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Ask HN: NFTs legit or mania?
42 points by cloudking 3 months ago | hide | past | favorite | 41 comments
There's a lot of buzz around NFTs (non-fungible tokens) lately: https://www.coindesk.com/what-are-nfts

Some uses cases like NBA Top Shot seems like they could have lasting value, essentially a digital version of trading cards backed by the official sports league: https://www.nbatopshot.com

Other uses cases like buying Jack Dorsey's first tweet for $2.5m seem a bit more like mania to me: https://www.theverge.com/2021/3/5/22316320/jack-dorsey-original-tweet-nft-cent-valuables

Do you agree or disagree? What are your thoughts on this space and it's future?

I’m personally at the stage where it seems like such obvious silliness that I feel like I must be missing something, and so I avoid expressing this opinion anywhere that I might be held accountable for it at some point in the future. But I still suspect that I’m right, naturally.

Definitely interested to hear arguments to the contrary though.

Kind of off-topic, but there's an excellent documentary called The Spider’s Web [1] that explores how society reached this point of valuing increasingly ridiculous displays of paper wealth and the financialization of everything through the lens of British offshore wealth secrecy schemes.

[1]: https://www.youtube.com/watch?v=np_ylvc8Zj8

Wow, only one comment on here and it's exactly how I feel, but articulated better than I would've.

In a theoretical sense I can see how they'd be valuable - limited supply and high demand and all that - but in practice it just seems like the prices of some of these early ones are too bonkers for it to be sustainable.

Relieved to see others saying it seems like an inside joke that they just don't get. What I don't understand is how content is verified. If I sell you a digital clip and the rights to it, who's verifying I had the permission to transfer those rights: that I owned the image/video/etc at all?

Nobody and nothing, and this is generally impossible.

Essentially what you do is just encode a trusted party (or multiple) and do what they say. This way you get "trusted" data in the blockchain for scripts to use. For instance, who owns a house, or the closing price of a commodity, or who won the super bowl (or an election). As you can imagine this just makes them a target for corruption.

Given that content creators retain copyright over work they upload to platforms, that platforms explicitly provide that guarantee, and that much of the current NFT craze is around speculation on already-potentially-valuable digital content, I agree.

One possibility that occurs is: for decentralized infrastructure, where no organization can attest to the identity of an original author, then it might make sense for that author to 'claim' their content when they upload it (at which time, for most authors, it would have zero value).

That could be a way for authors to retain and claim value for their work over time, while also making a public copyright claim.

That's all conjecture on my part; I don't really understand the hype yet, either - or whether it will last.

See also: https://news.ycombinator.com/item?id=26373108

A risk that springs to mind is: unlike the legal concept of copyright ownership, an NFT could easily be accidentally lost by the person who holds it.

To me it just looks like another way to get scam everyday and stupid rich people...

yeah, this is either a bitcoin like scenario that the initial boom is happening or we are a bunch of idiots that we thought this was a good idea. At this point I have no idea. The amount of money going around is eye opening

People have been doing stuff like this for a long time - trading cards, the kid who was selling pixels on a web page (https://en.wikipedia.org/wiki/The_Million_Dollar_Homepage), astronauts were taking items in their personal kits with the intent to resell them later for high value etc.

I suppose that we'll see things like these get more weaponised as people look for easy ways to make money. I'm not interested in participating.

Commodity fetishism, what an example!

I expect NFTs to be a trend. It's much easier to fetishize a physical commodity than a digital one. What you're paying for is the imagined blessing imbued by the creator and access to the content (which can be leaked).

If you understand how NFTs work and appreciate the art, you might imbue the NFT with the magic blessing of its creator, and then translate the feeling over to the rendering. There's a gap here.

That magic is going to fade quickly because any rendering of the content (easily leaked, copied) is hardly related to the fact that there's only one of the NFT. Let alone if you're not constantly displaying it to remind yourself.

I could see NFTs as a value store / speculative investment, as a more honest version of the upper-crust art market. But what you're paying for is essentially feelings and leaky exclusion of the content.

It is a scam, as a rule if it is "X but on a blockchain" it's a pump and dump scam. "Art ownership but on the blockchain" will make a handful of people very rich, at the cost of everyone else who follows the pump and dump.

Here is a thought experiment. There's a neutral party in Switzerland that will mark you as the owner of a digital item in their ledgers kept in a Swiss vault. you can buy and sell ownership as long as you call up the Swiss 'Meme ownership broker', but that's it. Does that seem silly? Doing it on the blockchain doesn't make it less silly, if anything it makes it sillier since there is a lot of pollution in order to have everyone run the Swiss Register.

