NFT always felt ridiculous to me, but I though I understood the mechanism: "it's like baseball cards but in the blockchain".
This week I learned it's not.
NFT are Non Fungible Tokens, which means tokens that can't be divided, unlike crypto currencies like Bitcoin that can be divided in Satoshis. So you exchange the totality of it, or not. Basically it's a unique number in the blockchain you change ownership by applying cryptographic signatures during a transaction. Most of the time it's an ethereum smart contract address + a token id.
But wait, where are the pics ? The gifs ? The videos ?
I mean, opensea.io does allow you to mint (the term for magically turning a media into an official NFT backed by the blockchain) up to 100MB of content.
So where is it? Not in the blockchain, obviously, it's already fat enough with tiny transaction data.
Well, it's just stored in the centralized platforms like opensea, rarible, etc.
Basically, the NFT is not even that piece of art, baseball card or whatever, it's just the number linked to the proprietary, centralized, privately own trading platform that hosts the content.
The platform disappears, or bans you, or changes policy, or is blocked, or whatever, and your NFT is back to being a bare-bone blockchain contract number and a token id.
It's even more bullshit that I though! You don't even have control on whatever you make believe to virtually own. It's madness.
But you know what, the week I spent in this weird universe was also so much fun. There is an atmosphere of creative WTF, a mix of scams, community bonding, money laundering and genuine experimentation all bathed in some frenetic craziness that reminds me of the early days of the internet.
Non-fungible doesn't mean something can't be divided, it means a specific one just can't be substituted for another one.
An example: If I trade oil, one barrel of oil with a certain spec[1] is fungible with another barrel of oil with the same spec. If I sell you some oil you don't care which specific barrel you get as long as it's the same kind of thing. Likewise if you borrow 10 dollars from me you can pay me back with any combination of notes up to the value of 10 dollars, you don't have to give me back the specific bills I gave you.
On the other hand, things like art are not fungible. If I loan a Van Gogh to a gallery I very much want the same piece to be sent back to me after the exhibition is done. It's not ok for them to send me something else. Even if it's "sunflowers" (since Van Gogh painted a few of those and they are quite similar), I want the actual one I loaned to be sent back to me.
Normal bitcoins or ETH are fungible whereas NFTs are non-fungible. The specific one you have matters usually because it represents a digital proof of ownership of some specific resource (a bored ape or whatever).
[1] The spec for oil types standardises particular grades and then people trade a standard barrel size (called a bbl which is short for "blue barrel" because they used to be painted blue). "Brent" and "WTI" are different grades. A barrel of brent is fungible with another barrel of brent but not with a barrel of WTI because that's a different grade.
This answer confused me at first, because I initially thought you were trying to say non-fungible assets can be divided. At least in the case of non-fungible Ethereum tokens, it's the case that they both each can't be substituted for another one and they can't be divided, right?
And in the case of ERC-1155 semi-fungible tokens (SFTs), you can substitute them for others of the same type but they still each can't be divided. They're whole, irreducible units.
For both NFTs and SFTs, I think the non-divisibility is an important component to understanding what they are. There's no "smaller denomination" of each asset in the way that Ethereum can be divided arbitrarily until you reach the minimum "wei" unit.
You're right that non-divisibility isn't a sufficient condition to be non-fungible (as with SFTs), but the way I interpreted your first sentence made it seem like it was an orthogonal condition rather than a necessary and central one. (At least for cryptocurrency assets.)
Just one thing - you can always write a separate contract which subdivides an otherwise indivisible asset on the blockchain.
For example, with NFTs, you could make a DAO that pools together capital to purchase an NFT and can trade their share of ownership of the NFT on the open market.
Divisability is often related to fungibility in that the ability to divide a resource is a way to create fungibility (e.g. the sea of oil is split into barrels)
Oh do I have a scam for you! So, no, obviously you can't divide an NFT, but what you can do is create a new fungible token (or smart contract not sure about the exact details) that represents partial ownership of the NFT. So you can issue 1000 of these fungible tokens that represent partial ownership of the NFT.
The whole thing feels like some kind of postmodernist performance art about property and ownership.
Actually, come to think of it, maybe that's a great idea. If people ask questions about NFTs, they might start asking more questions about intellectual property as well, and ultimately about property rights in general. In a sense, NFT is the ultimate absentee property - it's impossible to use or occupy. It's a title to itself.
I'm slightly afraid of the asking because of what answers parties might arrive to.
Someone pushing for intellectual property maximalism might see in NFTs a technical counterpart to the legal monopoly on the ownership of digital information. Why not encode the ownership of a copy of the newest game as a NFT, and then have the console check at startup? And similarlines of thought that I don't have the imagination to consider.
I mean, that's basically just DRM, and we already have it - the blockchain adds nothing to the picture.
Well, such validation would continue working for as long as the blockchain on which the tokens are checked is still running, as opposed to when the manufacturer takes down their DRM servers. But that's added convenience to the user; the manufacturer actually loses a degree of control, so I don't see why they'd go for it?
> Imagine writing the investment memo for “20% of a picture of a dog” and being like “the most we should pay is probably about $2 million because the whole picture of the dog sold for $4 million three months ago and it can’t realistically have appreciated more than 150% since then; even if the whole picture of the dog is worth, aggressively, $10 million, this share would be worth $2 milllion.”
> One model here is that everyone on earth wants to pay $4 million for a unique picture of a dog, so if you make one unique picture of a dog and sell it for $4 million you’ll get $4 million but if you cut it into 17 billion slices each one will sell for $4 million?
Fungible doesn't mean divisable. That does not imply non-fungible means something is divisable. I gave an example of somithing fungible which isn't divisable (a barrel of oil) and one which is (dollars). In fact I also gave an example of something non-fungible which is non-divisable (Van Gogh's Sunflowers).
I'm struggling to think of something non-fungible which is divisable, but in any case I'm pretty sure NFTs are not divisable. It might be the case that non-fungible implies non-divisable but fungible things can be divisable or not.
"...which says you believe you own this receipt, and at the time of purchase, you believed that the issuer of this receipt believes in your ownership of it too".
So I do wonder whether the NFT divide (between people who get it and people who don’t) might be a generational split, related to a larger societal shift away from ‘owning things’. We’ve definitely passed ‘peak thing ownership’.
For those of us old enough to have grown up with the idea of ‘buying a book’, ‘buying a toy’, ‘buying a CD’ or ‘buying a magazine’ we have a particular mental framework for ‘owning’ stuff.
But people stopped buying those things a while ago (people stopped buying toys? Not completely, but certainly some of that spend now goes on apps right?).
So for people who have grown up in a digital-subscription world, they might just have a fundamentally different mental model of ownership - one which is more compatible with NFTs as a reasonable idea than the paradigm us old ‘thing owners’ have.
Like, consider some of the things you likely have bought recently: a ‘twelve month Netflix subscription’, a ‘Steam library game’, an ‘app’… you bought those things with no expectation you could resell them later because you don’t think of those as ‘things’. And because you haven’t yet adjusted your mental model to the reality that this is what you spend your wealth on now - ephemeral digital rights you won’t be able to pass on to your kids when you’re gone.
But if you grew up digital native and the only things you’ve ever been able to buy are non transferable digital pointers to rights to use something, maybe the idea of a transferable digital rights pointer seems like a crazy innovative new idea that changes everything?
The difference between most[1] NFTs and Netflix/Steam/Apps is with the latter, you are buying access to something. With most of these NFTs that are just a picture, owning the NFT doesn't confer any special right to you. We can all enjoy the Disaster Girl meme, you don't have to have bought the NFT. The owner of the first ever tweet cannot actually do anything with it, edit it, destroy it, put it in a private collection so only they can look at it.
The only thing buying one of these NFTs gives you is I guess "bragging rights" but I think it remains to be seen why anyone should care that you paid money for 0x3B3ee1931Dc30C1957379FAc9aba94D1C48a5405,25046.
[1] The only exception is maybe these NFTs that interact with something on the blockchain like an item or place in a videogame, in that case owning the NFT provides some sort of utility.
Yes, that's definitely the case for a lot of NFTs being minted and sold.
And if an NFT did represent the right to download and play a particular game from Steam (like, you had to present proof of ownership of an NFT to Steam to be allowed to play the game), such that I could sell that NFT outside of Steam to someone else... well, the value of that NFT is only as good as Steam's willingness to abide by the agreement it embodies, which they can unilaterally withdraw at any time, so there's little value in Steam honoring such a thing. If they wanted to permit game resale, they can do that, inside their own database, without any NFT nonsense.
So yeah, it's still a bit of a mystery if or whether this actually adds anything, but I'm just trying to put myself into the mindset of people who are excited by this and trying to figure out what excites them, rather than just assuming they're all dumb because they think buying numbers is going to change the world.
It really shows the dishonesty in crypto "innovation:" they claim "security" and "trustlessness," but it all reduces to simple human/institutional/contractual trust relationships as soon as you need to deal with anything with real-world practical value, whether that be access to games on Steam or tracking a package or whatever.
With all this fancy software and energy spent on mining, what then is the point of all that effort?
I think some of that directly connects to the (intentional) confusion in terms of "smart contracts" and old fashioned "contracts". "Smart contracts" are programs and there's a sense that they are "better" and easier to "trust" than old fashioned "contracts" because computer's enforce them ("fairly and equitably", or so proponents believe [1]) and not people and institutions.
But people don't run "smart contract software" in their own brains and at the end of the day if these things are to be meaningful to people they have to interact with people and institutions and good old fashioned "contracts". It's trying to solve sociological and political problems with code, but we don't have a real world substrate for those "programs", what we instead have millennia of institutional history and contract law and at the end of the day those still matter more than what the computer says even you personally don't trust those institutions for whatever reason.
ETA: [1] Don't forget that it's a common fallacy among tech idealists that computers are unbiased and objective "because math" rather than machines that will reflect the biases and subjective opinions of those that program them.
Yeah I agree, and that's why I'm generally skeptical of any smart contract ideas that have to interface with real life (supply chains, land registry, and so on). I think they make more sense when they are concerned with things entirely contained within the blockchain, like swapping tokens or mapping names to addresses. Frustratingly enough, it's the former type ("let's put cows on the blockchain") that seem to get the most mainstream attention.
I've passed beyond skeptical of smart contracts that try to apply to real life to a concern that much more real contract law needs to apply to smart contracts.
Ethereum is already full of fun stories where "smart" contracts did extremely dumb things because they took a programmer's word extremely literally rather than a programmer's intent.
In a world where programmers are assumed to be ordinary, fallible humans that's a ton of pressure to put on a programmer to never make a single mistake. While there's a lot of active research into trying to bring technical solutions to that human problem such as strict "formal proofs" and such of the programs being made into smart contracts, I'm increasingly of the opinion that would benefit them the most would be political and sociological solutions such as classics like "courts of appeals", "trials by jury of peers" to determine intent over literal substance, and so forth.
Those aren't "fun, technical" solutions, and would require placing trust again in institutions and people, so I absolutely have zero optimism that any smart contracts system would embrace them. I just think that they need such political structures to exist otherwise you left with merely a lowest common denominator tyranny of software bugs (no matter how formally the best contracts mathematically prove their claims/efforts).
Using a court of appeals assumes a shared widespread understanding of the topic of disagreement, often the only people with the expertise on the topic are going to be the parties involved and teaching a 3rd party can be impractical and prone to steering.
I can see smart contracts working with very low volume specialized scenarios for this reason.
Also traditional dispute resolution is expensive plenty of times where both parties would be willing to accept the risk of a bug over paying lawyer fees
The shape of trials in a court of law is built around discovering the topic of disagreement and sourcing enough expertise on the topic to get a judgement from a jury of "peers".
Whether or not that is an expensive process is orthogonal to the question: if a "smart" contract makes a mistake, how do you fix it? Right now there is just zero recourse and everybody shrugs their shoulders at it, "oh well, that's just how software bugs work, sorry about your loss". That's an awfully hard pill to swallow for the average person. Real contracts built up a lot of mechanisms to keep contracts fair and equitable by making sure that when one goes wrong there are ways to deal with it.
Right now with "smart" contracts it's a wild west of whether or not escrow accounts exist and you can maybe, optionally get people (or institutions) involved to fixed something about to go wrong or in the process of going wrong, and there's just about no way in most "smart" contracts to fix things after they've gone wrong. But critically it's a "right" in most contract law-based countries to challenge a contract in a court of law and get a human opinion from a jury of your peers, and I don't see how average citizens can trust a system where that "right" is not given as such and is an "optional" feature that they generally have no idea exists in a specific "smart" contract code (much less if that feature itself is buggy or not).
I realize (per above) that this is often a "feature" and not a "bug" in "smart" contract design today. Most of the designers don't trust institutions (and maybe not even people) and like the "freedom" of "smart" contract platforms with few regulations, few "required features", and few places for instutional/personal intercession. I just don't think that's a good situation for most people to ever trust "smart" contracts in the real world.
Pretty much every profile pic NFT now (hottest form of NFTs right now) comes with some huge list of utility and roadmap behind it (look into BAYC for a good example), if that's the sort of thing you're looking for. Also, "bragging rights" or flexing, it turns out, is a pretty huge part of not only the physical realm but also digital as well if you look at the existing digital skins market.
Skins are an interesting comparison. I feel like that falls under the utility category I mentioned, like when you buy a skin you are really buying the right to use something at a particular place and time (a cool looking gun during a match), and nobody else has the right to use it. In contrast, whenever I see the Disaster Girl meme posted somewhere on the Internet I don't see any indication of who "owns" it.
It has an owner. Its copyright belongs to the photographer who took it - Dave Roth, father of Zoë Roth, the girl in the picture. If you ever see it reproduced in a newspaper article you’ll see him credited.
The NFT Zoë Roth sold doesn’t convey any rights over that image or its use. It’s got the faint frisson of exclusivity to it - kind of like if you had a print of that photograph signed by Zoë Roth. It’s a little bit special that it’s an NFT minted by her in specific reference to the meme; and it has some additional cachet as a historical artifact of being maybe one of the first meme NFTs, so there’s that.
So sure, I can sort of see there being some value in the bragging rights of being able to say “look, I have the private key to the ethereum wallet that has the right to transfer ownership of this binary string to someone else, and look - this cryptographically secure chain of numbers shows that that very same binary string is the one Zoë Roth cryptographically signed with her own private key way back in 2021…”
Just, that’s going to be a lot to explain, for the bragging rights, I think.
Compared to pointing to a picture in a frame and saying “yeah, that’s signed by the person in the picture”.
> It has an owner. Its copyright belongs to the photographer who took it - Dave Roth, father of Zoë Roth, the girl in the picture. If you ever see it reproduced in a newspaper article you’ll see him credited.
Note that we casually may call him the owner, but having certain legal claims such as copyright is not the same thing as the legal concept of ownership.
This is relevant, because pointing to a picture on the wall saying "yeah, that is an original Disaster Girl print" is a very different social flex than saying "I am the artist of this well-known photograph". The latter doesn't really need nor benefit from an authenticated digital print on the creators wall; of course the artist can print dozens of copies and they are all authenticated.
For Dave Roth to sell the the copyright or certain license rights to the image is just such an entirely different transaction that I am not sure why NFT critics keep mixing them up.
Those are good points. The comparison to an autographed photo is actually really fair and puts it in a different light for me. But half a million bucks for an autograph from the girl in that meme? It still sets off my BS detector but I'm open to the possibility that I just don't get it.
Not really, because there is still no utility in owning the rights to an NFT.
I've only ever seen two kinds of interest expressed in NFTs.
The first is immensely wealthy people who are looking for a trendy way to flaunt their wealth, because they've exhausted all traditional options. This is what leads someone to pay $3M to "own" the first tweet.
The second is people who aren't immensely wealthy but are hoping they will become so by buying/minting an NFT and selling it for an huge profit, presumably to someone from the first group (or a sucker from the second). This makes up the majority of NFTs by volume, and is where the pyramid scheme similarities become hard to dismiss.
Haven't seen anything resembling a third kind of interest that, under scrutiny, doesn't ultimately fall into one of these two groups.
It seems to be exactly the opposite. In digital age you can consume stuff without buying anything and people care less about ownership per se, but "people who don't get it" buy stuff like NFT.
Maybe. Or maybe it's that people less used to the concept of ownership can be more easily defrauded by "as a Service" businesses and people peddling crypto alike.
> consider some of the things you likely have bought recently: a ‘twelve month Netflix subscription’, a ‘Steam library game’, an ‘app’… you bought those things with no expectation you could resell them later because you don’t think of those as ‘things’
Yes and no. The subscription is very much "a thing". Think of this like a mental jump you've made when you understood functions as first-class values - code that your program can grab and pass around. I may not be able to sell the underlying media library to which I'm granted access, but I can very much sell the access itself. Or borrow it to a friend. Or charge money for it. People are[0], in fact, trading access to subscription services like Netflix.
> if you grew up digital native and the only things you’ve ever been able to buy are non transferable digital pointers to rights to use something, maybe the idea of a transferable digital rights pointer seems like a crazy innovative new idea that changes everything?
That's... a couple decades of dystopia ahead of us. People growing today are still buying food, toys, medicine. Children develop understanding of ownership before they develop understanding of money.
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[0] - Or were, last time I checked, which was some 2-3 years ago.
NFTs are all about owning, in fact they are more about owning than almost anything on earth. The ONLY advantage you get from owning an NFT is the knowledge that you own it. Everyone, owner or not, can enjoy looking at the jpeg in the same way. That's not really true for anything else.
