Does NFT Art Really “Live” on The Blockchain?

The first and most crucial component of an NFT is the unique ID that distinguishes it from every other token. The most popular iteration of NFTs — built on the ERC-721 tokenization standard — is supported by an Ethereum smart contract that records any transfers or changes in ownership of that particular NFT.

Another fundamental feature of NFTs is their ability to link to data outside of their smart contracts, referring to data that exists off-chain. It is technically and financially inconceivable to host a large file, such as a piece of digital artwork, natively on-chain in a blockchain environment. It has been estimated that storing one gigabyte of data on the Ethereum blockchain would cost about 17,500 ether (ETH) (an approximate equivalent of $35 million USD as of June 2021). For this reason, NFTs must be able to reference off-chain data, which also means that the artwork a particular NFT represents must exist elsewhere. The NFT that indicates the provenance of an asset lives on the blockchain, but the asset itself typically does not.

Lispnft.com