Atlas Development co-founder Witek Radomski explained that hybrid storage options such as Filecoin or IPFS could be the solution.
As on-chain and off-chain storage of nonfungible tokens (NFTs) have their own unique pros and cons, Web3 executives urged creators to consider what types of NFTs deserve a residence in the blockchain and which should live outside the chain.
In 2022, NFTs were not stored on the blockchain. The norm then was that NFTs in the blockchain pointed to a data storage location outside the chain. Jana Bertram, the head of strategy at Rari Foundation, said that the problem with this type of NFT storage was highlighted early in the FTX bankruptcy saga. At the time, NFTs hosted on FTX broke, showing blank images instead of the original artworks. Bertram explained:
However, the advent of Bitcoin Ordinals changed the game. With Ordinals, NFT data is now stored on-chain, giving birth to a different trade-offs. While Bitcoin-based NFTs lived on the blockchain, giving them advantages like permanence, it also sparked a debate on whether NFTs should be in the Bitcoin network. Many continue to argue that Ordinals are clogging the Bitcoin network, while a different group advocates for the continued existence of NFTs in Bitcoin.
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Source: https://cointelegraph.com/news/bitcoin-ordinals-off-chain-nft-storage-web3-execs