So, far from representing the move away from ownership, they are a distillation of the ownership concept.
I do, in fact, expect to be able to use my paid for Android app at any time in the future.
I'm not counting on updates and new features, I just want the same version I bought to work on the same version of Android it works on right now.
Obviously, that's all in my stubborn old school brain, but it doesn't stop me from hoarding .APK files and Android images.
I had a lot of great very old software on some CDs that I regularly reburned/copied until I lost them over a decade ago and I'm still pissed about that :D
> I mean, opensea.io does allow you to mint (the term for magically turning a media into an official NFT backed by the blockchain) up to 100MB of content.
So where is it? Not in the blockchain, obviously, it's already fat enough with tiny transaction data.
Well, it's just stored in the centralized platforms like opensea, rarible, etc.
You’re right that this is the way many have been created so far, but that will not be the case for long. Already people have pointed NFTs to IPFS/Filecoin which will give them much more staying power. And this can be done without using a centralized platform like opensea, check out nft.storage and metaplex (1) as starting points.
Agreed, and I hope it will become more popular. But right now, since you can't browse IFPS with firefox or chrome, and manual minting is harder than clicking a button on open sea, I wager private platforms will keep their appeal.
Maybe when decentralized service will do all the decentralized hard work for you, take your metamask, upload your content on IFPS, mint it, then let you sell it, it will take on.
I think the key here is that we've already as a society given up a lot of our ownership for the sake of convenience. Most people buy their phones through a mobile carrier, locking them in through the life of their contract. I'm not totally sure about how Google accounts work, but I'd wager that getting your Google drive data back if you're banned is difficult. Kids these days are even purchasing skins for video games with the full knowledge that if they get banned, all of those skins will be gone.
A lot of what we own these days is not "owned" in the traditional sense. Opensea is no different from purchasing a video game that you could be banned from in that both purchase prices aren't ownership, but rather a price to access a product.
Actually this is quickly becoming the standard. Once you mint an NFT on opensea, you have the option to "freeze" the metadata, which transfers the image and everything else to IPFS storage.
Don’t those still rely on the gateway for wherever you mint it on IPFS staying up? The NFT link only points to a gateway which can go down then you’re at the mercy of it being replicated across nodes right?
Correct, it still only exists as long as someone on the IPFS network wants to keep it up. Similar to bittorrent in that way. Still, in the long-term, it seems that having the actual image/video/audio/other data replicated on a decentralized network rather than hosted on a single domain makes more sense to me (but then again, I'm very bullish on the future of IPFS/Filecoin).
It'll be interesting to see because if someone is the only one to pin/replicate the IPFS object an NFT points to it seems like they have some leverage over NFT owners. Is there any way to validate the file without the ipfs object? That's one weakness I've seen pointed out in the NFT idea (beyond the obvious objections about the energy use for what looks a lot like tulips and speculation).
If you scroll down you’ll see that the assets can be hosted on decentralised networks too like IPFS.
Also, not all NFT projects are built the same. I suggest you check out Pak’s Poets project - it’s a very exciting piece of performance art built around game theory.
Disclaimer: I don’t own any NFTs but that doesn’t mean I’m not excited by what they’re doing.
Oh, I would never have believed it. Thanks for the info. Most people that I know don't even know what IPFS is. Are those human uploaded, or bot uploaded?
> the art is the token
Yes, but why isn't the token displayed in the centered of the page on most popular platforms?
Because human needs a symbol that represent that token.
For most people, the animation and the number are the same. NFT work because people share a believe about them, after all.
And all the strong believe in humanity are sustained using symbols.
There are certainly a chunk of NFTs that the media only exists on one centralized server somewhere. Someone forgets to pay the bill and poof there goes your art. You can download the image but the contract's `tokenUri` function still points to that old location.
Then the next tier up would store their media on IPFS, if you purchase the NFT you're expected to be responsible for pinning that IPFS content somewhere. That's not communicated too well though. The benefit there is if the original minter stops paying for IPFS hosting but you still have yours pinned, it's still available. I think most of the "Mint as a service" platforms will use IPFS by default.
Then there are projects that are storing the images entirely on chain. These are obviously more costly to create but don't require another service/protocol/platform.
Anyone who buys these things is getting scammed and I feel sorry for them. I have friends who regularly fall for MLMs and other scams like this, and they never seem to learn. Is there any way to get through to them?
As stupid as it is, what you describe IS exactly "baseball cards in the blockchain", because each individual card/nft can only be owned by one person at a time.
The difference with baseball cards (apart from not being physical) is that most nft projects are combinatorial, so they make 10000 different cards, constructed from combinations of a much smaller number of "traits". That way the artist only has to draw say 25 faces, 20 hats, 20 eye glasses etc.
With baseball cards you'd instead make 100 different cards, and then print 1000s of copies of each. You could do that with NFTs, but you don't. The reason for that is probably that you can't sell NFTs in sealed packages where 95% of the cards will be uninteresting. I guess you could, but again you don't.
Many of the early ISPs played shell games with ad companies. NetZero is one of the most famously documented of the 90s dot-com age promising "free internet" with ads/MLM schemes, but they were one of the pack. The few I can recall today to google on the Bings, including NetZero, surprisingly still exist and survived the dot-com implosion as more traditional ISPs, but NetZero is the most useful example to give as it still bears the scars of its early scam-like history its own brand name. I don't think they've offered actual "zero dollar" service in more than a decade, but that's where their name originated.
I recall so many fly-by-night ads and ads+MLM schemes in the early internet, a lot of which I watched in Slashdot takedowns and teardowns at the time.
The early days of online payments (paypal) maybe. Unless they're talking about usenet selling, in which case I don't remember it being 'thrilling' to get a money order in the mail.
I kinda hate NFTs: But, the analogy to a "certificate of authenticity" for "real pieces of art" or "memorabilia" is reasonable. It's not "actually the art".
the "centralized platform" blocking you is kind of immaterial. The point is that other people can see that the token matches. Though one difference from CoAs is that the "centralized platform" could remove the art. I don't know how opensea works, but one could in theory hash the digital content, drop it onto bittorrent (or whatever, use the bittorrent hash id) and lock that up with the token. Is that how opensea works?
I'm still trying to wrap my head around the NFT thing (I get the base concept, and I know originally it was thought of for digital ownership of home deeds, etc, which makes perfect sense to me, but everything that I'm seeing from it lately just seems like beanie baby collecting, like art and avatars and buying with the sole expectation of selling to a bigger sucker later).
Where are you going to immerse yourself into this universe and seeing the community and experimentation? I don't know where I'd even start with that.
I have a lot of crypto nerds as friends, they have a trading platform, and so they are on all the reddit/discord/telegram important channels.
I wouldn't know where to begin, because I just got dunked into it a few days ago when one my friends asked my help to code a platform to create vanity user pages. I had nothing to do, it came to me :)
Gotcha. I've been into cryptocurrencies for a long time, but I've been feeling like a bit of a luddite when it comes to NFTs, or like most people who call crypto a ponzi scheme (some coins pretty much are, but not all), and that probably means I'm missing something.
I know where to go to find good information about crypto, but not NFTs.
Your second last paragraph perfectly summed up my feeling about it. :p I don't want to touch it at first, since its scam/money laundering smell is very strong(and also environment impact) also I think overall thing is pretty stupid.
But after some time that I,um, "participate" in it, I can feel the lots of weird creative energy flowing in there, collectively. Not a thing we see often in today's world. It's quite rejuvenating, and crazy.
While you are right that the NFT is just an entry to the blockchain with a URI to the actual media file, the file is NOT stored on a centralized platform.
While it is possible to use a regular server to store the media file, it is certainly very bad practice and defeats the whole point of NFTs.
The media files are stored on IPFS, which is a decentralized peer-to-peer storage network. This ensures that the media file that a NFT represents, will always be available, since it is hosted by many people on the network.
> This ensures that the media file that a NFT represents, will always be available, since it is hosted by many people on the network.
I’m pretty sure this is incorrect. IPFS is not permanent storage unless you host the content yourself or pay a pining service to host it. It may be cached on many computers but those caches are finite and get cleared.
> The platform disappears, or bans you, or changes policy, or is blocked, or whatever, and your NFT is back to being a bare-bone blockchain contract number and a token id.
So what? You can obviously right click to save the JPEG, so if the platform goes down it doesn't really matter. What you're buying is ownership of the NFT of the JPEG, not the JPEG. Even if the platform goes down, you'll still be able to see the name of the piece in the metadata.
NFT's doesn't prove anything though. The art world care a lot about originals, but an NFT cannot prove that something is an original. Nothing would prevent the author from just issuing a lot of NFT's pointing to a lot of copies of the same art piece. They are even worse than that, NFT doesn't even represent the piece of art, if the service it is connected to goes down then the NFT points to nothing, you can't even prove that it at one time pointed to a specific image.
Lastly, there is no reason for a service provider to issue NFT's. Service providers earns a ton from taxing the market when people trade items, there is no reason for them to give this away by issuing NFT's. Rather every service I've seen issue NFT's did it to sell items that will never be valuable, but that NFT enthusiasts now think will be valuable thanks to the NFT.
Anyway, best case NFT's are just an untaxed market associated with a game or service content. That is the absolutely best case, in what way does that sound novel?
Edit: The untaxed part probably means that governments will shut it down if it becomes too popular. So even less reasons to invest.
>Nothing would prevent the author from just issuing a lot of NFT's pointing to a lot of copies of the same art piece
Nothing prevents an author from just issuing a lot of duplicate art and claiming they are the original copy.
Except it's fraud and people would likely figure it out over time. That's the exact same scenario as the blockchain except it's even harder for the artist to cheat as everyone can see the blockchain so when the artist makes copies and tries to sell them then everyone can easily see that they are frauds.
>you can't even prove that it at one time pointed to a specific image
Most NFTs use IPFS which uses hashes to uniquely identify files and even if the file disappears from the internet it can be recovered by anyone who still has the original file and be back online.
There’s a lot of confusion here about why NFTs are valuable if the buyer doesn’t get to own the image copyright. This should not feel mysterious - NFTs are just like baseball cards.
If you buy a Barry Bonds baseball card for $1,000, you don’t own the artistic rights to the image on the card. All you own is the card itself, which has negligible manufacturing cost. It would be trivial for any card company to produce a million functionally equivalent Barry Bonds cards.
When you buy a Barry Bonds baseball card, you hope that the card company won’t dump a million more on the market. You also hope that if another baseball card company springs up and prints their own Barry Bonds cards, people won’t be as interested in that brand of cards. Attention and scarcity drive value; the nuance is that other speculators must care about scarcity along the same dimension that you possess it (in this case: the brand of the baseball card company and the year the card was made). There are a hundred tokens functionally equivalent to Bitcoin, but none approach Bitcoin’s value - purely because Bitcoin sustains more consumer and media attention. This position is fairly stable because attention has strong positive feedback loops.
There has always been interest in speculative collectibles. A purely digital collectible solves a lot of practical problems related to exchange: you don’t have to wait a week to receive the item in the mail, you don’t have to worry about its condition because it does not degrade with time or use, there is minimal counterparty risk due to online escrow contracts, and counterfeits are harder to fake (along the relevant dimension of scarcity, which is the origin address).
People have been speculating on collectibles for thousands of years. Crypto just makes it easier to trade them back and forth.
NFTs are a JSON string on a proprietary entity that point to the image of a baseball card. The image can be viewed by everyone. The bragging rights of owning a JSON string depend heavily on whether or not the proprietary entity will become the dominant player in the I own a JSON string-world.
This also has zero to do with blockchains. The proprietary entity could've used any database they wanted.
It's all a ridiculous scam, but have fun trading JSON strings.
" The bragging rights of owning a JSON string depend heavily on whether or not the proprietary entity will become the dominant player in the I own a JSON string-world." -> as the parent post explains, this particular aspect is exactly like baseball cards; where technically anyone could print other Barry Bonds cards but your bragging rights of owning a rare baseball card depend heavily on whether or not the proprietary entity printing those particular cards will be the dominant player in the baseball card world.
Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
Whether the data representation is a piece of cardboard or a JSON string replicated on 10,000 Ethereum nodes or a tulip or a Venmo balance is arbitrary; it just matters whether a lot of humans are looking at the same thing. And for the time being, a lot of humans are looking at crypto ledgers!
> Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
Oh but surely it does.
Cardboard is fragile, and degrades if not looked after. Over time, the average condition of cardboard cards will deteriorate. So, if you own a baseball card in good condition, and can look after it better than the average, over time you will end up with one of an increasingly rare class of pieces of cardboard - an old baseball card that is in good condition.
It’s not hard to imagine that in the distant future there will still be people who place value on the history of baseball who are interested in owning, for example, a collection of mint original baseball cards dating to the original era of each player, for every hall of famer who ever played for the Giants.
So the speculative value of any baseball card includes some expected value estimate based on the possibility that it might, someday, be the last of its kind, and some millionaire needs to buy it to complete a collection.
Can you really tell a similar story to yourself for why the expected future value of any NFT isn’t zero?
But then I come by and scan your card and print a fresh one. This is fairly cheap to do. Why is mine not valuable? Does this process devalue yours?
NFTs posit that the answer is that yours isn’t authentic and the process won’t devalue mine because mine is. And they offer an algorithmic mechanism to enforce and verify authenticity.
In the baseball card world, that ought to be true, but may not be. Maybe my fake is sufficiently good to fool the market.
Then at that point we realize that what is really valuable is that authenticity. We can make cards themselves infinitely cheap to copy flawlessly and the proof of authenticity remains distinct and valuable.
Your copy doesn't just lack 'authenticity', it also lacks something uncopyable, and which is only relvant to physical artifacts: 'age'.
The fact that digital copies can be perfect, and never age or deteriorate due to the inevitable march of entropy, is a fundamental difference and yes that affects how valuable 'owning' a digital artifact is versus owning a physical one.
I think this is basically true. Impermanence is part of what makes possession important. I can totally see the value of all NFTs decaying on long time scales because they're just boring.
But on short time scales all age is similar and authenticity seems to be sufficient to at least toss a bunch of liquidity from place to place.
But you've hit on exact problem the blockchain solved from day 1, you can copy the image (just like you can download hi resolution scans of baseball cards) but the underlying "cardboard" cannot be copied, or copies can be detected with 100% accuracy (depending on how you look at it).
Some day, the last original 1986 Barry Bonds rookie baseball card will disappear, lost in a housefire or an alien invasion or something. There might still be high quality digital images of what that card looked like, in archives of eBay auction pages and the digitized records of the baseball hall of fame and whatever other ephemera wind up in the Svalbard vault.
And in fact, the photo reproduction on that card was already a poor 1980s print quality reproduction of an original photo of Barry Bonds, which probably - no matter how well it was looked after - will have suffered and faded with age as print tends to; and that actual original photo was probably reproduced in a bunch of other places outside of that run of baseball cards - and maybe the original negative of that film exists in some archive somewhere, with a high quality digital copy available - from which you could reproduce an even higher quality picture than was presented on that card.
But you would never be able to replace that card, because the point of the card was its physical connection to the moment in time where a legendary career started.
"Humans preserved this specific lump of matter and kept it safe over a long period of time even though that was difficult and, let's be honest, not very important" is what gives value to antique collectibles.
"Humans preserved the cryptographic chain of custody of this sequence of binary digits that reference a specific widely archived piece of digital media over a long period of time, by creating a distributed computing system that just automatically ensured it would be passed on to posterity whether posterity wanted it or not," doesn't create the same human connection.
I think placing the value of baseball cards on the fact that they are made out of cardboard is mostly trying to rationalize a preconceived notion that baseball cards make sense whereas NFTs don't. But even then, similar dynamics to the one you mention also apply in the NFT world: people lose the keys to their wallets. In that sense, the NFT completely degraded. This will probably happen to many NFTs as has happened to a significant amount of bitcoins.
This is about where I got to when pondering this with regards to NBA Top Shot:
1. Is it irrational to pay large sums of money to collect NFTs? Yes.
2. Is it irrational to pay large sums of money to collect physical cards? Also yes.
Regardless, we humans are weird and will do it anyway.
Fragileness is not a requirement for rarity, you can just as easily print fewer baseball cards / NFTs to begin with to reach the desired circulating supply.
Beyond that though, keys get lost so NFTs do have a mechanism of leaving circulation.
> Whether the data representation is a piece of cardboard or a JSON string replicated on 10,000 Ethereum nodes or a tulip or a Venmo balance is arbitrary; it just matters whether a lot of humans are looking at the same thing. And for the time being, a lot of humans are looking at crypto ledgers!
But are they really? I mean, are there that many humans waiting in line to have a JSON pointing to a tweet?
There were a few reports of NFTs going on the market for thousands of dollars, but at least the ones I'm aware of sounded an awful lot like people buying their own NFTs and leaving that out from the report.
FWIW, I am personally shocked that anyone wants to buy small pieces of cardboard with photos of baseball players on them at all, much less for any appreciable amount of money just because one happens to be "rare" (whatever the hell that means, as clearly anyone with a printer and some cardboard can make their own)... that doesn't mean that someone else is valuing them for some reason, and they clearly do; that most small pieces of cardboard with pictures on them aren't valuable is kind of irrelevant to the idea that some are.
> FWIW, I am personally shocked that anyone wants to buy small pieces of cardboard (...)
I fail to see the relevance of your personal preferences to the discussion, as my point was that the cases I'm aware of sound an awful lot like shills trying to inflate the value of something with no market value whatsoever.
