Elon Musk Calls NFTs ‘Just a URL to the JPEG’

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Elon Musk recently criticized some NFT projects for not fully storing assets on-chain during an appearance on Joe Rogan’s podcast.

“The funny thing is the NFT is not even on the blockchain—it’s just a URL to the JPEG,” Musk said in an interview this week. “You should at least encode the JPEG in the blockchain. If the company housing the image goes out of business, you don’t have the image anymore.”

Musk argued that NFT creators should store the full artwork directly on the blockchain, rather than just having the NFT token point to a JPEG hosted on a company’s servers. If that company shuts down, the link would break and the NFT owner would be left with nothing but a broken token.

A prime example of the risks Musk described is the Coachella NFT debacle. In February 2022, Coachella sold $1.5 million worth of NFTs with FTX.US. But with FTX’s collapse, these NFTs are now inaccessible, leaving buyers empty-handed.

However, Musk’s assertion does not apply to all NFT projects. Some projects do fully store artwork on-chain, including pixel projects like CryptoPunks, CyberBrokers, and Bitcoin Ordinals. Storing artwork on-chain ensures it will remain accessible as long as the blockchain exists.

Bitcoin Ordinals in particular store inscriptions of text or images directly on the Bitcoin blockchain, making them permanent and immutable. Advocates argued on social media that Ordinals exemplify the more resilient model Musk advocated for.

.@elonmusk you just laid out the case for Bitcoin ordinals – image/text inscriptions directly on the most secure open source monetary network on the planet. There are currently 38 million of these inscriptions on the Bitcoin blockchain. pic.twitter.com/WASj1qpkz8

— Will (@WClementeIII) November 1, 2023

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