoin

Filecoin is Protocol Labs’ economic incentive layer built on top of IPFS. Where IPFS provides the protocol for content-addressed storage, Filecoin creates a marketplace where:

  • Storage providers lock up FIL tokens as collateral
  • Clients pay storage providers in FIL to store data for defined periods
  • Cryptographic proofs (Proof of Replication, Proof of Spacetime) verify data is actually being stored
  • Storage providers are penalized (slashed) for failing to serve data

Together, IPFS + Filecoin are intended to form a fully decentralized, economically sustainable alternative to centralized cloud storage (AWS S3, Google Cloud Storage).

Limitations

  • Latency: IPFS is generally slower than centralized CDNs for serving content to users — peer-to-peer retrieval has higher latency than geographically distributed CDN edge nodes
  • No guaranteed persistence: Without pinning, content can disappear from the network as nodes drop cached data
  • Browser compatibility: Browsers don’t natively support ipfs:// URIs — requires an IPFS gateway (like gateway.ipfs.io) to serve IPFS content over HTTP, reintroducing centralization risk
  • Large file performance: IPFS works well for documents and images; large files (video) work less smoothly

Common Misconceptions

“Files on IPFS are stored forever”

False. IPFS is a retrieval protocol, not a storage guarantee. Files are only available as long as at least one node is pinning them. “Stored on IPFS” without a pinning arrangement means the file may eventually disappear.

“IPFS is the same as Filecoin”

Related but distinct. IPFS is the protocol; Filecoin is the economic incentive layer that pays storage providers to persistently pin data. You can use IPFS without Filecoin (and must pin manually) or use Filecoin to fund persistent storage.

“IPFS is slow and useless”

IPFS has real latency challenges for serving end-user web content. But for content-addressed immutable data (NFT metadata, software distributions, archives), its properties are uniquely useful. The latency problem is partially solved by gateways and CDN caching.

Social Media Sentiment

IPFS is generally respected in the Web3 developer community as important infrastructure. NFT projects that use IPFS for metadata storage are viewed more favorably than those using centralized hosting (often listed as a “rug risk” if images are on a centralized server). However, the nuance that IPFS alone doesn’t guarantee persistence (pinning is required) is poorly understood by most retail NFT buyers. Protocol Labs is considered a legitimate and important technology organization in Web3 circles.

Last updated: 2026-04

Related Terms

Sources

  • Benet, J. (2014). IPFS — Content Addressed, Versioned, P2P File System. arXiv:1407.3561.
  • Protocol Labs. (2022). nft.storage: Free Decentralized Storage for NFT Data. Protocol Labs Blog.
  • Wang, Q., Li, R., Wang, Q., & Chen, S. (2021). Non-Fungible Token (NFT): Overview, Evaluation, Opportunities and Challenges. arXiv:2105.07447.