As a concrete example, there was a HN discussion a couple of months ago on how a kid reported a couple thousands of dollars worth of sales from NFTs, but it all sounded like a mix of straight up fraud and money laundering. A few comments in the discussion point out that the kid's father works in finance and it sounds he is trying to case in on the NFT trend.
> But are they really? I mean, are there that many humans waiting in line to have a JSON pointing to a tweet?
This is just your belief in what people would want to do, and is irrelevant to whether people out there exist, and I am claiming (seemingly successfully, as my comment is resonating with a number of people) the same thing would probably be said with just as much confusion by anyone who really considers how utterly pointless a baseball card is.
To me the more likely use seems not a pump-and-dump scam but rather money laundering - get a plausible and legitimate money trail as "capital gains from digital art investment" from some dirty bitcoins coming in from, for example, a ransomware payout.
> are there that many humans waiting in line to have a JSON pointing to a tweet
There are a lot of humans waiting in line for other digital assets that don't do anything, like Fortite skins. That's also just a row in some database, what's the difference?
> Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
No, but if something physically exists then it's possible for there to be originals and first printings, which can be finite in supply despite the ease of reproduction.
I can understand why some people might prize a 1987 Barry Bonds card over a modern reproduction, even if the reproduction is indistinguishable, because the 1987 version is older or more authentic.
But there is no 'original' of this comment - moving it from my computer to yours (and from your RAM to your screen and so on) inherently makes it a reproduction. There's no authentic-vs-inauthentic distinction to be drawn.
It is a small leap. The balance in your bank account is also a number without a physical presence. It has value because you can convert it to physical goods. The same is true of a Bitcoin balance.
Currency is a contract, it's inherently intangible.
Bitcoin is not a currency, and it's not used for anything, so it's a really just a number, that someone may speculatively want to pay money for, due to the fact a small number of other people will pay for it, but unless there's a more broad acceptance of it, the implied value will also fade.
If NFT's implied ownership of the Baseball card itself, I think this would be another thing altogether.
It's actually simpler than that. It's just an entry in a database with your name attached to it. It's like an autograph.
Why do database entries have value? Well, usually because there are processes attached to them. Often it is as simple as having a court enforce the process.
I don't know why but the whole cryptocurrency space feels like a philosophical parody of the real world. Money without people. Contracts without enforcement. Ownership without property.
They have value because people agree they have value. Trusted third parties (like courts) help people come to that agreement, by providing transparent, objective processes to settle legitimacy and ownership disputes (in the happy case, in the not-happy case they use physical force to reach agreement).
Personally I don't understand the controversy, blockchains are a different kind of trusted third party that also help people come to agreements, by also providing "transparent, objective processes to settle legitimacy and ownership disputes". These third parties aren't mutually exclusive, and the role of blockchains/NFTs aren't fundamentally different, they just use novel means to help people come to agreements, within the same social constructs we've always had.
The problem with using NFTs to verify ownership is that they actually make it much harder to resolve any disputes. An NFT can't be transferred or modified without explicit permission from the owner of the NFT, which means that any dispute is impossible to resolve without bypassing the NFTs entirely.
For example, let's say you have an NFT that represents something tangible (and not just some link to an image download). What happens if the owner of the NFT dies without setting up a way to transfer their NTSs? What if multiple, seemingly valid NFTs point to the same object? What if the NFT was never truly valid in the first place? What if an NFT is stolen?
In all of these situations, a third party (like a court) would have no actual power to fix anything within the NFT space. A hard fork is theoretically possible, but that becomes impractical to do every time someone has an NFT dispute. The only option is to just declare an NFT invalid. But if you have some third party that controls the validity of NFTs, then you might as well cut out the NFTs and just rely on the third party.
I think you're misunderstanding my stance here, I'm not arguing that NFTs are always better than other trusted third parties. I don't know enough about their details to make a claim like that.
In the terms of what you're saying, I'm arguing that the space of scenarios in which people can't come to an agreement is different for NFTs vs. legal systems, because NFTs provide some self-service mechanisms for proving ownership and legitimacy. I'm sure those come with tradeoffs, as you've mentioned. I'm not in a position to weigh those tradeoffs yet, nor claim that one is always better than the other. I think it's too early for that.
More concretely, courts, NFTs, et al are tools for reaching agreements. There's no reason to dogmatically cling to "on-chain" if it's not helping reach an agreement, and there's no inherent reason things can't be mixed between on-chain and off-chain, just as agreements can be made in court vs. out-of-court.
Right! Which is why NFTs are specifically not representing anything physical (despite certain people within the space admittedly pushing this misguided notion). They work because the NFT itself, the ledger entry, is valuable.
>I don't know why but the whole cryptocurrency space feels like a philosophical parody of the real world. Money without people. Contracts without enforcement. Ownership without property.
The common denominator between these being: process without purpose.
And this is why the parody works so well. The world is already like you describe, though it's hard to notice if you view it through the rose-tinted glasses that the ever-shrinking in-group is more than happy to sell to you for good "old" fiat money. (If 50 years ago is old.) Neoliberal "infinite growth" capitalism is already an inter-generational MLM, sanctioned by a global monopoly on violent enforcement. All power grows out of the barrel of a gun, and we have all become so delightfully non-violent... The logical conclusion: Oceania, Eurasia and Eastasia locked in perpetual war upon the background of a collapsed ecosystem?
Well, fuck that. Techno-capitalistic nation-states are an early-stage performance optimization. And since violent uprisings lead nowhere, we're doing the sane thing. We're refactoring 'em the fuck out of existence.
If "having a court enforce [a] process" is "simple", how come so many people already have "avoid courts", "distrust lawyers" as rules of thumb, and "don't side with authority" as a general life principle? For the marginalized majority, every state is a failed state, and every system is hostile and oppressive. The thing everyone's getting out of crypto is the same thing they've been getting out of all the other silly pyramid schemes, from Tupperware to contraband. Which is to say, the same things they've been aggressively denied by the state-sanctioned economic mainstream.
Hope. Opportunity. A voice.
A functioning parody of existing economical processes gives people the hope that there's a better economic system right around the corner. Maybe we just have to collectively sort of stumble into it.
Of course, it's only that simple if you have a simplified view of human creativity. But that's OK, too. Every invention that truly revolutionized our way of life was a somewhat accidental result of thousands upon thousands person-hours of organized research. And that's exactly what we're doing here - about as haphazardly as virtually any other kind of software development, but at the same time crowdfunded on a global scale.
Today, we're offering people the same sort of economic "junk food" that the current system has gotten them addicted to for the better part of the 20th century. Tomorrow, someone finally sneaks distributed consensus technology into the mainstream, and makes the world a little less corrupt.
Can you give an example of the proprietary entity you're referring to? I was curious so I took a short course that covered minting NFTs with Solidity, and the way it seemed to work is that the JSON strings (which contain the base64 encoded image) are stored (as an ERC-721 token) on the Ethereum blockchain. Eg. you can see a random such token here: https://rinkeby.etherscan.io/token/0x6b96751051cd25c29cdcea7...
The only proprietary entity involved in that process seems to be Alchemy. My understanding of them is a bit vague but they seem to just help with making miners aware of the new contract and getting it distributed. But that's just the contract, once it's deployed it's nothing to do with them and the NFTs AFAIK don't pass through them at all.
Maybe a stupid question, but where do I find the base64 encoded image in your linked token? The only thing I can see is a transaction moving it from one address to another, the contract bytecode (which I guess might encode an image but its definitely not obvious[1]) and the "extra data" hex in the transaction (that doesn't appear to be an encoded image either, from what I can tell).
I'm probably missing something, so if you could let me know where to look, that'd be nice!
The contract has no mention of opensea, so they must be reading it from the blockchain somehow - but I guess etherscan doesn't display these tokens in a similar way for some reason. It's all pretty new to me and I definitely don't have a super joined up understanding of it all!
To query the URI of your tokens through your contract, you need to interact with its ABI through code; alternatively, you can upload the ABI to Etherscan, which will provide a UI to query it.
You can use the URI to store base64 encoded image or svg data, and that is super cool; but will be too expensive for larger images, at which point you will link to an IPFS-hosted url.
Ah thankyou! In that course we did write a web frontend that interacts with the contract ABI to mint the NFTs, but we didn’t do the display side. I’m curious how opensea are doing it, because they can display NFTs from my contract without me ever giving them the ABI. Can you go from decompiled contract (like etherscan can generate) -> ABI maybe?
When you are implementing an NFT, you are likely implementing either the ERC 721 or the ERC 1155 interfaces; as such, certain standard functions will be available using a standard ABI call.
So OpenSea will just try to call `tokenURI`; if you have implemented the interface correctly, that will succeed, if not, OpenSea will not show a placeholder image.
No thats confusing one possible technical implementation with the concept, there are other ways to solve that. Thats like saying a Picasso painting is just a specific canvas with som paint on.
You are wrong. The JSON data is metadata and is optional. Also, you’re still not refuting GP’s explanation. If you can understand why people buy baseball cards, you can understand NFTs
> There’s a lot of confusion here about why NFTs are valuable if the buyer doesn’t get to own the image copyright.
Mostly because of two persistent lies around NFTs: 1) That you buy a piece of artwork. 2) Blockchain makes it automatically watertight.
All you get is transfer rights of a single number via a blockchain, optionally (usually) with a URI pointing to some media.
Now, why is owning blockchain transfer rights to that number valuable? Because an artist was involved in creating it, and they stated somewhere that the number refers to a specific artwork.
Outside the blockchain, more things have to be trusted for this to hold up:
- The artist in question must be the seller. Sure, you bought it from "banksy44" on nftgox.com, but is that the artist? There are soft ways to verify it, and you can get all sorts of receipts, promises, or statements from semi-official authorities.
- Whatever links the number or the URI to the artwork must remain up. If it's on a regular URL, the host owner gets to decide when to delete it, or when to replace it an ad for their gambling site. If a IPFS resource goes dead, it's gone. If the number referring to the artwork is stored on a 3rd party ledger you rely on them being honest, online, and correct.
AND NOW you have two weaker links in your trust chain, on the level of "humans trusting humans", rendering the blockchain basically useless. The premise is a lie, intentional or not.
I will not disagree that there is confusion and bad arguments on both sides of the debate, which is why you are essentially arguing within the wrong framing.
At the same time, people buying NFTs are generally quite a bit less confused about what you consider "lies" than you seem to think.
Importantly, the blockchain is not useless because they have to exist within the universe's rules of impermanence. You may want to ponder the differences and shared properties between something like seditionart.com, MASS MoCA's ownership of Sol Le Witt wall paintings, and an NFT on a blockchain.
Finally, let me point out that the URI issue is very much a misunderstanding that is widespread within the NFT community as well. It helps to think of the URI as a convenience feature rather than someone implying anything about the value of the token. There are fascinating experiments with tokens that have no url, tokens that have no visual representation, tokens with changing urls, or arbitrary urls; tokens that point to the same url. There are of course tokens that use data uris, and have the image-representation on-chain, or generate it dynamically; or they do so but not in URL form. There are technical implementations where the database of urls is separate from the ledger of tokens; there are early experiments by artists with blockchains (many years before anyone cared about NFTs) where there is no ability to store a URL in the first place.
Cryptopunks, a really early project, simply stored a hash to a file containing the assembled images, and that is all that is needed.
There are various vague touching points of NFTs and real world collectables like baseball cards, but they are not the same. Artificial scarcity is one of them, e.g. there is no reason why there couldn't be a billion baseball cards of the most expensive kind (which would make them stop being the most expensive). Somebody else could create fake ones, but they would have little value for the fact that they are not genuine, which can be verified. You can make the very same arguments for an NFT, including that they are genuine based on who issued them.
But a baseball card, or a Lego set have value on their own. Their collectable value stems from the fact that they are desired as such, and the scarcity makes the price of a certain type go up. Somebody might buy them just to show off or speculate, but another might be a huge Lego nerd and buy the rarest set just to feel joy by looking at it. But an NFT has no value beyond the scarcity. Nobody feels human joy by looking at an NFT beyond being able to show off that they are able to basically burn money in the "i am rich" app type of way. Thus it can only remain a toy for the rich. A van Gogh painting is most likely just a speculation and a show off object, but I might buy a painting from a local artist for $200 because I like it, and to put it on my wall so it makes me happy because it reminds of something nice. I will not buy a $200 NFT just to say I have one too.
Yeah, I follow Peter Mohrbacher who's a surrealist fantasy artist. I've bought some physical prints from him (not even originals or anything, just normal art prints) because I like his art and wanted to have it on my wall and preferred to pay him for a proper print than print a digital copy myself. He also at some point made some NFT sales and I really tried to find a reason to get excited but just couldn't.
I can understand why he was, though, because on his particular platform, artists get a cut of future resale of their art. So he sells a piece for $100, someone later sells it for $200, and he gets a 5% cut (made-up number, I don't remember what exactly it was) for an extra 10 bucks, and so on (but it's still always just a digital token, not a physical piece).
But that doesn't require NFTs to happen. Since it was a proprietary platform, a plain old database could have done the exact same thing.
> e.g. there is no reason why there couldn't be a billion baseball cards of the most expensive kind (which would make them stop being the most expensive)
This is a hilarious contradiction. You are saying there can be a billion baseball cards of the most expensive kind that are at the same time not the most expensive kind.
> People have been speculating on collectibles for thousands of years.
Have they really? IMHO the whole concept of intentionally creating collectibles as a market started (and IMHO became possible) only after strict IP laws that could prevent anyone from making and distributing large quantities of items that should be rare by design.
My favorite example is the fictional collectible card game Gwent in Witcher 3, where the whole concept of rare/scarce cards is ridiculous in the absence of a single organization being able to enforce a monopoly on issuing Gwent cards; the actual expected result should be like ordinary cards, where everyone gets an ace of spades in their deck or chess where both players get a queen, no questions asked; for human-created marketable collectibles (as opposed to actual collections of butterflies or the like) the scarcity can only happen if artificially enforced.
This is one of my main gripes with MtG. It just feel like a scam, a 90s loot boxes situation. I do not want to contribute to the business model, even if the product is solid.
I will probably sell my collection and print some proxies.
MTG is kind the original lootbox, but I guess at least there is a reasonably good game behind it.
I dumped my MTG in the early 2000s, these days I'll only buy into a card game using the LCG/ECG model. It's not necessarily cheaper but it is less scummy.
Unlike NFTs there is at least a (physical) product.
(And even in the digital version, you have a limited digital item in a verified/trusted (digital) environment, backed/supervised by an entity (company). In crypto you're backed by a concept (an algorithm))
To me this whole crypto stuff seems like a bigger and better incarnation of the tulip mania (https://en.m.wikipedia.org/wiki/Tulip_mania), very little crypto stuff /coins are backed by anything of intrinsic value. In a way it's the ultimate decadence.
If we are going to approach the issue through analogies, here's an alternative one: selling an NFT is like the old scam of selling a bill of goods (this is where the victim thinks he has bought a number of tangible things, but the contract actually says that all he has bought is the document listing the goods.)
The big difference with NFTs, of course, is that the true nature of the transaction is not being disguised. That makes it legal and even ethical, but whether that is enough for you to be a buyer is up to you.
If not for the energy costs NFTs would be just like you describe above - a somewhat pointless but harmless hobby for enthusiasts (what good does speculating on baseball cards do in the world? What good does speculating on art do for that matter? As far as I can tell "little to none" for both of these).
NFTs themselves don't have any energy costs. Depending on what network you're using for buying/minting/trading NFTs, there might be energy cost associated with it, but not all NFTs are equal. NFTs based on Proof-of-Stake networks won't have the same energy cost as NFTs based on Proof-of-Work networks.
Unfortunately, it seems that most NFTs are based on the Ethereum platform, which is currently Proof-of-Work. Fortunately, Ethereum is moving to Proof-of-Stake slowly but surely.
But the point still stands, NFTs themselves have no energy costs, only the transactions on the network where they live have that.
There's no energy cost to spawning a million algorithmic penguins. They have no inherent cost or value.
The sunk costs of obtaining something rare or difficult to get (like titanium) is a factor only for the next person who desires titanium.
Since there is no cost to see or copy a jpg, there is no "extra value" added in an NFT. Not even energy costs. The end product still has zero value.
A simple corrolary is wine. Swill stored expensively doesn't acquire new use values from the storage. The expense of storage doesn't accumulate to the value of the NFT. Whereas the expense of obtaining real goods like metals is exactly what sets their value.
When you have a baseball card, the first sale doctrine means that you at least have the legal right to display and transfer that card. With NFTs, even that is not necessarily the case because displaying the content of the NFT is making a copy, and you may not have a license to do that.
If you own an NFT, you have the ability to write someone else’s address on a socially recognized ledger of ownership. That is all that matters. If the NFT and the ledger have wide interest, this ability to transfer ownership has value regardless of any legal subtleties.
We already have a concept of ‘ownership’ in the real world.
If an artist wants to sell a digital work to someone they can do so - just write up a contract, sign it, exchange some value, and you’re done. Selling things is a well understood concept. We have a legal framework for it.
If an NFT represents a transferable sellable set of rights, then those rights have to be expressed in a sale agreement of some sort (implied or explicit).
Sure, the blockchain gives you an easy way to handle the ‘transfer of ownership’ portion of a subsequent sale, but items not some radical new form of ownership - it rests on an underlying legal framework that is indistinguishable from selling deeds to acres on the moon or selling numbered prints of an artwork with a certificate of authenticity.
Either there remains interest and social consensus around this ledger, in which case it can be rebooted on a different network, for example, or even by a centralized party; or maybe you are the only one with an interest in your NFT collection, in which case you can keep a copy of the ledger yourself.