It's not mania. It's a vision for competition, control, restriction, & ownership. It's the value system of limited natural resources, imposed on a much more open place where bits are cheap, where copying is basically free, where vast amounts of computational capabilities are everywhere.

It's not going to go away. This camp of control & authority & power will find enough adherents to make that which is without value have value. They will recruit enough suckers to buy in, spread this new religion. Society will think it cares about this dark, against-the-point menace. We will almost certainly decide these things have value, and fight & squabble & "invest" in these things. Alas. L. Ron Hubbard created a religion based on aliens & purity, & these folks are asking for faith in ownership & scarcity.

We will have to keep hearing about these dark disciples for decades.

Woah woah easy there pardner

That is what I continually want to ask of the world, some easiness. But the din & the stink persists, the civil world is continually menaced by arrogant loud persistent forces, & it feels like we have so little defense, so few a ways to cry out & beg for peace. Competition and greed root so much more easily, require so much less nutrients to develop & spread.

Nothing will stop NFTs. Sure enough, mankind is generating a new enduring upward-spiralling mania, a new way to squabble, inventing scarcity so that some might profit. Just one of a long long series of there being so little means to ask for a cessation in society, there being no means to slow the gathering of war-wagons & takers.

It's techno-mysticism. There's no more value here than a credits page, where you give thanks to your backers, your supporters. Or dedicate a piece of work to someone. But it's dressed up as something fancy, understanding slightly out of reach. The inability to pinpoint it's value is itself the core value, an esoteric tapping into something that feels bigger than us. It's a play into our emotions, into those steep undercurrents of desire & control. The logos is not here, the ethos is largely negative, and I am left with only a pathos for the poor world, subject to this artful hackery re-imposing the zero-sum upon the world by a sad malappropriation of the digital.

Just like everything else in the crypto space, it is both.

This stuff isn't going to die out completely and the exact way that people interact with it is going to develop over the next years.

On the other hand it is very possible that current prices are a mania although there is certainly some possibility, that in the long term, current prices will prove to be good buys.

Most of the uses I've seen so far seem like nonsense to me, though I could imagine a known and popular fine artist creating some digital art along side physical works as a way to create a more affordable entry point to their fans, much in the way that prints are already a more affordable entry point than paintings.

I think in such a fine art case there needs to be some good ways to display such NFTs though.

I think it's both. IMO we are in a mania and this will ballon before it comes back to reality. After that it will just become "normal" and perhaps a de facto standard for "digital ownership". The applications are broad, and I'm not sure of the lasting value of individual "collectible" NFTs, but the world is on the cusp of embracing what it means to "own" a non tangible good, and that's really interesting.

Full disclosure: I do sell art as NFTs on one of the curated platforms, and I do get to benefit from the current "mania", but I'm not one of the big name artists, to me the whole NFT thing as it pertains to art is more like patreon. It's a way for folks to support artists they like and to have a (non physical) piece that they can show for it at the end of the day.

They're both legit and mania. Yes, you can cryptographically own a token that represents the first tweet. Is it worth $2.5M? Not really. Some rich kid is just showing off and wants to make news. You could say that the value comes from the stupidity of it. Art is not very easy to understand or value objectively.

NFTs may have real applications in enabling markets for intellectual property like copyrights, patents, and what not. For example, it would be possible to automatically stream money to one or many NFT copyright holders from a decentralized Spotify. It is also possible to tie NFT in smart contracts, so that the owner is able to call special functions or change the state in the contract. For example, if an ad spot on a website is controlled by a NFT, the NFT owner would be able to change the ad.

But would a NFT hold up in court as proof of ownership? For example if I get ahold of your NFT for some digital good do I 'own' that good now? I'm guessing if we went to court over it and you have all the accompanying documentation proving you purchased it and all I have is the NFT, the court would rule in your favor. And if that's the case what benefit is a NFT over a standard purchase agreement?

Generally, if you have to ask that, an NFT is not a good solution for your problem. In many cases, the answer is "yes", they very likely would, but it wouldn't be easier than a non-NFT. If you were already in business with someone and both decided to use NFTs to track something, then almost assuredly.

A big problem is that ownership is proven by knowledge of a secret and you'd need to decide how would you want the court to decide if two people both present the ownership password/key? What would half-control over a cloud server be worth?

