What Is IPFS Storage and How Does It Work?

What Is IPFS Storage?

IPFS storage is a decentralized protocol for storing and sharing files through a peer-to-peer network. Instead of requesting data from a specific server or hard drive, like with traditional web technology, IPFS distributes content across multiple nodes in the network. Each node, or computer, stores a small part of the file. No single party has full control over the entire file. That makes IPFS especially popular for Web3 development. Many NFT projects and other cryptocurrency projects use IPFS technology. There is no single point of failure. If one of the nodes goes offline or disappears, your data is still safe.

The main difference lies in how data is addressed. With IPFS, you do not request a location, you request the content itself. Files receive a unique cryptographic hash, also known as a content identifier. This hash is based on the contents of the file, meaning any change immediately results in a new identifier. This fits perfectly with how blockchain and crypto handle data.

Key Takeaways

• IPFS is a decentralized storage protocol that operates through a peer-to-peer network.
• Files are identified based on their content using a cryptographic hash.
• IPFS prevents a single point of failure by distributing data across multiple nodes.
• NFTs and Web3 projects often use IPFS as an external storage layer.
• Without IPFS, NFTs and Web3 applications risk centralized failure.

How Does IPFS Work?

When a file is added to IPFS, it is first split into smaller pieces. Each piece gets its own hash, and together they form a kind of tree structure. These hashes are shared across the network so other nodes know where the data is available. When someone requests the file, IPFS automatically searches for the closest or fastest node that has the requested content.

Because the hash is directly tied to the content, users can always verify that the data they receive matches the original file exactly. This makes IPFS not only efficient but also secure and reliable. There is no central authority deciding who gets access to the data or whether it remains available.

IPFS and Crypto: Why Do They Go Together?

In crypto and blockchain, data integrity is critical. Blockchains are excellent at recording transactions, but they are not ideal for storing large files like images, videos, or documents. That is why IPFS is often used as an external storage layer.

A well-known example is NFTs. The metadata and images of NFTs are frequently stored using IPFS, while the blockchain only contains a reference to the IPFS hash. This keeps the data decentralized and prevents it from being easily altered or removed. IPFS is also used in DeFi, DAOs, and Web3 applications for front-ends, documentation, and governance files.

What Happens If You Do Not Use IPFS?

If NFT metadata, images, or Web3 front-ends are simply stored on a centralized server through HTTP, traditional internet risks apply. Data can disappear for several reasons. For example:

• the server could go offline
• the hosting service could be terminated
• the domain could expire
• the owner could decide to remove the files

If that happens, your NFTs technically still exist on the blockchain, but the image or metadata is gone. In other words, you are left with a broken NFT or an empty placeholder. That is why it is important and common practice to store NFTs in a decentralized way.

How Can IPFS Be Used?

In practice, IPFS is used in several ways. Developers use it to host decentralized websites that do not rely on a single server or hosting provider. Crypto projects store whitepapers, smart contract interfaces, and NFT content on IPFS to increase longevity and reliability.

Individuals can also use IPFS to share files or store data without relying on centralized platforms. Combined with additional networks like Filecoin, IPFS can even function as an economic storage solution where users are rewarded for providing storage space on their personal computers.

Advantages of IPFS

• Decentralized storage
  Files are not stored on a central server but distributed across multiple nodes. This makes IPFS more resistant to censorship, outages, and targeted attacks and aligns well with the core principles of crypto and blockchain.
• High data integrity
  Files are identified based on their content using cryptographic hashes. This makes it nearly impossible to modify data without it being immediately noticeable.
• Better content verification
  Because the hash is directly tied to the content, anyone can verify that the data matches the original file exactly.
• Efficient data distribution
  IPFS automatically retrieves files from the fastest or closest node in the network, which can result in faster access compared to traditional centralized servers.

Disadvantages of IPFS

• No automatic guarantee of permanent storage
  Files remain available only as long as there are nodes hosting them. Without additional solutions like pinning services or supplementary storage networks, data can theoretically disappear.
• Dependence on additional services
  Long-term and reliable storage often requires extra services, which can add complexity and cost for projects.
• Technical barrier for beginners
  Setting up and managing nodes, gateways, and pinning services requires technical knowledge, making IPFS less accessible for non-technical users.
• Not yet fully ready for mass adoption
  Compared to traditional web technology, IPFS is still evolving in terms of usability, tooling, and infrastructure.

Traditional vs. New: HTTP vs. IPFS

The traditional web is largely based on HTTP, where users connect to a specific server through a URL. If that server goes offline or the content is removed, the data is no longer accessible. IPFS works fundamentally differently by using content-based addressing instead of location-based addressing.

Where HTTP is centralized and server-dependent, IPFS is decentralized and network-focused. This makes IPFS more robust and better suited for crypto and Web3 applications. At the same time, HTTP is currently faster, simpler, and more widely supported, which is why it still dominates the mainstream internet.

Technical Details of IPFS

For those who want to understand how IPFS works under the hood, it helps to look at the technical principles the protocol is built on. These ensure that data within IPFS is stored and distributed efficiently, verifiably, and in a decentralized way.

IPFS uses so-called MerkleDAG data structures, which stands for Merkle Directed Acyclic Graph. Data is split into smaller pieces that are cryptographically linked together. Each piece receives a unique hash based on its contents. This allows IPFS to quickly and reliably retrieve specific parts of a file without reloading the entire file. This approach is also used in blockchain technology and fits naturally with crypto applications.

Another core principle of IPFS is content addressing. While the traditional web uses location-based addresses such as URLs pointing to a specific server, IPFS identifies data based on its contents. Each data block receives a hash directly derived from its contents. When a user requests that hash, IPFS automatically searches the network for nodes that have exactly that content. The physical location of the data does not matter.

IPFS also works with decentralized data distribution. Data added to the network can be stored and shared by multiple nodes when those nodes request the content or choose to actively keep it. This increases the availability and resilience of the network because files do not depend on a central server. For long-term or guaranteed availability, additional solutions such as pinning services or specialized storage networks are often used in practice.

Finally, IPFS can be combined with encryption. Users can choose to encrypt data before adding it to the IPFS network. IPFS stores and distributes this encrypted data without having insight into its contents, meaning only parties with the correct keys can access it. This is especially relevant for applications where privacy and data security play an important role, such as business-related or sensitive crypto data.

Final Thoughts

IPFS storage is playing an increasingly important role in the crypto space and is a key building block of the decentralized internet. By identifying files based on their contents and distributing them across a peer-to-peer network, IPFS offers a solution to issues related to centralization, data manipulation, and availability. Its strength becomes especially clear when combined with blockchain, NFTs, and Web3 applications.

Although the system still faces challenges in terms of usability and permanent storage, its growing adoption shows that IPFS is a serious addition to existing web technologies. For crypto investors and developers interested in the future of decentralization, IPFS is definitely a concept worth understanding.