Sure you can do that right now. But my point was more: physical objects can be traded easily in the far future.
We can hardly rebuild stuff from source after 20years time, so I'm pretty sure you will not be able to revive long dead blockchains as easy as renting a space to trade physical objects of collectible value.
My point here was more akin to saying: Sure, if no one cares about your NFT, or the chain it is on, then yes, it's worthless. If you want to be the last one to care, keep a copy of the chain.
The physical equivalent is a worthless painting that no one cares about and your grandchildren throw out.
Exactly, you own a ledger entry. Stop saying that is like baseball cards. I can frame and hang a real baseball card on my wall because I own it and it is real. I can hang a digital frame on the wall and point it at your NFT and have the "real" thing even though I don't own it. It is simply a pyramid scheme. Some people will make a lot of money and some will lose a lot. I do see people who are so convinced that NFTs will be around 20 years from putting their entire net worth into NFTs and planning to HODL.
This is a great explanation. I’ve understood NFTs slightly differently, where they are akin to an _autographed_ baseball card. In that case, regardless of how many copies of that card exist in the world, you have a rendition of that card authorized by a special party (the autographer) that causes it to be unique.
Where any number of digital copies of an asset may exist, the NFT is the “autograph” atop that asset that is unique and therefore adds the value.
(It’s worth noting that anyone can autograph any baseball card. So it’s not the autograph that makes it valuable, but _who_ autographed it. It’s the same with who minted the NFT.)
There's another aspect to this analogy - It's like an autographed baseball card + the person / entity autographing the card has declared (by code) that there won't be another one of these autographed series ever (eg - 10k CryptoPunks series).
They're nothing at all like baseball cards. Very few baseball cards are worth anything at all, and the ones that are don't promise to be rare in some hypothetical future. They're cards that were created decades ago and are actually rare and can't possibly be recreated. If you have a rookie Willie Mays in mint condition, it took half a century for that to become valuable, as all but maybe one or two in the world disappeared and you have the only one left. Nobody mints a brand new baseball card right now, pinky swears it will remain the only of its kind forever, and then sells it for millions immediately.
Baseball cards are exactly what they are and baseball cards were historically viewed as worthless until a craze in the 80’s that in turn caused over production and has made them a pretty poor investment.
This is partly true, but you are missing one important aspect:
While ownership can be enforced equally well with NFTs and baseball cards, the crucial difference is that with physical cards, owners have a unique way of experiencing the card. Anyone can look at an online reproduction of it, but only if you have a physical copy can you hold it in your hand.
This is not the case for NFTs, anyone can experience the image in exactly the same way.
I think your point on scarcity and attention are well put, but can't apply to NFTs in the way as physical commodities because I think there has to be some notion of originality intertwined.
Like for art pieces, sure people can make copies and put the copies on a wall - but only I have the original to hang up my wall. There is value to most people between having a copy vs the actual thing.
There is obviously a massive disconnect with this and NFTs because anyone can save a copy of a NFT (or the image a NFT represents) and not have its value diminished because all the "copies" of the NFT are the same - since "originally" doesn't apply to digital goods.
It doesn't matter if there is some hash on a blockchain out there saying so-and-so "owns an image", I can still copy the image and get the same value. That is not the case with say having a copy of the Mona Lisa vs the actual Mona Lisa.
NFTs are worthless to me for the above reason aside from the value that other people think they have.
The difference with baseball cards is that nobody ever had the option to just "buy the Barry Bonds card" out of the gate.
The value came from the rarity of people all over buying random packs of cards, collecting them, trading them and the established rarity that came from that massive distribution coupled with holding the cards for a decade or more to see how one of these players career played out. On the off chance that you held onto a rare card of a legendary player, then congratulation...you have something of value. More so if you took good care of it.
There's none of that with NFTs. It's akin to handing out flyers on the street and asking somebody to pay for them on the basis that..."Sir, that flyer belongs only to you now. Congratulations!"
NFT's are just digital proof of an old adage.
"A fool and his money are easily parted." - Thomas Tusser
# I bought the rights to the quote from an NFT
The difference between baseball cards and NFTs is that if I'm cold I can make a bonfire from baseball cards, whereas I certainly can't do the same with NFTs.
At this point, of you say crypto is involved with some new fad it's just a clear indicator that silicon snake oil is the real product.
It’s thought that something like 20% of BTC are “lost” (1) (ie, private key is lost). This will certainly happen to NFTs as well since people will inevitably fail to back-up their wallets.
NFT's are not like Baseball Cards, they are more like Pet Rocks.
A Baseball Card has some underlying value and fun, kids get baseball cards. They cannot be diluted as 'reprints' would never be accepted as substitutes.
If some people want to trade those things on the margins, fine.
A 'number' i.e. digital signature is not a collectible.
Digital signatures of any creative work are meaningless, nobody will derive satisfaction out of owning them and they'll probably just lose value over time.
It's an obvious money grab populist grift that really doesn't create net value for anyone.
Ok, let's see if I'm following the discussion right. let's say you buy an NFT for using a GIF of the Techno Viking, from the Viking himself, and Reddit verifies it. Now you are the only person on Reddit that can have a Techno Viking GIF signature, yippee! Except I can make a new NFT of the same GIF and nothing in the NFT itself betrays that it wasn't issued by the real Techno Viking, so it's up to him, Reddit and you to call me out and reach for old school copyright laws to stop me from using it. Which is no different than me uploading a Techno Viking video to YouTube and getting sued by him or flagged by YouTube, is it?
You're both correct and underestimating how broken NFTs are. If you buy an NFT that gives you nothing except bragging rights that you "own" this NFT. What ownership actually means when devoid of the associated rights is anyones guess. Buying an NFT of a GIF doesn't stop anyone from using that GIF on reddit. No one is going around checking if posted GIFs have a matching NFT out there and enforcing property rights based on that.
When you buy an NFT you're not even buying the GIF, you're buying the receipt proving you bought the GIF. What good that is without owning the GIF isn't exactly obvious to me.
Not that I support NFTs much, but conceptually, how is that different than you buying a Marilyn Monroe from Andy Warhol and him printing the exact same Marilyn Monroe and selling it to someone else ? Hopefully in 2021 everyone would agree that the two are distinct artworks, even if the physical object is exactly the same to the human eye ; that's not what matters when buying art.
Having ownership of the physical print is a pretty big differentiator. I guess you could have always bought that same print from someone who created it illegally rather than Warhol himself, but that is where the vague "supporting the artist" reasoning comes in to play.
Since NFTs don't provide that physical object, all that is left is the "supporting the artist" angle. If that is central to NFTs, why is the secondary market such a big aspect of the community? To extend your analogy, that would be like me buying the Warhol print for $10, turning around and selling it for $100, and claiming that $90 in my pocket is supporting Warhol.
Why would "supporting the artist" be relevant at all? Apart from NFTs whose smart contract gives the minter a share of resales, I have never heard anyone say that.
The Marilyn Monroes are still limited by the number that Warhol prints, and you have ownership of the print that you bought. Maybe it’s not as valuable as it would be if there was only 1 Monroe print, but you are paying for a physical object made by Warhol.
If I understand correctly, an NFT is like if someone, not necessarily Warhol himself, sold you a note posted on a wall somewhere that said “You own Andy Warhol’s Marilyn Monroe”, without any rights to the underlying work, or any promise that another person might sell another note on another wall that says “Andy Warhol’s Marilyn Monroe”.
Fun Fact: Rodin was one of the first sculptors to take advantage of reproduction, as he employed craftsmen in his workshop that could build you a custom thinker that was 2 inches tall for a paperweight or another full sized thinker statue for your public park. These statues had his special patina added.
When he died, Rodin destroyed the recipes for his patina but the workshop, run out of an old hotel and eventually becoming the Musee Rodin, continued to make "official" copies. Thus there are 25 full-sized thinkers but only 10 or so have the patina, the rest being made after his death.
The funny thing about NFTs. The emperor has no clothes. Confusion is evidence of understanding -- there's that little substance. No Fscking Thing.
> a note posted on a wall somewhere that said “You own Andy Warhol’s Marilyn Monroe”
It's basically a pointer. It's not hard to scrounge the sites that track the ETH blockchain, find where a NFT changed hands, and then find the URI for the full res image that anyone can go download. All that's owned is the pointer.
Warhol mass-produced his prints using silk-screen, and verifying them as authentic is damn near impossible.
The real ones may be limited, but he made a lot of them (you can really churn out artwork with silkscreening), and it’s hard to know which ones are the real ones.
... you think counterfeits are not a thing ? People spend inordinate amounts of time and money to ensure that the painting the buy is indeed from the painter it is said to come from
Because that's the reason people value the NFT. The fact that someone can take a picture of the Mona Lisa and try to sell it as an NFT is not the point; people don't value that NFT, and NFTs are not designed to prevent that from happening.
It is a simple ledger entry that records the ownership of an edition released by an artist, and people choose to value it because of that.
The problem is that anyone can mint an NFT. Verifying that an NFT is actually minted by the artist would likely require some sort of external certification that you can trust. This is done for paintings and other collectibles as well.
What I don’t understand is: Once you have an external certifying authority, why have blockchain based NFTs at all? Couldn’t you save a lot of energy and complexity by tracking purchases in a database?
It is none of those things. It does not record ownership, there is no guarantee it is released by an artist... And people do not really value them either, other than people speculating or scamming.
The same as with any other intellectual property (books, movies, songs): buy the legally enforceable copyright. As in "right" and "copy".
PS: I'm immensely interested in the process of creating a digital image. It's actually pretty tricky and technical, to apply all those filters in right order and with right settings. I would buy a recording of how the digital art was created.
Except the legally enforceable copyright is just that: legally enforceable. The legal system is what creates a financial incentive to own the rights to something as opposed to just copying it in some way that might constitute IP theft.
With NFTs, there is no legal benefit to actually owning the NFT.
I would say it's not different and it's a great analogy that shows how NFTs are ridiculous. It could be even more extreme than your example. The piece of art could be entirely reproductible by anyone and still only some versions would be considered valuable. See the $150,000 banana.
This is exactly why very little art is valuable until the artist is dead, and even those rare artists who can sell while still alive see the value of their work skyrocket when they die. Andy Warhol definitely can't make a copy of anything you own that he created and he has verifiably been unable to since 1987.
If you buy the Marilyn Monroe print then you can legally put it up on your wall at home and other people can see it.
If you buy an NFT (which is just an URL to somewhere that might have a picture today but might be a 404 tomorrow or an ipfs hash if you're lucky) then you can not (in most cases I've seen) legally put that picture that's behind the link in the NFT up on your website and show it to others. Heck, in some countries this doesn't even grant you the right to store that picture itself on your own computer.
(Most) NFT's don't give the owner of the NFT any rights for the linked art itself - you can't copy it, distribute it, present it etc. You can do all of that with the NFT but _not_ the actual art piece.
Of course there's a difference between the original and a print. An NFT is not an original though. At best an NFT comes with an URL to an image you can use to make a print. But guess what? anyone can make that print.
If you buy an NFT you don't buy an original. You buy proof that you bought the original. It's like buying the receipt to the Mona Lisa. Doing so doesn't gain you anything. It doesn't even gain you the original Mona Lisa.
Unless people are ceding the point that NFTs are art in and of themselves I don't see the point. And I hardly see a receipt as a form of art.
As someone pointed out already in the baseball card example. NFTs do not give you copyright over the images. You may buy a baseball card but that doesn’t let you sell or license the image displayed on the baseball card. NFT is exactly the same in that sense. It is purely a collectible not explicit ownership of a likeness.
I think you underestimate how important bragging rights are.
That's the reason people purchase Rolex watches! And because you can't show off your Rolex watch in the online world, instead you'll use an NFT as a profil pic.
I think it's hard for people that don't care about bragging rights / status symbols to understand NFTs.
Conversely, I think that status symbols are a very important part of the lives of the people that understand and advocate NFTs.
I understand bragging rights, but it's pretty hard to brag with something noncorporeal. That profile pic? Anyone can use that, whether or not they own the NFT or not. Makes for some pretty poor bragging material if you ask me.
Except copyright and trademark laws exist. The Washington Redskins lost their trademark. You can create as many NFTs of their logo as you want. But you cannot stop me from putting that logo on my website.
The NFT equivalent of marriage would be getting married, and your spouse continuing to live with their old roommates, date around, keeping a separate bank account, going on other people's family vacations, and starting multiple families other than yours.
If that's how marriage worked, people wouldn't get married either.
Anybody can own and share the media file (one of the great things about crypto art is that we can all access and view it), but only one wallet owns the token that links back to the original creator’s signature.
To use a print analogue: a print of a photographer’s work likely holds no significant value* unless that artifact is provably signed (or otherwise approved) by the artist. To take it a step further; a convincing photocopy with a fraudulent signature will also hold no value, once it’s determined to not have come from the original creator.
* Here “value” refers to cultural and artistic significance in how it is perceived by an art market. Of course a poor photocopy of a Mona Lisa holds cultural value because of what it signifies, but a museum isn’t about to acquire that artifact from you.
I didn't see this answer and wanted to submit it. So, in order for this NFT to have any authenticity, it has to be made under some sort of "technoviking" name right? Ultimately, this technoviking guy is probably reputed and if someone found his content through NFTs, would probably let him know. You can argue that the chain can't regulate itself, but as it stands it does -- just by virtue of there being one large platform (opensea). I'm not sure that Technoviking could easily get his content pulled from the chain, but it can be delisted entirely from opensea, and probably rigged up so future items of his would be caught and shadowbanned immediately.
Is this a solution that works long term? I'm not sure about that. It's a hard question to answer, but I'm glad someone's going for it. I would personally expect ycombinator to be more open to these kinds of ideas -- Programmatic solutions are something we can all get behind. It's a hard problem to solve but that's what drives a lot of our passion in this field, correct?
Basically yes, you'd be right. Someone has to call him out. But do you expect an automated system to handle that in a fair and ordered manner? We already have a terrible (user-wise) implementation of that -- DMCA. What's important is ascribing ownership for the long-term, even if we have to do it manually and surprise -- that's what NFTs (could) do.
I could be wrong but from what I've seen, I think DAOs could bridge that gap. These 'headless' communities create that manual self-regulation that is needed -- social verification fueled by some sort of financial incentive, driven through a very public system.
This touches upon the main issue with NFTs and tokens in general, that they always have to rely on a centralised authority to connect them to the real world, and except when it comes to derivatives on crypto assets, that real world connection is crucial.
So, are artists suddenly getting in on pgp key-signing parties to establish a web of trust, or is the public key of the artist really just a key claiming to be that of the artist? What is to stop me from buying "bank.se", "banksy.me" and "banksy.io," and actioning off three different NFTs (of three different digital representations of the same street art) to different online art communities? What is to stop someone who MITM's the artist's webpage from selling NFTs on their behalf?
Sure, but if Warhol had each of his prints signed with an unforgeable signature akin to a private key, while we still have to know what is private key was, the Warhol Authentication Board wouldn't have been in the mess that it was in.
No, you need to think about what you’re buying as a unique address and tokenID pair. The same way someone can recreate a hackernews at a different URL, most people here are going to continue to see https://news.ycombinator.com/ as th real one
It is more like buying a signed baseball card. And with NFTs being digital tokens they can't be forged or duplicated, and the original creator can't stop you from transferring to someone else, and they can be transferred to someone else relatively securely if you have the private key and pay the gas.
Anyone else could print and sign a baseball card, mint an almost identical NFT. But if they come from someone besides the techno viking they won't be worth anything, because anyone could do the same thing. But the techno viking can certainly sell more to others just like a baseball player can sign a lot of cards.
Your NFT’s trade provenance will reveal it was never owned by Technoviking’s key. He won’t need to use copyright law, you simply can’t impersonate him so no one will value your duplicate NFT.
I might be mistaken but I don't think >99% of people who have bought an NFT have verified that the key used to generate the token does in fact belong to the artist that created the piece that's (currently) behind the link that's in the token.
They don't have to, generally speaking. OpenSea does that for them, and issues a blue checkmark to items belonging to the collection of the verified key.
All of this gushing hype for the future of artistry is transparently performative. Nobody in this tech cares about art or artists, any of the useful functions of NFTs have long been possible and many orders of magnitude less expensive using public key cryptography or digital signatures.
Eh I have spent ~100 on smaller stuff on hicetnunc. The majority has been on art made by people that I know, and I've really enjoyed the new artists that I've found.
I'm uninterested in the NFTs with big price tags, and I'm uninterested in pieces that I don't subjectively enjoy the art of.
I care, but I'm guessing you either didn't literally mean nobody cares, or you are going to brush off this counter example for whatever reason.
This is a lot of words to say "there is by design no way to do that".
DeFi systems are all designed around the unspoken (although sometimes spoken, honestly) assumption that rules are bad and that the system should make enforcing them difficult-to-impossible. A fun exercise is to consider, if all businesses went to using *coin overnight and one accidentally overcharged your wallet, how would you get your coins back?
You do realize that replicas are a problem in the real world art world as well right?
In real world art this is resolved by proving providence, in crypto providence from minting is trivial, but you still need to prove providence that the minting was honest.
None of which in any way responds to what I said. NFTs, by design, have no fraud prevention mechanism and no mechanism for getting your money back if you were scammed. They allow for arbitrarily many tokens to be minted of the same thing, with no obvious mechanism for people to realize that's what's happening.
Smart contracts can and do limit the amount which can be minted. And fraud exists everywhere, regardless of institutional controls - this is where community matters.
