This week in the metaverse: NFTs, Microsoft and Meta

Carlos Topo Maseda was at a friend’s wedding in Puerto Escondido, Mexico, last November when he began to panic.

A flurry of tweets claimed that Hic Et Nunc, the NFT marketplace where he had spent much of the past year creating and buying non-fungible tokens, had suddenly shut down. The project’s website returned an error, the Twitter account had been terminated, and Topo Maseda could not access any of his NFTs.

“Overnight they disappeared,” he said.

Topo Maseda eventually recovered its NFTs from a clone site that copied Hic Et Nunc’s open source code, but not everyone may be so lucky, especially as other NFT marketplaces close or are acquired during the crypto bear market, according to Jason Bailey, CEO of ClubNFT, a platform that backs up NFTs.

Although many collectors believe that their NFTs will be safe forever because they exist on a blockchain, this is not necessarily true, Bailey said Fortune. Although some elements of an NFT exist on a blockchain, only about 10% of them are fully on-chain because of how expensive it is to do so, Bailey claims. Instead, approximately 40% of all NFTs reside on private servers, meaning they can be lost at any time.

“People are confused because they hear these stories about blockchain and how things exist forever and last forever,” Bailey continued. “What they don’t realize is the art and the metadata they’re actually looking at when they go to market, what they’re falling in love with, is almost never on the blockchain.”

Courtesy of Carlos Topo Maseda

An NFT typically has three to seven components, Bailey said, which may include the main image, any metadata that defines rarity traits, or the artist’s name. But these items are often stored on private servers that can be shut down on a whim, similar to what happened with Hic Et Nunc. This can leave a collector with a shell of an NFT pointing to a long-gone image, ultimately rendering it worthless.

To solve this problem, some NFT marketplaces have turned to IPFS, or the InterPlanetary File System, which is universally compatible and uses a unique hash to guarantee that the items in an NFT can be retrieved as long as they still exist somewhere online or are available to you.

Metaplex Studios CEO Stephen Hess told Fortune that his company offers IPFS to its users because it is one of the best systems for securing an immutable NFT.

“We see collectors looking for permanence,” Hess said. “They want to know that they are buying this piece of art and it will be around for generations to come.”

But IPFS means nothing if a marketplace closes and stops paying for “pinning”, which almost happened with Hic Et Nunc. Pinning is essentially a recurring fee for hosting NFT. It’s similar to paying to store your files on a cloud storage service like DropBox.

To avoid the pitfalls of a marketplace storing your NFT on private servers or stopping payments that would render IPFS useless, ClubNFT allows collectors to download a free local backup of their NFTs and items. Even if the marketplace where you bought your NFT closes and stops paying for pinning, you can use the local backup to restore it using IPFS, and then start paying for pinning yourself.

After Topo Maseda’s experience with Hic Et Nunc, the first thing he did was back up the NFTs he was able to recover, which he now has on two separate hard drives.

“For me,” he said, “that was the moment I understood what it meant to own your data.”

In other news:

Microsoft blew his lead on the metaverse, according to The Wall Street Journal. Although the tech company released its augmented reality headset HoloLens back in 2016 it faced setbacks with the technology, according to former employees, and struggled to meet the demands of its biggest potential customer, The US Army.

This year you can celebrate The day of the Dead in the Metaverse, in an experience of Spacious and Ezel.Life with the participation of the government of Mexico City. The Día de los Muertos experience will include activities, holiday-themed avatars and a mural by Mexican artist Diego Rivera. A virtual parade that mirrors the physical parade in Mexico’s capital also opens on October 29 in Decentraland.

Courtesy of Spatial

Meta his division virtual and augmented reality Reality Labs probably won’t turn a profit anytime soon. The company said in its third-quarter earnings report that Reality Labs’ operating loss will grow “significantly” year over year in 2023. The division has lost $9.4 billion in 2022, but CEO Mark Zuckerberg is adamant, saying on the company’s earnings call that developing the metaverse is “some of the most historic work we do.”

Twitter may soon allow users to buy and trade NFTs directly through tweets with a feature it is testing called NFT Tweet Tiles. In partnership with Rare and Magical Edensports NFT marketplace Jump.Trade, and the creator of NBA TopShot and Flow blockchain Dapper Labs, Twitter plans to allow users to buy, sell and trade NFTs across multiple blockchains.

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