An NFT is great for a unique digital resource, where control over it and ownership are roughly the same. For instance, cryptokitties. You buy tokens which cannot be divided - you can't own half a cat - but can be transferred. Whoever controls the keys controls the cat. In this situation the token replaces a stored user credential, and a stored avatar.

In the real world though, I think they're a reasonable solution for short-lived, low to mid-value, non-fungible items, where users both want to swap their items and find doing so in a centralized way is too restrictive. Like concert tickets.

All depends on the specific incentive models. If an NFT holder aims to increase speculative value, they turn into vocal champions of the work. That drives a great deal of the cryptocurrency space to date - there's no particular reason why it will fail for art.

And this was previously done in a very exclusive way, in elite venues, but now it's possible to throw open the doors and make it like eBay - without even needing the seller ratings.

So, you are not interested in learning new methods to launder money? How quaint.

Mania for now but long term it will bring scarcity to the digital realm something that's important to fully develop the digital economy. Right now digital has been very profitable for a relatively few since it takes lots of money to develop a product but scarcity will let many more people make a living.

A simple example are artists. Artists have been mostly locked out of making a good living with their digital works but NFTs will fix that.

We will also start to see new forms of products that aren't profitable now since there is no way to cover the costs to develop them but with NFTs there is now a way to cover the costs.

I see the book market changing. Established authors will be able to sell their books and not have to go through publishing houses. They can sell them to the public and now the public will be able to resell the book and gain some of the money back and the original author can get some money too.

The future is very bright, as they say. There's finally a way to monetize cyberspace for the everyman.

> Artists have been mostly locked out of making a good living with their digital works but NFTs will fix that.

What? "NFTs will fix" the competiton and marketing? Sounds like snake oil.

Artists/authors have unpredecented ability to scale their art sale to entire World with simple means like own webpage PoS, right.

But surely that is not enough for one to live a decent life from art, because what is crucial is to reach the right audience and compete in a popularity contest. That is what intermediary services, like Spotify, Youtube, Deezer, iTunes, Gumroad, Amazon, Shutterstock etc, do with their hefty commissions.

How are NFTs going to bring customers with their money directly to the artists?

> Right now digital has been very profitable for a relatively few since it takes lots of money to develop a product but scarcity will let many more people make a living.

This doesn't really make any sense. Right now I can write one piece of software and sell it thousands of times. The return on investment (time and energy) is absolutely huge.

Introducing scarcity only hurts my bottom line and customers who can't get what I'm selling.

NFTs seem like complete nonsense. But I thought the same about BitCoin (and honestly still do) but we know how that turned out.

I'm not sure I get it. If the art is digital, then copies can be identical to the original (apart from the NFT), no? So why would this model succeed over, say, a Patreon-like model where many people get access to the product?

Even in the traditional sales model, I would think the typical PED for digital goods means that selling multiple copies provides more revenue than selling one copy for a higher price. Most things aren't Once Upon a Time in Shaolin.

I think you can think of this as patreon in many cases. It's not really about the art itself though, it's more about this conceptual idea of "digital ownership".

Very true, ownership is what it's all about. In the real world there can be 100 exact copies of a Picasso but the only one that has enduring value is the original. NFTs become the place holders for originals in digital. It's what people will value and will pay for over time. As an NFT owner you own a portfolio of rights to the work. What are they? One very important one is resale. But we don't know all of them, yet .They will be defined as people start to use them and the courts/laws decides what they will enforce. But without place holders there's no way to apply the rules.

A real world example is the idea of owning a copyright. What do you own there? The right to monetize it, yes. Bragging rights, yes. The right to resell it, yes. And others I can't think of. If someone decides to encroach on any of the rights then you can go to court and seek retribution.

>it will bring scarcity to the digital realm something that's important to fully develop the digital economy[...] The future is very bright, as they say. There's finally a way to monetize cyberspace for the everyman.

This isn't the future, this is enclosure of the commons feudal style, except for the fact that the physical commons were actually scarce so the proponents I suppose had some sort of point, whereas in the internet age we're actually making free and ubiquitous information artificially scarce to make the internet obey our insane economic logic

Regardless of the premise, anything that so needlessly worsens the climate emergency by wantonly wasting energy isn’t future proof.

For NFT, I think the energy issue is close to irrelevant. The tokens live on ETH blockchain which exists anyway and is massively larger than these tokens. There are also plans to migrate ETH off of PoW soonish, so it may become irrelevant.