Sure, but it has a different address...there is no possibility of confusion. Something from the 1950s is not going to be confused with something from the 1980s, especially with a blockchain timestamp.
On the other hand, it's trivial to show that an NFT is authentic and not a replica. The difficult part, as always with cryptography, is linking a public key to a know identity.
If you have a trusted channel from the artist (e.g. their twitter feed) it's trivial for them to indicate that a given public key/wallet address is theirs and therefore anything minted on there is authentic and anything minted elsewhere is not.
Determining if a real world piece of art is a replica or authentic can be fairly expensive. Determining if an NFT is authentic is much much cheaper.
I don't think that's an example of something unenforceable, though. So long as you still have courts and bailiffs, they can basically just force someone to make a transfer by threatening or employing violence.
And when they decide that you were charged correctly and tell you to pound sand? Or when you can't contact them because they closed your account but are still charging you? Sometimes, businesses aren't nice or reasonable.
I'm now genuinely curious, have you never heard of a credit card chargeback? What about a stop payment order for a check?
>And when they decide that you were charged correctly and tell you to pound sand? Or when you can't contact them because they closed your account but are still charging you?
Same as when they won't refund my card I take the loss.
>I'm now genuinely curious, have you never heard of a credit card chargeback?
Last 2 times I tried it (debit card refund) it didn't work and I got no money back. The majority of cases it's the business that issues my refund.
At any rate there's nothing stopping you from having a refund functionality or escrow built into a dapp if that's what users want.
I'm an amateur generative artist who just started minting on hic et nunc a month ago. I'm extremely sceptical and even disgusted by the big money NFTs, but minting and collecting on H=N has been a lot of fun, there is a very nice community as well.
Selling my art for ~real money for the first time has been such a motivating experience, even knowing that we are in a strong mania phase now. So I can say that I care too!
One thing to note is that hic et nunc is ran by one guy who doesn't really like to communicate and doesn't believe in paying for stuff like devops work, so I'm not sure if this will be the one site to survive on tezos. The community will eventually decide over time.
Oh some of your stuff is quite nice! If there were still maze pieces for ~3 tez I'd pick one up.
I've really been enjoying the community around hic et nunc. Hopefully if the site collapses the community will mostly stay around, it's been such a breath of fresh air compared to most of the NFT activity on ETH.
I like the fact that it's normal to include royalties on secondary sales, I think that it much better for the artist.
I generally like generative art and there's really been a huge explosion in generative art being produced.
I already followed some of the artists that have minted and was excited to more fully participate by buying some of their NFTs
I don't find NFT ownership that different than high end physical art ownership (high end enough that you simply don't display it, but display a replica instead)
Lastly for the friends I have bought from, donating money and buying something are very different social interactions. IMO donating money creates an implicit power imbalance, there's a connitation of being owed something in return. Instead I am buying something from them, that is a market based interaction & while it has good feelings associated there is no power/reciprocity imbalance there. They aren't doing this for their full time job, just a fun hobby.
Thanks for sharing - I didn't know about the royalties, if that works then that's sensible. I'm afraid I don't quite understand why NFTs would be necessary for the rest though, other than just being a contingent catalyst stimulating the creation of generative art. If it's purely the fact that you're buying something from them, them sending you an autograph, or a video in which they say "thanks X6S1x6Okd1st for buying this video" seem to have the same effect (though with the "downside" of you not being able to resell it to make money off it yourself).
Is that not only if you sell the NFT to someone else again, presumably because the artist has become successful? Do you have any insights into why that person would buy it from you - it seems the attractions you listed would no longer apply to them?
The guy who came up with the idea and has been paying me for the last few months to build our NFT auction site is a musician trained at the New England Conservatory, working doing performances in a band and as a music teacher, paying out of his savings, and he definitely cares about artists since he is one. Also these systems do use public/private keypairs and signatures (Algorand). https://gifeconomy.com
Being an artist doesn't mean you care about other artists. There are a looooot of selfish people out there and they'll often use the trappings of helping people to claw their way skyward.
It apparently malfunctioned. He posted a video on Instagram of it a few days later of practice run that fully shredded it with a caption saying something like "worked in rehearsal"
> any of the useful functions of NFTs have long been possible and many orders of magnitude less expensive using public key cryptography or digital signatures.
A major useful function being the ability to buy and sell with purely digital money, was that possible before?
Yes? Even if you're exclusively referring to cryptocurrency when you say "purely digital money", it was already possible before the popularity of NFTs to accept cryptocurrency as payment for anything.
I'm saying you still needed https://eips.ethereum.org/EIPS/eip-721 to appear on the scene to facilitate NFTs, that implementation isn't as omnipresent as the possibility of buying anything with crypto.
A cryptographically signed picture may tell you its from a certain artists, but it cannot enforce uniqueness.
There are only two options - tokens, and ledgers. Despite the name, there is no such thing as a digital token, because digital objects cannot move, they only copy.
So you need a ledger, so basically something like a blockchain, to keep track of copies.
But a ledger doesn’t prevent copies of the art or duplicate tokens it just enforces uniqueness of the singular token. So you’re still left with the uniqueness problem. Essentially trying to create scarcity where there is none is a spectacularly silly idea.
1. I am artist X
2. I have an Ethereum wallet and even own the ENS name X.eth
3. I mint an NFT that represents ownership of one of my digital works
That NFT cannot be duplicated, because the Ethereum network enforces unique IDs for each ERC 721 token and prevents the double spend problem. What's more, I can look at the NFT and determined that it was indeed minted by artist X because it was his address that created it.
The artist can later mint duplicate NFTs but everyone will still know which NFT came first.
This would have been more interesting if the author had traced where all the money being plowed into NFTs is coming from.
I suspect that most of it does not come from outside of the current ETH (or whatever) ecosystem. I'd bet that most of the volume comes from people who are either treating it as play money, or trying to pump the NFT scam for their own benefit (real or imagined).
> This would have been more interesting if the author had traced where all the money being plowed into NFTs is coming from.
Not possible to trace where the money is coming from.
In fact, someone can "sell" an NFT to themself in a wash trade between two wallets they control. The last trade price of the NFT is now recorded as the transaction price, but it's possible that money never actually changed hands.
Want to have an expensive NFT? Just trade it to yourself for as much money as you have in your crypto wallet. You keep the money, you keep the NFT, but now everyone can see that someone "paid" a certain amount for it.
Art market started because people appreciate art. In fact rich people even commissioned art for hundreds, if not thousands of years.
It can be used for various scams and as an investment, but the whole premise is ridicolous: people pay for art since they like it and want to own it. (And in this NFT scam they dont own anything useful)
I disagree. Art was never expensive, and artists are known to make little money until their death. Price of selective art really went through the roof for no reason other than creating a market to make money.
patrons pay for art because they want the art to be made, owning it is a side effect (indeed much art is loaned right back out to galleries, the possession is not the point, the creation is)
> In fact, someone can "sell" an NFT to themself in a wash trade between two wallets they control. The last trade price of the NFT is now recorded as the transaction price, but it's possible that money never actually changed hands.
I heard rumors this is what happened with the Beeple nft
However, an auction house is going to take significant fees as a percentage of the sale price and your shill bidder will want a cut as well. You’re also going to get a large tax bill because you technically had a realized capital gain and the auction house will report it.
With NFTs you can do a blockchain transaction for a relatively small fee by yourself from your computer. No taxes owed because you didn’t actually sell anything.
Isn't it basically a flat tax, not dependent on the value "claimed" by the transaction, that is easily drowned for any transaction that would make such a scam worthwhile anyway?
Yes, and it's rampant in all sorts of collectibles markets. There are some people doing it very publicly with vintage video game cartridges right now, and "pawn stars"-type game shows are largely marketing for the scam.
Yes, but the auction house takes a cut and the taxman might notice so it's not without risk. Usually a shill bidder doesn't want to win the actual bid.
Yes, if you trade it on a marketplace such as OpenSea. You could argue that the benefits and upside of wash trading outweigh the cost (about $10 per tx).
Youtube suggested a video to me about what's going on in the collectable video game market. The claim was that there's some collusion between a major auction site and a grader, and some of those players were running a pump and dump.
Unless you know who the buyers and sellers are or transaction fees are high (like an auction at Christie's), you have no idea if the sales are real, so it's pretty easy to make it look like the asset is appreciating when it's really just manufactured hype.
Yup, Karl Jobst's expose I bet. It was a really good piece of journalism, maybe not something you'd expect from a YouTuber who mostly vlogs about speedrunners.
"Ecosystem" is a word that I believe sprung to life in the 70s, referring to the entire collection of organisms inhabiting a 'place', along with the weather conditions etc. in that place. The term was coined because without it, you need (or rather, I needed) 16 words to express it.
So it bothers me when people use the term to refer to collections of stuff that's never been alive: the Java ecosystem, the cryptocurrency ecosystem. These are not "ecosystems" - they're called "systems".
See also "epicentre".
Upvoted - I appreciate the observation about where the NFT volume comes from.
"system" denotes something which was designed to work as a whole. Pieces are connected together by a manufacturer to build a system. The operating system is a kernel, UI, tools, etc taken by a creator and put together into a packaged tool that people can use on their computers.
"ecosystem" denotes an environment created by some kind of vessel e.g. Earth, the ocean, Ethereum, etc where independent entities can be created, develop, and compete for resources, attention, space, etc provided by that environment. The entities have no real connection to their environment besides just living within it and interacting with the other entities.
Ethereum is just as much of an environment as the Earth is. It provides the foundation which the entities live on top of (security), the resources the entity needs to exist (data availability), and the gathering point where complex interactions can happen (smart contracts and end users). Ethereum doesn't build any of the ecosystem, it simply provides the marketplace where life happens.
> "system" denotes something which was designed to work as a whole.
I don't agree that systems have to be designed.
I mean, it depends on what you mean by "system" - was The Capitalist System designed? Who designed it? The atmosphere is a system, by most standards; it wasn't designed (or if it was, I'll shoot the designer). The human brain has most of the properties I'd expect a "system" to have; but hopefully you share my view that it wasn't designed.
But I'm not really bothered what a "system" is. I was just having a rant about words that used to mean something specific, until they were borged by lazy opinion-formers and made into cliches, rendering them useless for their original specific denotation. C.f. "epicenter".
(This seems to be a thing I care about more than other people; discount my remarks accordingly)
sorry to be pedantic, but it's literally not multi-level-marketing? Specifically, it's missing the multi-level part. Your upline isn't getting $$$ when you sell a NFT. I suppose you can make the argument that if you then take the money and buy more stuff, then your upline gets paid, but that describes most distributor arrangements. Come to think of it, there isn't really even an upline. It's just a network of artists and traders with no set hierarchy.
I agree. I kinda dislike when people throw around terms like pyramid scheme and MLM. And specifically calling crypto a ponzi. Yes there has been ponzi schemes done with crypto. But speculative bubble itself is not a ponzi scheme.
Pyramid and MLM are related concepts, and usually MLM is pyramid. That doesn't mean all pyramids are MLMs though. Same applies for other types of scams or structures.
I know I'm a hopelessly naive hippy, but isn't there some option where we make our case by saying things that are true, rather than saying things that are untrue but alarming in the right direction? I feel like I personally would find online discourse much more helpful if we could do that.
Who convinces people to buy Herbalife? People who have spent a bunch of money on Herbalife.
Who convinces people that NFTs aren't just a fad, they're really innovative and you should consider adding them to your portfolio? Not people who don't own any.
Ok, let's call it a pump and dump scheme then. The end result is the same: high profit for those in control (early adopters) and latecomers get the bill.
NFTs are most likely pump and dump. Established cryptocurrencies aren't following that pattern though. They get bigger and bigger until they are no longer sustainable. That's much closer to a pyramid scheme than pump and dump.
> The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.
But at least the solid tech companies had revenue in 2001. There's a long history of useless assets becoming a part of a bubble that pops. And this even worse than Beanie Babies. At least with those, if someone still enjoys them in 2021, they can put them on a shelf. Are you going to frame printed QR code of a NFT and tell your friends to scan it with their phones to verify what virtual asset you own?
Cryptocurrency has been through -80% draw downs multiple times in it's history. The question is, is the entire history a story of a pump and dump or are you saying we are currently in a smaller bubble & bitcoin should be ~5k instead of ~40k?
Why has it been able to withstand a draw down of 50% 4 times in 13 years?
I was referring more to NFTs than cryptocurrencies. They went from nothing to huge too quickly. NTFs are closer to Beanie Babies, Bitcoin to baseball cards. The big gotcha with NTFs, and why they're worse than Beanies, is they're incredibly hard to price because they're non-fungible, and unlike art (also non-fungible), it's not clear which tokens are desirable or why.
Somehow I don't think you'll read those and decide it's not a pump and dump anymore, are you saying that it's not actually a condition for beliving it's something other than a pump and dump, but rather a mechanism that might reduce the desire to participate in a pump & dump?
When an NFT project proposes a value share and airdrops amongst token owners, and also has a royalty fee paid on every transfer [1], I think the “up line” and MLM aspect come more into play. There is value for you to inflate the price of the NFT as it benefits you and the other owners directly as sale prices get higher.
> I think you could argue that the 'upline' acrues value even if they aren't paid directly. Greater interest in an NFT drives the value up.
right, but uplines getting paid in a necessary but not sufficient condition for MLM. In a MLM it's usually derived through their downlines. The mechanism described is a general benefit to all participants in the system which isn't very MLM-like. platforms (eg. youtube) tend to have the same "general interest drives the value of the ecosystem up" (ie. creators convincing other creators to join your youtube clone increases your site's catalog, which boosts the quality of recommended content you can show to your user to get them to stay on longer, making it easier for creators to get views), but you wouldn't call that a MLM.
> In short, the minute you connect your blockchain to an app frontend you now have a degraded blockchain, one that cannot even in principle guarantee immutability, trustlessness, and decentralization – at least not for assets that the app's customers actually care about.
Scratch the surface on almost any NFT ecosystem or blockchain application and I find I'm still relying on trust, or a centralized service, or a service that's more mutable than it advertises. So if I don't get the purported benefits of blockchain anyways, what was the point of getting a blockchain involved?
EDIT: Getting a lot of responses that I don’t have time to reply to. My more involved thoughts on the entire space are here:
This isn't true - sure there are projects that use IPFS to host token assets too big to store on-chain (3d assets, photos, etc.), but those assets can be assured to be perfectly correlated with their hashes. Not to mention many projects are fully on-chain, like CryptoPunks and AutoGlyphs.
Ah, so in some cases you’re able to stuff an entire JPEG into the blockchain itself, I’ll grant that. In which case we move on to all the other problems. But For NFTs that are meant to be used in applications, I think my argument still holds.
For fully disembodied NFTs where you just stuff a jpeg or it’s hash into a blockchain, my other complaint is that you’re just creating a speculative instrument that doesn’t really do anything except hope someone else will pay more for it. And I still have to rely on trust outside the blockchain that the artist approved these NFTs in the first place (there are many done with unauthorized art)
"my other complaint is that you’re just creating a speculative instrument that doesn’t really do anything except hope someone else will pay more for it."
So like bitcoin? - The value is in what someone believes it is worth to be provably in control of a given asset. It also provides a great deal of social currency...certain NFT owners have identity wrapped up in them such that owning it extends social latitudes, as the reputational harm which could be done for being a ingeniousness actor far outweighs making a quick buck.
Yes I think Bitcoin is bad as well. Speculation is not productive, and this particular form of it has negative externalities - costs the rest of society is forced to pay, which is both bad and unfair.
Proof of work is far too expensive and wasteful, and the necessary private key discipline to not lose all your coins puts it out of reach of normies (immutability is a bug not a feature for normies), and it’s deflationary which discourages circulation, and it’s got high transaction costs and slow speed, and just massively inefficient. So it fails as a currency, which it was originally pitched as.
Lightning network papers over this (an admission of failure in many ways) but just trades off with new vulnerabilities and further degradation of the original promises.
Make whatever digital assets you want and attach value however you like but own up to the limitations and costs. And pay for your own negative externalities, don’t force them on others.
In most of these projects I feel like it’s the aura of blockchain that’s being sold and not the substance because the actual promises of blockchain (immutability, trustees, decentralization) are always undermined in some way. I wish people would just be more honest about that.
I agree PoW is bad, and I'm hopeful for the future of Proof of Stake. Just like using coal and oil to fuel our industries is bad, and we are moving more and more towards renewable energy it is a path of progression. You have to start somewhere and grow, but I think it is somewhat disingenuous to discuss them as if they are static states which are not seeking and progressing to more ethical models.
I suppose I see is like noticing that a house is being built, and then criticizing it because no one can live in it, and the builder's tools are loud, and pieces of building material are strewn around. If you don't like houses at all, then it's certainly fair to be critical of them at any state of their development, but if you admit they are useful to exist, albeit in a more developed state than not, it seems like a conflict. - I do appreciate your discussion here, and I hope I'm not coming across as antagonistic by saying your position is disingenuous, I just see it as a process of growth, some of which is not so tenable...like a screaming child vs an adult who creates something that contributes something that is a boon for society in their life. I also admit it remains to be seen, but there is meaningful evidence which supports a net positive outcome.
It's not a joke, the prices are insane in large part because this meshes very well with the idea of compsability & permissionlessness that the Ethereum community is very excited about right now.
Yeah this is one of the reasons I love hicetnunc and am suspicious of most of the NFTs hyped on Ethereum, so many that I checked are hosted on some random host, I even saw a very $$$ one hosted on heroku...
