Hashinals behave exactly like regular NFTs on Hedera and can be viewed in wallets like HashPack and exchanged in marketplaces like SentX. We can trade, auction, transfer, and view Hashinals in the same ways as regular NFTs. That is because, like Hashinals, they are also minted on the Hedera Token Service. For most users, very little changes in their day-to-day interactions.
However, unlike regular NFTs, Hashinals are stored entirely on-chain. Every single byte of metadata is written to the Hedera Consensus Service rather than off-chain solutions like IPFS and Arweave. They follow the official HCS-1 and HCS-5 standards created by Hashgraph Online. These standards provide an official format for utilizing the Hedera Consensus Service, combined with the Hedera Token Service for storing metadata directly on Hedera in a cost-effective and scalable format.
https://x.com/HashgraphOnline/status/1767586891946463669
We often get asked why someone would choose to inscribe their NFT as a Hashinal versus simply uploading files to off-chain solutions like IPFS or Arweave.
🌎Understanding On-Chain vs. Off-Chain
Typically, NFTs are hardly on-chain. Really, the only thing on the Hashgraph is an auto-incrementing id (the serial number) pointing to a location where we can get more information about the content (the metadata). It's a very shallow reference. That's it.
🔎Why Not Just Use IPFS or Centralized Storage?
That pointer often utilizes tools like IPFS or even centralized storage to store things like the metadata, its primary image, and associated files. While storing on these solutions is often cheaper or free, it does come with downsides. For example, with IPFS, there is this idea of "pinned content," which essentially means that once we upload to the network, we must submit a pin to tell nodes that our content is important enough to keep up. If we do not stay on top of pinning and lose the original file, there is a chance the file is gone forever. This is how the IPFS network, which is free to use, does not crush itself from all of the weight. For most folks going this route, we should ask ourselves this question: "Do we want to be responsible forever to keep our content pinned?"
🪄The Hashinal Difference
Hashinals and other on-chain data permanence protocols utilize a different approach where all of the data is stored completely on the network. Each byte from the JSON file that stores NFT attributes to the images and additional files (multi-file NFTs) gets stored on the network through the Hedera Consensus Service.
🔓Unlocking New Functionalities
Because files are stored on the network, we start to unlock some interesting pieces of functionality. For example, with HCS-6 (Dynamic Hashinals), we opened up the door to on-chain Mutable NFTs for the first time. Dynamic Hashinals stores a registry of versions for our NFT, and the latest version is always the current metadata. Because of the properties of HCS, this doubles as an audit log for applications to see historical changes. Similarly, Hashinals can unlock other novel applications in the future like encryption, layering, etc.
🤖Future Prospects with Hedera Services
Today the Hedera Consensus Service and the Hedera Smart Contract Service cannot talk to each other. When it becomes possible for the EVM to write and read messages on HCS, then we suspect we'll open the door to a myriad of new kinds of functionality that involve the data which has been inscribed on-chain. Keep in mind that trustless solutions typically cannot access the internet for security and performance reasons (any layer that proposes doing so is taking a risk, in our opinion), so since HCS is native to the network, it could be really interesting in the future. Imagine how applications ranging from advertising to logistics could change with on-chain data and trustless execution?
A New Internet
Hashgraph Online represents a paradigm shift in online interactions, from centralized services to decentralized websites that live entirely on HCS. As we get closer to envisioning that shift, and Hashgraph Online powered browsers come into existence, we suspect that Hashinals would be core to those new experiences. From advertising to gaming and true in-app experiences, we could look for further integrations with on-chain data.