Long-term, I think it's legit. A few big-name artists and other popular figures (athletes, actors, etc.) will take advantage, and use it as another income source. It's pretty convenient to immediately get a large payday by selling a unique asset (think of an autographed copy), while also being able to mass distribute and sell it at scale. For example, most people don't know that rookie cards for NBA players can go for well over a million dollars. Same idea here, except it is hosted online and cryptographically proven.

In the short-term, definite mania. Relatively unknown artists are getting ridiculous amounts of money, several magnitudes more than they get on the open market with a private commission, because the supply of artists that are currently active in this market is dwarfed by the number of rich crypto speculators that are throwing money around, trying to make a profit.

I recall a few different attempts to connect vehicle-title-like rights to physical artwork using the bitcoin blockchain. One of them was being worked on by a partner at a hedge fund that invested in Gliph.

I also remember some startups attempting to assign music licensing using possession of some secret connected to a public ledger.

I had a family member refer a colleague who taught continuing education courses for insurance agents ask for information so he could speak to the potential future of insurance contracts being done on-chain.

These are all examples from years ago, and included some form of the key characteristics of NFTs as described in the article: non-interoperable, indivisible, indestructible, verifiable.

NFTSs seem put an emphasis on the items they secure being purely digital.

I don't see NFTs as a new idea but possibly consolidation of pre-existing ideas into winning standards, (ERC-721 and ERC-1155 potentially), and perhaps generalized buzz around bitcoin and crypto.

Consolidation to a standard, endorsement from perceived sources of authority and a way for new people to still "get rich" in crypto might elevate this to something that goes the distance.

But I'd expect a lot of folks to be burned in the meantime, "investing" stimulus money on things that go to zero.

Anecdotally, when I was evaluating Clubhouse, one of the major detractors of the service was how much emphasis the communities put on scammy get-rich in real estate or other seedy business ideas. There were a lot of groups on NFTs and that was a few weeks ago.

I'm most interested in how digital assets created on the fly on someone's phone can be quickly secured to allow fluidity in the transfer of rights.

People are capturing more and more important events first hand. However validating authenticity, ownership and authority to license that content seems kinda messy right now.

I suspect NFTs could play a role in standardizing assertion of rights over content, it doesn't have to be deliberately created but rather by chance.

A more fluid market for opportunity-based "stringer" content is teased at in Neil Stephenson's "gargoyles" of Snow Crash.

I don't know if NFTs will be the vehicle for this but something like them will be, and whatever that system is will probably consume these more shiny "assets" appearing so far.

If you look at it from the point of view of an engineer, it appears to be mania: it doesn’t provide DRM despite implying it does (to some extent), and it’s unclear to what extent it actually encodes and stores the content.

However, if you don’t look at it from that point of view, then clearly it’s filling a previously unserved niche (though that may end if users find it violates their expectations). In other words, the need for it appears to be real.

The DRM issue could be addressed on the client side - if enough client applications (e.g. games) enforce the implied DRM, then that may be enough to satisfy this expectation on the user side.

> NFTs legit or mania?

So you are comparing it to Canal Mania in 1793?

I think yes, there will be NFT's sold far to high for investment purposes right now, but others that are profitable, it will be an on going business / art form.

I personally think $2.5m for the first tweet in a mature market would be embarrassing. Are you allowed to destroy the first tweet, if you are getting true control then yes I think it might be worth $2.5m. Else you are not actually buying the first tweet, unlike art created only as NFTs. So that has a embarrassing side, you're a rich person who doesn't even truly own it.


it is mania, but so are a lot of collectinf hobbies. NFTs are attractive to those who value physical minimalism but still value a sense of ownership of something.

identity is tied with ownership because it allows one to say they either created it (authorship) or they have the possession of it (ability to transfer / sell/ destroy) - NFTs are an extension of the human desire for identity.

they suffer from the false scarcity effect, that even with their distributed nature, rely on a central authority (the same as those certificates included in collectors items) - it's a matter of valuing the platform AND the NFT itself. that is a flaw imo.

I think we will see something of a hybrid. NFTs that have real world utility and physical practicality. even for games. we need to have FUN. not just scarcity.

these are not going to be great but they will last. most will be worth nothing and will make money for the platforms and some prolific or already existing artists.....

not the game changer yet.

It is built to be mania!

People don't create a collectible market without hoping for some sort of bubble.

I’m guessing mania, since a day after I first saw the article about them in HN, “normal” people were talking about them to me.

Can it be used for DRM protection?

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