This has to be elephant in in room right? There is so much cryptographic potential and none it is realized by most NFTs currently sold. Signing an http link to an existing .jpeg has to be the least imaginative way to implement this concept.
How about: Sign the image and generate a MAC. Then use steganography to include that information in the file. For the NFT sign create a certificate with the same key and include the MAC information. Publish that together with an IPFS link to a blockchain.
Then we can have discussions about IP law, art and what art ownership means.
Complete sidenote, but I loved your "So You Want to Compete With Roblox" article a while back, it was a pleasant surprise to click on this link and end up back at your blog.
The benefits of the blockchain are simple. To drive the pyramid scheme to profitability. It helps obfuscate the scam from people who don't know any better.
Car/bag/cloth/jewelry/art - these type of things are sometime considered status symbol. It help people convey certain “message” to other.
NFT might could be the same in the ever more virtual world.
I might not be be the target audience; but it does not meant that it hold no value to other.
People spent lots of money on game skins, rare weapon.
So there is a market.
When one goes to a physical conference: flair/badges serves similar purpose. NFT could be that in zoom/team/slack.
My naive way of looking at NFT: Maybe it can be used to help fund open source free software. Instead piece of art; a flair/pin/badge for showing your support for your favor projects.
When it comes to luxury cars and clothes, you force others to see that you’ve spent for status. That doesn’t exist for NFTs. There’s no public forum I can go to where others are forced to observe my status signals.
High end art is more about investing, money laundering, and tax havens then status.
How? Your Twitter profile picture is an image. What stops me from saving your profile and setting mine to the same thing?
Are you suggesting Twitter validates that a Twitter account owns an NFT and shows a check/badge/whatever? I also don't think that works. Whatever rare NFT you have I can go make a visually identical NFT for <minimum cost of an NFT> and confirm that I own that NFT.
I often think that I must be missing something about NFTs because they seem breathtakingly stupid. But, I've yet to find out what I don't understand about them.
Twitter is building exactly that apparently, you would get an ethereum checkmark next to your profile pic if that image is verified.
There is definitely discussion happening on exactly your point, but i imagine there are options to combat the fake NFTs given that you can't fake a signature from a known public key.
Given that there are so many NFT projects I speculate that the twitter verification will only happen for a small subset though.
Similarly all the crypto metaverse projects although they're not as mainstream suffer this problem. There's a reason Will Wright's new "NFT" game runs its own chain.
You can see which collection an NFT belongs to, their contract addresses, and transaction history. This is a non-problem. I'm sure it will be visible in Twitter's implementation too
The Twitter verification is for status, if the status also requires the person seeing the profile has to find the contract existing with the profile NFT and then exhaustively find out if there is an “original” then the whole verification process isn’t fit for purpose.
Yes, you can sign it with your own private key because you are now the "creator".
That's the point of digital assets, they are fungible by definition because it's a bunch of 1s and 0s, doesn't matter which system you run it on you will get an indistinguishable output.
Of course for that to work you need an easy way to check who owns a particular wallet so you can verify they did actually stamp their name on it. And quite a lot of NFTs exist without this level of proof hence rampant fraud.
Huh? You would have to authenticate with Twitter using your crypto wallet to prove you own the wallet associated with the NFT. Twitter would know the contract addresses of the original NFT so even if you created your own smart contract with identical images it wouldn't be the original...
I just don't see a single positive side of this.
Cool, now more people can flaunt their wealth in a brand new way. It's like Fortnite skins, but more extreme and for adults. Just one more way to rope people into wasting money on mostly useless shit.
NFTs as they're being used is silly, but to me the fact the article makes a brief mention about "digital ownership" makes me realize why I agree with Proudhon on the absurdity of property rights. Basically, everyone needs some kind of means of subsistence. In Proudhon's day most people lived by subsistence farming, so land was an essential element to that. And thus, the contention was what happens when all the land is owned? Do those born afterward become diminished by the need to purchase or rent land? Or is ownership contingent on the possession of it as in its direct use. Meaning that someone who inherits some title to land has no valid claim if they can only use/consume it? Today, people still need land to subsist but not in the same way that people did in the 19th century. As such, the whole idea of title ownership whether it's an Ethereum smart contract or an old fashioned title from the government it needs state enforcement as without this element it's worthless. Thus, the real problem with NFTs and just title/absentee ownership is the fact that it attempts to deprive people of subsistence rights whether in the physical world with using state violence to prevent people from finding shelter, food, medical care, and so forth. Or whether it's non-physical such as trying to make it illegal to distribute content ranging from images of art to information regarding circuit designs and chemical formulas for essential medicines. So to me, NFTs as certificates of "authentic ownership" seem like another example of the absurdity of title ownership. Your piece of paper or JSON file does not entitle you or others to absentee ownership. Use and possession are the only true means of ownership and absent that you must lean on the state to enforce it and the only means to enforce is through violence of various means (physical, structural, financial, etc).
I think people who have been in bitcoin for 10 years are more skeptical of NFTs because suddenly they’re framed as the ultimate crypto use case. And Eth is ultra sound money. And while there’s some interesting generative art (eg deafbeef) most of the industry is hyping NFTs for videogames.
There are better and more transformative use cases than just the “metaverse”.
Everything is framed as the ultimate crypto use case, because crypto doesn't have a use case. No one needs money capped at 8 transactions per second world-wide, which costs ever-increasing amounts of electricity to trade.
All of these things end up being an exercise in cryptocurrency people in a round-about way proclaiming to the world that they don't know what a thing is.
For example: NFTs are a great idea to people who have never read an undergrad definition of what art is.
You do realize there are blockchains that don't suffer from just... not working? like PoS fixes the electricity issue, and there are many solutions to making transactions much cheaper, quicker, and having more bandwidth.
Sure but a large portion of the current crypto market cap is in currencies that do have these issues, and I'm not sure how to explain that other than by assuming that that value is probably mostly speculation and not actual usefulness.
eyeroll I won’t deny that there are tons of NFT projects that are nothing more than modern day tulip mania. On the other hand there is an entirely new world of opportunity that has never existed before for both common people, artists and corporations in the form of DeFi projects.
Basically any distributed form of ownership you can imagine is now possible through NFT and DAOs. There has never been a better time to learn about it either.
> there is an entirely new world of opportunity ... any distributed form of ownership
That is what people say, but what I don't understand is what ownership is actually conferred with NFTs. The only "ownership" is the ability to transfer the NFT to another person, which simply gives them the ability to transfer it to another person (which sounds a bit MLMy).
For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
> For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
That's the part about NFTs that I keep getting hung up on, yes. I get the abstract notion of creating artificial scarcity for digital goods, and how that could have market value. But we've seen absurd things like "use this service to create an NFT for any individual tweet," with no verification that the NFT is being created by anyone who has any legally-recognized right to the tweet's content. If an artist tweets out an image of a new art piece of theirs and I mint an NFT from the tweet, what exactly do I have "ownership" of? I sure don't have any rights to the artwork. I don't even have any rights to the tweet text, which is implicitly copyrighted by its author.
And it's that sort of foofery, more than anything else, which makes me more inclined to be skeptical. Obviously there are NFTs created by legitimate copyright holders who can legally transfer ownership or other rights to you, but the legal recognition of the ownership doesn't seem to have anything to do with the inclusion of the NFT in the transaction -- the NFT itself can't verify that it was minted by someone who had the necessary legal rights to assign ownership of the thing the token represents.
A lot of people on here are aggressively expressing skepticism of NFTs while only giving simple easily refutable reasons. It seems like they're trying hard not to understand. That's what happens when people have cognitive dissonance. Perhaps they've spent their whole life building a slightly incorrect mental model of how society works and NFTs don't fit that model. It's easier to deny the value of NFTs than to change their mental model. The denial has to be aggressive because it's so emotionally dangerous to let yourself lose your grip on your existing beliefs. That kind of hysteresis or stickiness of beliefs is a good thing because it allows us to build elaborate consistent useful models of the world without upending it at every random new idea. But it also means old set-in-their-ways people aren't good at adopting cutting edge ideas.
I didn't vote you down, but I do think it would have been a better use of time to explain why NFTs are the future, rather than ad-hominem attacks on people who disagree with you.
Please tell me why NFT are valuable and useful, with very concrete examples of utility. If you use the word "ownership" please explain in context what this means.
You know, there are people in the space who talk a lot about adding utility to NFTs. This may well work for tickets or whatever, but the kind of NFTs we talk about here don't benefit from utility; art doesn't benefit from utility.
I agree with the OP that a lot of people here seem unwilling to take a moment and think about this more deeply, and how NFTs might compare to existing ways of valuing things. To be fair, it does take some time to wrap your head around, and maybe an open mind.
People complaining about a lack of "real" ownership often seem to mean ownership as in owning the copyright, but note that during the piracy debates of 00s the tech world spent a lot of effort trying to convince the world that a copyright claim is fundamentally different than physical ownership. And so it is.
There is physical ownership over a digital file; and that is having physical access to the bits that make of that file.
NFTs work because of the realization that a significant part of the value of physical artworks has nothing to do with there physical form.
Now there remain a lot of open questions; for example, it may well be that the physical form is still somehow essential, even if a small part of the value. Yves Kleins Immaterial Zones don't seem to be trading a lot at Sothebys, as interesting as a concept they may be. People may well feel the value of hanging your Rothko in a home is a very important part of the experience, even if 99.9% of the value is simply provenance (which an NFT artificially creates for digital goods).
It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
The frustration those of us who are skeptical of this use case of NFTs -- creating artificial digital scarcity -- has with responses like yours and Exporectomy's is that you're pretty much saying "you're clearly not thinking about this deeply enough, because anyone who thought about this correctly would surely agree with us." This is not only not a very convincing argument, it's a little bit of an insulting one.
The objection I mentioned in my previous comment was that the original copyright holder of a creative work is the only person who can transfer any ownership rights. But let me restate this without invoking copyright: if I have the legal right to transfer ownership of a digital file in any legally recognized sense to you -- whether that file is a piece of software that I bought on physical media I am conveying to you, or artwork I created that is being digitally transferred to you -- an NFT is only useful as a proof of ownership if we have contractually stipulated that it does. That contract exists independently of the NFT, incorporating the NFT only by reference, just like the NFT itself only incorporates the digital file it tokenizes by reference. The NFT itself has no legal authority -- it's just a transactional record. As I mentioned in my previous comment, it's possible to easily create "bogus" NFTs of digital files whose creators or rights holders haven't authorized it. Furthermore, since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain, so again there needs to be a framework outside the blockchain to truly establish ownership.
So the question has to arise: do you need the NFT in this transaction at all? Why can't the original contract incorporate the digital file directly by reference itself? The NFT doesn't really do much to support "proof of ownership," while instead clearly creating opportunities for scammers taking advantage of people who don't understand that just because you have an NFT for a digital file doesn't mean you necessarily have any legal authority to sell any kind of right whatsoever, copy or otherwise, in that file.
Maybe you don't see it that way -- clearly a lot of people don't -- but please do not imply I haven't taken a moment to think about this more deeply. I've thought about it a lot, in fact, and so far I haven't found a convincing response to the concerns I've expressed about this particular use case for NFTs.
I didn't attempt to answer your point directly because others have already done a better job of it. Excuse me for making it sound like "You're wrong but I can't explain why".
> This is not only not a very convincing argument, it's a little bit of an insulting one.
My apologies if I came across as insulting, but I do feel a sense of frustration with some of the arguments provided in discussions like these, and I think we can agree that some of the language critiquing NFTs here does not scream "open minded".
First, let me correct a misconception that may give you a slightly different perspective. You write "since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain". It is worse than that! There is nothing that enforces uniqueness of an NFT within a single blockchain; not in a way that would make such a duplicate any different than a duplicate on a different chain. You couldn't prevent such duplicates, even if you wanted to. First, artists may on purpose create multiple copies; second, the only way such unique could be detected would be hashes, which can easily be fooled. Third, a scammer minting an NFT of an image belonging to an artist, would then block that artist from being able to mint the NFT themselves. It sounds bad, but it really doesn't matter for the concept to work. People scamming by pretending they are selling art pieces they did not create is a problem, but it is not a problem NFTs set out to solve (and indeed cannot).
The NFT does not confer any legal rights, correct. But what legal authorities would you want it to confer to the owner? There are a couple that are really useful: The right to download a copy of the art piece from a website. Yes. The right to use the art piece as a profile picture on Twitter. Sure! And artists do often provide license agreements along those lines. (If they don't provide any license information, I believe an owner could try to argue that there is an implied license, and may or may not succeed in that claim.) Some artists put their work even into the public domain.
I would agree that owning an NFT which you do not have the permission to copy to your hard-drive, or which you cannot see on OpenSea because the artist refuses to allow OpenSea to show that image, seems quite degraded. It will probably be not very popular. And yet, some people just might pay for it anyway, because the ownership of the token on a blockchain is what matters in the end. If a popular artist such as beeple were to publish an NFT, explicitly denying that the owner has any rights to even make a copy of the image, there is no doubt someone would buy it. Call it conceptual art. There is no legal system required, because like you say correctly, the NFT itself does not confer any legal rights. The blockchain is the definitive record of ownership, because legal modes of ownership are basically orthogonal.
Consider the example of Mitchell F. Chan's Digital Immaterial Zones (I recommend the blue paper: https://github.com/mitchellfchan/IKB/blob/master/Digital-Zon...), which explicitly is a token without any visual media attached; there is nothing that exists outside of the blockchain that you even could own. It is the pure distillation of this idea.
There is a difference between an artist saying "you have the right to download my file" and the artist saying "I consider you the owner of this immaterial piece that I created, I will only acknowledge 10 owners maximum, and also all of you have the right to download the file".
The latter kind of agreement can certainly be modeled with a conventional contract, and indeed that has been done in the art world, but it is just so much easier on a blockchain to track those 10 owners, verify that the person selling to you is an authentic owner and that they sell their claim only once, and so on.
I think you have outlined the fundamental disagreement quite well.
> It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
I think when people see utility in physical artwork, to the point they would travel to the other side of the world to see it, they find it hard to credit that almost all the value comes from provenance.
Likewise I think people who see art as nothing more than the name of the person who painted it will wholly embrace NFTs as investments.
These two groups are probably not going to come to an agreement.
I don't believe they're the future, nor do I really understand them much at all. I'm just critical of the way people say "I don't understand them, therefore they're stupid". There may be valid reasons why NFTs are terrible but these people are not expressing those reasons. They're expressing reasons that a quick skim through any popular HN NFT comments page, such as this one, would answer.
Yep, several years ago it was trendy to shill the idea of "cadastre [land records] on the blockchain" to solve some imagined issue with the central authority of land registries, never mind that of any particular asset class, land title was the very last thing any sane individual would cede to a "zero trust database". If you're going to sell or buy land, that title better be backed by all the legal and otherwise mechanisms of force available to the state!
NFTs are just a further abstraction on that same failed idea – a cyptofinancial derivative to make something appear real that isn't real.
If an application (videogame, social network, website, etc.) gives the holder of the NFT special rights, then that is the utility of the NFT. It does not matter about legal ownership of a graphic.
The application becomes the central authority for some arbitrary token. Yes, in theory they could use "an NFT" to represent a key to some in-application capability but at best the owner of the NFT has an exclusive right to that capability at the whim of the application owner. The NFT owner can't really claim to own any real "thing" in and of it's own right.
The application owner gains very little – they could just implement a Plan Old Database within their system.
The owner of the "NFT" gains very little – except the theoretical value of a token they could trade, and might have value, as long as it's backed with some capability provided by the application.
None of this applies to things like "a gif on the internet", for which the NFT means exactly nothing if you have no enforceable rights.
The point is that the application owner does not become a central authority of authenticity though, the blockchain does. The application owner is just one of many acknowledging authenticity.
Many different applications can build on top of this open authenticity verification. This decentralised layer for authenticity verification is much more powerful than a single application builder can achieve with their own database. The concept itself is very powerful for interoperability but some of the valuations of assets currently feel ludicrous.
If everyone agrees that, for example, a particular distributed ledger provides authenticity of some class of artwork, that is fine. But soon the real world happens eg. a court in one country orders the art to be seized and handed over to a third party , but they don't have the ability to force the NFT to be transferred because the former-owner is in a different country. Would the art world suddenly pretend that the artwork is not real because the current owner does not have the NFT? We are back to square one.
You don't think there's value to the application owner? They get a secondary market for the accounts in their application that they don't have to manage and they get royalties automatically paid to them for every resale. The scarcity of accounts drives up the value of those accounts, which also financially benefits the application holder because now they can sell the extra accounts they held on to for more money, and they get bigger royalties on every resale. And on the consumer side, someone is more willing to buy in to check it out because if they get tired of it or they don't like it or they beat the game and want to move on they know they can sell their account easily.
And on top of all that, assets from one application can be integrated into another application. If I build a game and I allow people to use the "sword of NFT" they have from another game in my game then I've created a big incentive for people who like that other game to also play mine.
The application owner gives up control to a secondary market for no gain. They'd do better to simply buy and sell directly, and maintain full pricing control. They already control scarcity, they don't need some other mechanism.
Meanwhile there is very little incentive for some other application to use those same tokens when their value is contingent on the whims of the original issuer. You're tightly coupling your business and liability to some other party who hasn't made any guarantees, promises or agreements to you. Its a can of legal problems.
Ultimately is like trading Apple gift cards, Pre-loaded debit cards, phone cards etc - its an abstraction in which then value of the token will only ever be less than the cash paid for it up-front, and most people trading them have some other reason for taking the hit (ie money laundering, fraud, etc)
The author literally says the following in the article:
>Note: It is important to note here that we think that NFTs as a technology hold incredible promise to help more evenly distribute financial outcomes to community users, not just community organizers. We are in the early days of exploring what digital ownership actually means and it is far too bearish to universally decry the technology. Our concern is with the following types of NFT applications.
You’re missing a big part of the picture. NFTs do provide real utility for anyone dealing with illegal goods or services. They are only selling NFTs publicly while the real goods or services are something else. It’s not a new hack but this is a much more efficient vehicle.
> Scarcity is fundamental to any store of value. There are an infinite number of potential NFTs.
I'm a pretty big crypto-skeptic, and I'm especially an NFT skeptic, but this is a weird argument. It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much? Even more, it's possible to create extremely high quality reproductions of famous Picasso paintings, but they would have just a teeny amount of value of the original.
Reason being, with very expensive art, and other things like a signed book or baseball card, what you're really paying for is the provenance of the item, not so much the thing itself. While I'm skeptical that the NFT form of "digitally assigned provenance" will be valued similarly, I can understand the argument for why a piece of digital artwork with an associated NFT isn't that different from a piece of physical art with the artist's signature.
> It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much?
We could mint an infinite number of Picasso NFTs, though. None of them are the actual piece of art.
You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting, but it’s still just a fancy hyperlink to a page that says “This is a Picasso NFT”.
NFTs are basically fancy blockchain transactions with a memo field that can say “This represents a Picasso painting” and we’re all supposed to believe that it means something.
The closest equivalent would be something like baseball cards. There is a market for baseball trading cards, but everyone is fully aware that they’re still just arbitrary prices of printed cardboard.
> You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting
I’m pretty sure the analogy would be that Picasso himself actually issued the NFT. Anyone can “argue” that Picasso issued an NFT, but that’s just like arguing that your extremely skillful forgery is a Picasso original. What’s important is if it actually is an original.
With an NFT everyone has access to the exact same byte-for-byte copy of the art work, but one person gets to hold a special token saying that they have some special pseudo-ownership relation to it.
So, a more apt analogy would be Picasso donating a painting to a museum, but trying to sell you a certificate saying that you own the artwork, but you're unable to move it to your private collection or gain any additional access than the general public.
A signed print of a picasso painting would quite likely go for quite a bit, even if you could get the same print sans signature for $20 in the gift shop. Even one created post-death by family foundation etc as a limited edition probably would. Some people do value the scarcity and it being tied to the creator more, think an NFT represents that and thus pay more money. (I personally am not interested in owning NFTs, but "people spend money on scarce things I wouldn't spend money on" isn't exactly a new phenomenon)
Your argument is about digital art, and has little to do with NFTs. No one is claiming that the owner of an NFT has different access to the piece of digital art itself, of course.
The link is a red herring. Just like an original Picasso, the content of the thing you own is responsible for very little of its value (an excellent forgery would deliver all the aesthetic value of the original, but it would be much less valuable). The provenance of the thing is the reason it is valued. There’s really nothing new or unique about NFTs other than the technology used to implement them.
But they aren't. They're pieces of cardboard with a particular story. The card has no value itself, which is why a rookie card isn't very valuable, unless its of someone famous. Why? because one is a story right at the beginning, which may not even be a good one, where there other has an established success story behind it. Owning the card is representative of owning a chunk of that story. You can say its arbitrary, but the fact is the picture on the card is of a real person with a real story, and their image on the card is part of literally that same story.
So with NFTs, its the same, anyone can write a document that says "this certifies ownership of a picasso painting" and it doesn't mean much of anything. However if Picasso writes up a document broadcasts somehow he has done so and the document says you own x painting, then its easy enough to certify to anyone that you own a Picasso from the man himself. The story is not arbitrary, this is precisely why it has value. The arbitrary easily copied stuff is cheap and meaningless and known as such. The "rare" NFTs and stuff selling for massive prices is expensive because it is genuinely so. You can write a comment here about how easily you can create a counterfeit NFT, but how easily can you actually convince someone to buy it from you? You can observe that baseball cards are just pieces of cardboard but how easily can you acquire a card printed when batter X was a rookie?
I'm not saying this sort of value is easily quantifiable, but it is easily observable, identifiable that its reflective of a real element of reality and not (entirely) arbitrarily imagined.
Just minting something does not give it value. Sure, you can give it a price. Likely nobody will pay for it unless they think it truly has value. It’s the responsibility of each NFT creator to convince people that it’s worth anything.
Orson Wells' F for Fake is a terrific film about an art forger, that explores concepts of art, authenticity, and value.
In the film, an artist forges works of art by famous artists and fraudulently sells them to museums. It's implied that the museums don't know they are forgeries or don't care. So why is a Picasso more valuable than a perfect reproduction of it?
I think the point is, it's all just perception, and greed.
Cryptography is a highly significant technology, but cryptocurrency and now NFT too often just smacks of a money making scheme, promoted by self-serving people who happen to own a lot of it.
In my view there's a finite number of Picasso paintings, but an as yet unlimited possible number of digital artworks, and an unpredictable number of things that could compete with digital artworks for the dollars of buyers.
To fix the supply of digital artworks, there has to be at least a loose consensus on what the accepted "canon" of those works consists of. For now, that's an unknown.
There's a finite number of Picasso paintings, but an infinite number of non-digital artworks. Digital art is no different from physical art in terms of availability.
True, all of the paintings in hotel rooms. In my view, the value of Picassos is partly due to a loosely accepted "canon" of paintings that are considered to be of particular value. If hotel paintings were discovered to be of equal artistic quality, it would not put them in the "canon." The supply is artificially limited by social convention.
Art prices are also driven in part by a partial record of sales, so at least we know what some paintings sold for in the past.
What we don't know about the digital art world is what conventions will emerge, that define the "supply" of works of particular value.
Scarcity is necessary but not sufficient. What sets BTC apart from NTFs is its fungibility. In theory, there are an infinite number of potential cryptocurrencies, sure. But everyone has already embraced bitcoin (and a small handful of others), and replacing that userbase is an incredibly tall hurdle.
On the other hand, minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.
> minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.
I'll add onto this that the core technology has no way of verifying which beanie baby NFT is "valid" outside of traditional centralized mechanisms like IP law and large validators. You can duplicate NFTs that point to the same beanie-baby-NFT link, are totally indistinguishable, that don't have any artwork that you own, and nobody can stop you outside of centralized mechanisms. As soon as you try to build a market on top of NFTs, you're right back inside the current system of ownership enforced by legal contracts and centralized validators.
At least with Bitcoin, you don't have to tie your wallet to a Twitter verification system to figure out whether or not your funds are real or just a low-effort scam.
People can disagree with whether Bitcoin has value (I think it's a bad system), but at least it doesn't completely fall apart as soon as you leave Coinbase. NFTs really don't work at all unless they're tied to centralized services, because anybody can make an NFT for anything, regardless of whether they have any real relationship to the asset they're issuing. Even official accounts that are validated: you can mint 5,000 NFTs of the same beanie baby, nobody can stop that from happening. Any scarcity in the system is only self-imposed by the actors within that system.
Is this really a meaningful thing? I mean, of course it is somewhat in terms of how things are viewed. But, theres no religious law that NFTs must be a pure blockchain thing. Possibly they're finding their niche, and that is to be a sort of intermediate, which uses traditional systems as the origin of verification/trust, but can then go forward on its own with no further verification. (Of course, your wallet keys could be stolen and used to impersonate you, but the same is true for login credentials of twitter blue checkmarks)
What does the addition of a blockchain help with here? Selling? Not really, because the recommendation to avoid copycat NFTs is to sell/buy them through official platforms that will verify them. Display? NFTs do nothing to prevent link rot, and in fact make it harder to correct when it does happen. Coordination/portability between platforms? There's nothing that guarantees that platforms will respect each other's NFTs.
> But, there's no religious law that NFTs must be a pure blockchain thing.
Every time someone tells me that verification and enforcement are inherently social/legal processes and not processes that the blockchain is designed to solve, I feel like they're just one step away from finally understanding why people don't like NFTs. The only value of adding all of this math and environmental impact and complication and fragility to the system of buying digital assets is if doing so decreases the social/legal burden of verification. And NFTs don't do that, they don't do anything. They don't even make the secondary market safe.
There are of course systems you could build on top of NFTs that would help solve some of these problems. But you could also build these systems without using NFTs. None of the proposals I've heard about enabling decentralized verification on the secondary market, or making it easier to pay artists, or building a web of trust for issuers -- none of those proposals need NFTs to exist before they can be built. The vast majority of these proposals don't require anything other than basic federation, and many don't even need that.
The blockchain part isn't adding anything, it's useless. We could have the exact same conversation we're having right now, and come up with all of the same solutions for verifying and distributing digital assets without ever needing to talk about or consider a blockchain. It's not adding anything, it's just kind of there.
And you're right, there's no strict law that everything must happen on the chain. So we could also just drop the chain entirely, use the same token issuance systems that have existed for ages, and focus only on solving the problems that actually need to be solved.
Let’s look beyond the “art” NFTs for a moment and think about how else they can be used.
NFTs, in addition to being collectibles, can be used to unlock access to features, like an exclusive chat room or give the holder access to bonus content only available to those X number of NFTs which were minted. Furthermore, secondary markets could easily exist for transferring access, something that is not really doable these days with accounts.
I’m with you that the current art/collectible NFT craze seems a bit much, but I actually think the future utility of this “access” property is where things will get interesting.
You know what's actually useful - today - for compensating artists and unlocking access to features? Patreon. A glorified mailing list with a subscription fee. NFTs are inferior to that; at least the artist gets your email address.
That is actually correct and very smart. I can mint an infinite number of ERC20 tokens on Ethereum, and I can create an infinite number of Bitcoin clones. Bitcoin is only scarce in terms of its social support base being different than other coins; the same is true for any NFT. They simply have a supply of 1.
I think you're missing the purpose of NFTs. Again, I think the best analogy is really the art market.
Most art in the art market is pretty worthless (at least monetarily) - just go to one of a bajillion garage sales to see why. But a few pieces of art will be worth a lot because something about them is desirable.
It's the same with NFTs. There will be a bajillion "beanie-baby-NFTs" that will be close to worthless. And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".
> And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".
Not necessarily. The original creator that issued that "Charlie Bit My Finger" NFT could also create 1,000 more of them tomorrow. And all of those NFTs would be exactly as valid as the original, it wouldn't be equivalent to making a print of the Mona Lisa. It wouldn't be downstream of the original NFT, the original NFT is just a link to a publicly hosted asset.
You're trusting the creator that they won't do that, but you have no real guarantee that they won't. That's doubly true when you start looking at corporate-backed NFTs like what the NBA is doing. They control the entire supply of the NFTs they issue, you have no way to guarantee that they won't re-issue all of their NFTs that you own.
This is no different than any current artist with a limited print run. The earliest prints are typically still the most valuable and the artist has incentive not to create additional runs of the same artwork.
> This is no different than any current artist with a limited print run
Right. But also nobody acts like limited print runs are mathematically non-fungible.
If the best argument for NFTs is that they're scarce in the exact same way that existing systems produce scarcity, and that this scarcity is enforced using the same systems we already have, that's not a good argument for the existence of NFTs. You might as well just do normal token issuance using existing technology.
> Right. But also nobody acts like limited print runs are mathematically non-fungible.
You misunderstand the word non-fungible here. They are non-fungible because 2 copies are recorded like this:
- token 1, owned by Alice
- token 2, owned by Bob
Bob and Alice may are may not be willing to make this trade, that is up to them. The two tokens are distinct. After they trade, it is still clear who the owner of each token is.
A fungible token is recorded like this:
- Alice owns 1 unit of token CHARLIE
- Bob owns 1.3 units token CHARLIE
If Alice sends their one unit to Bob, he now owns 2.3 units. No one knows which one these 2.3 units was Alices. It's just a counter
Note that no one acts like this is any different than I explained it just now. NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".
> NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".
What NFT people do is argue that the uniqueness of individual tokens matters. It doesn't. They try to have their cake and eat it too, they try to argue that the NFT's link to the individual artwork doesn't matter when evaluating the technology, but that it does matter when trying to determine whether or not NFTs have value.
There are two ideas being conflated here about fungibility. If you want to argue that NFTs actually represent an artwork in some way, and that owning an NFT is somewhat similar to owning a piece of art or that it carries some meaningful connection to that artwork, then for all practical purposes NFTs are fungible resources. The attributes of an NFT that link it to an artwork are not guaranteed to be unique.
If you want to argue that the part of an NFT that matters is the individual token itself, then sure, they're non-fungible. But if that's all we care about then they're also worthless, because nobody cares about owning serial numbers, they care about owning a token that meaningfully points towards a socially or personally valuable item. They care about the thing that the token represents.
The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.
I brought this up elsewhere, but if I pull a $20 bill out of my pocket, it will have a unique serial number on it that corresponds to only that bill, and no other bill. So technically, by your criteria, a $20 bill is just as non-fungible as an NFT. It's technically unique in the same way that an NFT is.
But what I'm getting at with that comparison is that it's not enough to have each NFT be technically unique. They have to be unique in a way that matters, they have to be unique in a way that somebody would care about. Otherwise you might as well just collect $20 bills. Back to my original point, if the only thing that NFTs are providing is that the token itself is unique, that's not an improvement over any of our existing systems. You can already issue unique tokens without bringing NFTs into the equation, issuing a unique token is easy.
> The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.
I don't really understand your concerns to be honest. It is exactly as you say. The connection to the artist and art matters.
Yes if an artist releases 10-editions for their JPEG image (which happens frequently), then those 10-editions may be semi-fungible, in the same way that say "floor-price cryptopunks" are, where many people are sort of happy to put them in a basket and trade the floor without caring too much about whether they have token 1 or 3. But someone might well decide to care, because token 1 is the one their grandfather used to own many years ago.
Some people may value the edition number 1 more than the remaining 9, but maybe edition 8 was previously owned by Elon Musk and carries a premium.
beeple can decide to release 10 thousand more tokens representing the artwork sold at Christies for $69m, equivalent in every way except the serial number It's anyone's guess what would happen, but presumably it would cost him in reputation, and the original would still be able to command a large premium.
Artists releasing physical prints also on occasion release another series some years after the first; Damien Hirst is releasing more dot paintings, and they are all so fucking similar they may well be considered fungible.
The question becomes, what are NFTs adding to this system?
It sounds like the current system is working, that the social system for determining value based on context is working. NFTs aren't making that better or worse, we're using the same social process that we used before.
And I mention elsewhere, NFTs aren't even really helping that much with the distributed ledger either, they still have to hook into the existing systems for determining seller trust and authenticating that the NFT you're buying is "real". There's little benefit in decentralizing the ledger when sellers have to coordinate with each other to ban bad actors anyway.
So we have two systems that already work, that have worked for ages, and now they're linked to the blockchain because... why? All of the use-cases people talk about with NFTs are stuff that you could always have been doing, you don't need a blockchain for any of this. And it's not clear that the blockchain makes any of it easier to do.
I think there's a big overlap -- if you're a crypto skeptic, you are almost certainly going to be an NFT skeptic as well.
But the reverse is not necessarily true. NFTs are just fundamentally a lot worse than cryptocurrencies. They have every problem that cryptocurrencies have, except they're also not scarce, require centralized verification mechanisms, have bad incentive structures around hoarding, are prone to link rot, etc, etc, etc...
NFTs are much harder to justify than cryptocurrencies are. They're all of the drawbacks with virtually none of the upsides. I don't know anyone who likes NFTs but dislikes cryptocurrency.
Most NFTs are just links to a publicly hosted asset. They're not meaningfully unique in any of the ways that matter.
Sure, technically you're making a new NFT when the same creator mints an NFT that points to the same work as before. But also technically you're making a new dollar with a new serial label when the government prints money, and we don't call paper money "non-fungible". It's not a kind of uniqueness that matters to anyone.
For the vast majority of people hyping NFTs, the metadata is the only part they care about. The metadata is the part that links the NFT to an actual piece of artwork -- the issuer and the work that it's linked to are the only reasons why some tokens are worth more to collectors than others.
Without the context of the person who issued it and the work that the token is being paired with, you're just trading numbers around and assigning completely arbitrary values to them.
Which to be fair is a common criticism of NFTs. It's just weird to hear an advocate lean into that argument themselves, normally advocates are trying to convince me that NFTs mean something.
Yes, a lot of NFTs will represent some kind of visual media, and you want to know what that visual media is that they represent. But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
Note that the argument that NFTs are useless if you need to rely on social consensus to link token and asset is not valid - the use case is in having a common ledger to track ownership of the token.
> But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
You voice your objection to this point below, and I'll get to that, but I just want to be clear: the NFTs are adding nothing to the existing social systems we use to determine value. We could have a collective memory/agreement without NFTs.
We're going to get to having a shared ledger below, but I just want to be clear about where we're starting -- NFTs do not add any value to the link between a token and an asset, we use the same social contracts that could always have been enforced before.
> the use case is in having a common ledger to track ownership of the token.
Now, a common ledger is a nice thing, but it also doesn't require NFTs, you could set up the exact same system with a little bit of federation.
Of course, federation would require some degree of trust and moderation, but here's the problem: NFTs require all that too. The only way that the NFT community has figured out to deal with copycat NFTs is to introduce secondary off-chain validation of which NFTs are "real" and which ones aren't. You end up recreating the exact same ecosystem of services that validate which NFTs are safe to buy, and the end result is that the secondary market isn't safe to use unless you run it through one of those services. Those off-chain validators will log fraud NFTs and refuse to validate them. As the ecosystem grows, they'll eventually shift to only validating NFTs that come from sources they trust. It's the same systems of moderation that already exist.
It's really hard to claim that NFTs add any value in the form of a trustless distributed ledger when one of the biggest recent events inside the space is Twitter verification. How much more centralized than that can you possibly get?
I bring this point up in a previous comment, but for all the criticism I have of Bitcoin (and I have a lot), Bitcoin at least doesn't suffer from this problem quite as much as NFTs do. The entire ecosystem for Bitcoin doesn't fall apart as soon as somebody stops trading on Coinbase. The NFT ecosystem has no idea how to keep the secondary market safe from copycat NFTs for normal buyers without cloning the same centralized systems for "genuine product" guarantees that we already have today.
And since NFTs aren't changing anything about our social consensus of value, and since NFTs aren't changing anything about how we verify goods on the secondary market, what on earth are they doing that's of any value? It's just an over-complicated system trying to reinvent federation. If the secondary market for NFTs was safe to use without hooking into a 3rd-party validator, or if the distributed ledger was safe to trust in its entirety without filtering out a socially determined list of bad actors, then you might have a point. But it isn't safe, NFTs have done nothing to make it safe.
I mean, you are certainly right that, again, an NFT is just a blockchain ledger entry, and there could be other kinds of ledger entries. Some examples include:
- Paper certificates of ownership of ideas/ingantible works, which have been used for art in the past going back some decades, and maybe somewhat more common now with certain conceptual / digital art pieces.
- A centralized leger, as the folks from Blain|Southern tried to do with seditionart.com.
- Or, maybe you can do something with federation, as you suggest?
That is just a tech argument of whether a blockchain (say Proof of Stake-based to avoid the energy argument) or something else is better, but note: It changes nothing about what the NFT is (and we can still call it that for simplicity). It would seem to do nothing to alleviate the concerns of people who don't understand paying for a pointer to a media file; since that is still what the federated ledger tracks, right?
If people feel a federated system works better for this, they can certainly build it. But Twitter is just Instagram from a purely technical perspective. There is more to product-market fit than the underlying database.
The whole thing came together with blockchains, maybe because you need an easy way to buy that stuff too, because there was a bunch of rich crypto people actually willing to spend money (when no one before was much interested in paying digital artists for their work), maybe cause the tech was there.
In general, I don't see what the argument is about; the ledger works quite well on a blockchain, and would work less well in a federated system from a trust perspective. I.e. your analysis about the trust vectors involved making the chain useless is wrong. Sure, platforms can choose not to show certain NFTs, and OpenSea has some dominance in the space, but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
There is really nothing centralized at the center of it in the end. Artists publish work on their own websites and their own contracts all the time, and if deafbeef posts on Twitter about his new NFT on this website, I will trust the existing social verification system (my friend telling me about it, his Twitter account being a known-entity).
This is distinct from Twitter avatar verification, which I predict a) will not happen and b) is indeed useless unless Twitter wants to be in the business of deciding which Punk-derivative project is looking too much like the real thing, which I doubt it wants to do.
If the argument is that tokens in general have a use-case, then I agree with you, they do. My concern is specifically with NFTs (not the general concept, the specific example that springs to mind when most people say the word). I have problems with:
A) the technology
B) the average consumer's understanding of the technology
I think we need art-tokens to be on a blockchain, and in a lot of ways the blockchain might even make this kind of stuff even harder. It's often desirable when working with non-fungible tokens to be able to easily update their metadata, block them, or link them together. NFTs are slowly making movement in this direction, but they're moving very slowly, and it's not clear how the blockchain is helping with any of those features.
I also think it's worth asking why this scene exploded specifically with NFTs even though the systems to make it work existed long before NFTs were on the scene. Frankly, I don't believe you that the average NFT investor understands that the ledger is just a ledger. I've talked to people who are involved in casual NFT collection, and they think the technology is magic. They think that the blockchain magically makes their tokens valuable.
> but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
It's not really the blockchain that makes this happen though; federated systems can split from each other and route around each other just as easily. If a federated ledger tries to remove tokens, communities can still choose to recognize those tokens and either fork the ledger or run in parallel alongside it.
What you're seeing with OpenSea and clone projects is the social side of this, not the blockchain part.
Except no, not easier to trade/verify if you have to hook into off-chain validators to verify that the token is legitimate. The part of transaction security that matters for most people are the trust parts that NFTs explicitly don't try to solve.
The big problem with trust in any token system (and really any art market) is figuring out which tokens are being issued by whom and whether the token/work you're looking at is "real" and actually issued by the artist.
Which NFTs don't even try to help with; they leave that to off-chain validators.
I like to think about NFT as an easy method of buying art from artists. There are many platforms for this with classical purchase mechanics, but as an artist myself, I love the idea of an auction-based platform for this era of digital art.
Right now, there are no mechanism for extraordinary digital artists to make their art expensive like IRL art. The best thing is you can do commissions for people, but it's hard for them to maintain their rights (both for artist and customer).
Maybe NFT will be more prominent with some "data registry" between platforms to make it global to check your rights on items, and great artists can sell their art for a more reasonable price.
For now, IRL art is like a "club for friends," and digital artists are not taken as seriously as they, even when digital one draw some almost masterpieces and spent 3-6 months on every item.
But you don't own the art. You own the receipt for the purchase of a hash of the specific digital format the art is stored in.
Note that there are definitely currently ways for digital artists to make expensive art, and that's in the form of commissions. If you really want to support an artist, find one you really like, and pay for a commission from them. You may also be able to pay more for forms of copyright (like reproduction).
NFTs are the worst possible way for artists to make money from digital art.
Many artists do not want to do commissions. In fact, you could argue that people who want commissions are very selfish. Not only do they want to force artists to work on their thing, often driven by vanity, they even want to own the copyrights to the work!
NFT buyers are clearly more respectful of an artists craft: They buy the work the artist really wanted to create, and they respect the fact that they cannot be the owner of the work in a moral sense.
Not so; many (but not the majority) NFTs (like Board Ape Yacht Club) come with very liberal licenses that afford the owner of the NFT the ability to do a lot with them.
There are only a few cryptocurrencies that have any significant adoption, and fungibility is fundamental to that value. If I exchange a bitcoin for $N, that validates the value of all the other bitcoins. And folks exchange large numbers of bitcoins for $N every day.
By definition, every non-fungible token is its own unique snowflake. There are new snowflakes made every day. Few ever trade, and the ones that do are probably wash trades.
Yeah come on it should be pretty simple to explain why Bitcoin has value. It's because there is demand for it, for whatever reason. A "scarcity theory of value" feels like someone hamfisted the labor theory of value into the cryptocurrency space. No, even if labor is scarce and precious then making beanie babies for which there is basically zero demand (I assume) is still producing no value.
I'd say most of the value of Bitcoin comes from the ability to do payments that are not possible in the current legal system. Some of them may be illegal. Some of them might be genuinely useful like in El Salvador.
And certain NFTs also have scarcity built in. Both NFTs and crypto coins can choose the level of scarcity they want, and all of the value for that scarcity is determined by whatever people believe it to be. NFTs are the exact same thing as crypto coins.
Store of value requires being backed by something, scarcity alone is irrelevant.
Nfts satisfy the same ponzi urge as memecoins (bitcoin, doge, etc) but also work as visible status symbols - expensive nft can be used as a profile picture, which is why they're taking over.
Most paintings don't have (much) value. Behold my latest work, the brown ring of quality... do I hear... 5 cents?
A few paintings have value, primarily due to the fame of the artist or the history of the piece (It hung <place>). Supply is frequently capped by the fact the artist is dead...
Yes, the historical and social context, etc, which are subjectively valued. I expect that those who purchase NTF with the hope that they appreciate also count on the value of the token being part of a "limited collection", or being one of the first (an NFT from 2021 becoming a "historically significant" thing due to being one of the first ever produced), or such speculative considerations.
Many NFTs either come with or are designed for a physical representation. 100s or 1000s are already installed and viewable IRL. Being an NFT does not preclude the art from being traditionally enjoyed.
Being an NFT does not preclude anyone else from hanging the exact same physical representation on their wall. Exclusivity matters if you want to impress your rich friends.
That is a circular argument. That is the same argument as print vs original -- NFT owners are paying for the original to support the art regardless of how accurate a print may be.
It's much more impressive to those people to have paid to support the original rather than having a knockoff... This has been true as long as goods have been produced.
There’s an infinite number of potential paintings too. I don’t see what that has to do with the value of any one particular painting. There’s not an infinite number of the one original Mona Lisa.
The NFT solves exactly this. There cannot be infinitely many copies of an NFT. The fact that there can be infinitely many other, different NFTs is irrelevant.
> That doesn't mean there is an infinite number of any given collection.
For digital collections, there are an infinite number. The only finite thing, in this case, is the NFT.
NFTs are not digital representations of art. They don't create scarcity. They're digital trading cards: their scarcity is only relevant and verifiable in and of themselves.
> will have all the staying power of a beanie baby.
You're making a future prediction about an entire category invoking a specific instance from physical collectibles. Have all physical collectibles been subject to the fate of beanie babies?
As with any other kind of collectable, scarcity is created artificially. There is a potentially unlimited number of baseball cards. I can print one for myself today. Yet it is the authenticated 1933 Goudey #53 which is worth $4.2 million. NFTs provide this authenticity.
Except that they don't, and still rely on experts to give any kind of authenticity. NFTs are like the serial numbers on dollar bills - if the dollar is genuine, then that serial number is unique, but the serial number itself doesn't prove that the dollar is genuine.
There are some aspects of the pfp trend that I also don’t like. On the other hand, it’s helping to onboard (wallet, security, metamask…) more people into crypto than any other use case before. Many ready to go beyond collectables.
Interesting. I actually think that scarcity is the only thing that NFTs have. I almost think of them as the purest distillation of scarcity. Everyone knows you can get a perfect copy of a Vermeer done for $10k. Why is the real Vermeer worth more? Because the guy with the real Vermeer knows that while you can have the lighting and you can have the shadows, you can’t have the scarcity. And the concept of an NFT is just the end game of that line of thinking.
Right, because the creator of the NFT totally can't just mint another token right after you buy the first one. Oh wait, just kidding they can. And there's absolutely nothing you can do, because you don't _actually_ own the thing, you just own a trivially replicated pointer to the thing.
It's ok though, because at least the original will definitely be the one to be valuable, and not the 42nd, 69th, or 420th. Right? Right??
But that’s exactly what the scarcity value of a Vermeer is (which is 99% of the value). People can make infinite numbers of copies. NFTs just kind of lay that bare. It’s almost like the concept itself a performance art. “Can we cleave off the scarcity from the art/history/je ne sais quoi that fuels the hoarding of other scarce artifacts, and just sell that disembodied scarcity in a marketplace?”
You seem to have missed the fundamental truth that NFTs are not scarce. With the example of a Vermeer, you create one original thing, and then imitations of that thing. Minting multiple NFTs of the same thing is creating more originals, but of the same thing. One is not somehow "more original" than the others.
This is a difficult concept for people to get their heads around because of the obvious but incorrect parallel between original art and reproductions. It would be slightly closer to say that an NFT is a photo of a Vermeer. Anyone can make more originals at any time and there's nothing you or anyone can do about it.
My understanding is the NFT is essentially a signed object like a URL. So I think the analogy would be Vermeer signing photos of his painting. A nice thing to own sure but as the number of copies increases the market value tends towards 0.
Have you heard of artists selling limited edition prints? The number of dot paintings Damien Hirst has his assistants produce is limited by what exactly?
Yes - NFTs are not scarce, but the only property of an NFT is scarcity! It's like something Marcel Duchamp Salvador Dali would have thought up. It's exclusivity without having to drag yourself out of bed and get to an exclusive nightclub.
"There are an infinite number of potential NFTs. "
There are an infinite number of made up currencies as well.
Because neither of them function as a currency then they are the same thing, the difference being, with NFT's you own some 'art' or something like that, with Crypto you own a 'number'.
The 'potential usefulness' of Crypto makes it feel like it has more material merit, but in practice, they're not useful (not yet), so they might as well be NFTs.
There are no Crypto models today that make sense in any real systematic way, other than some governments reasonable attempts to be more digital, which comes wit a bunch of scary caveats as well.
Currency is a form of social credit that is fundamentally tied to the economy in which it is used as a means of transaction, there is no escaping that reality. We can't just magically make up some thing that is independent of that underlying reality.
If we could merely overcome the kludigness of banks, and the transnational cost of VISA - and make something a little more easily internationalized ... those things would help, but those probably are going to have to be a function of 'good governance'. Maybe the experiments in New Zealand and Sweden etc. will pay off if they can find something that works, that can be expanded upon.
The venn diagram of crypto people who think NFTs are absolutely idiotic almost exactly matches the venn diagram of crypto people who haven't really dug in and tried to understand NFTS.
Cue the standard quote about Bozo the Clown[1]. The fact that a bunch of people (idiot or non-idiot) have done a thing isn't itself positive evidence that that thing is good.
This is exactly the sort of shallow understanding I mean to point at. NFTs are so much more than "owning jpegs." This is the same mistake as saying "owning bitcoin is just owning a cell in a spreadsheet."
Can I have the title to your car? After all, it's just a piece of paper.
NFTs are access tokens to social communities, where owning a particular token grants you access to a community that shares ownership. Collab.Land is a tool communities use for NFT ownership based roles, revoked upon sale. NFTs are a distributed system of title. I'd be shocked if every concert ticket isn't a form of NFT in ten years--you can transfer them verifiably on the secondary market while giving a royalty to the issuer, use them to access a concert, and keep them as a souvenir like a traditional ticket stub. And yes, some people make profile pics, and generative art projects. You don't have to like or participate in those. But dismissing all NFTs as idiotic is not a position that is going to age well.
Why would you put a concert ticket on a distributed ledger if there's only a single party who can honor this ticket? There's a company who issued the ticket, and it's the same one that will either let you in or not at the date and time the concert is supposed to happen.
Why would they put it in a distributed ledger instead of a database managed by themselves?
Interoperability out of the box with protocols for escrow/dispute and resolution without having to solely trust the company issuing the nft ticket, esp with PII (I'm thinking hotel/bnb bookings, I know of a DAO[0][1] that has already partnered with a few places in europe and facilitated this). Just have to walk in, sign a message with the address that holds the nft and then you have access to the space for the duration. They're trying to solve all the kinks before trying to scale though.
Granted, I really can't be bothered to care about all the stuff going on out there with nft's but i'm not going to let it sour me on those trying to build decentralized alternatives for systems people like to engage in now while cutting out the centralized platform rentiers/censors.
I still don't understand why this needs to be decentralised?
> without having to solely trust the company issuing the nft ticket
For the transaction yes, but what about the thing you are buying? Perhaps I am not thinking creatively enough, but I can't think of a use case where there isn't ultimately some trust required other than solely digital assets.
Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
You are not cutting out the middle man of some SaaS provider, you are substituting them.
Perhaps, but its ok either way, it's not really limiting the DAO or the places leveraging the DAO to pursue this stuff.
> Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
Its not just about honoring the ticket for the duration of any particular booking, but also mitigating the risk between multiple parties and being able to easily integrate such information with as many decentralized protocols are needed for the parties involved without extra dev overhead to connect them.
For some places, you need to have a card on file in case of damages (this is where the decentralized escrow/dispute and resolution protocol come in) and rely soley on visa/mastercard and the hotel unilaterally being able to say that you were the cause of an issue that may come up or being able to decided whether or not you are on the hook.
Incentivized actors (these need not be people, it could be automated, but since everything has an address, no one can tell the difference) of those other protocols on chain need visibility with the address that held the nft. So yes, its trust the protocols and incentives associated with them around handling dispute and resolution and non custodial locking of collateral in escrow (or allowing another protocol to time lock collateral on ones behalf).
And this assumes that the place someone buys an nft stay has the in house capability to do all that without using a particualr nft stay protocol (which alot of places dont esp for random bnb) or ok with giving a large cut to airbnb/booking.com/visa etc if they don't.
> You are not cutting out the middle man of some SaaS provider, you are substituting them.
Yes, for code that can take a lot less of the cut than existing SaaS providers (if any at all). A protocol != SaaS provider, even though a SaaS provider could manage a protocol[0], or a protocol can just be an set of immutable contracts deployed on chain, or anything in between.
because once you have a global, indestructible infrastructure that embeds the same principles, companies would find it more efficient to do so, instead of building their own unique and non-compatible version.
Why? When is the last digital bank heist you heard of? When has anyone mass produced fake concert tickets? Security behind digital commerce is fine, even good right now. What does blockchain actually improve ?
If I have a NFT concert ticket, how do I get into the concert? What do the people at the gates do to determine that I may enter?
Do I print a piece of paper? Do I show them a picture on my phone or something? Can't the previous owners of the NFT show the same picture? Can't anyone show the same picture on their own phone?
You hold the ticket on a wallet on your phone, then you scan a QR code at the door that prompts you to sign a message from your wallet. Signing a message is instantaneous and verifies you control the key that owns that ticket.
No infrastructure in venues integrating NFTs but it’s no different than a traditional ticket.
Your NFT could have an associated QR code read at the door. In case of conflict there’s only one owner with access to the associated wallet and will be able to proof ownership via app / website…
Someone could make an app that only shows a QR code for NFTs you own. Someone else could make an app that shows QR codes for NFTs they don't own.
I suppose your right that it usually wouldn't matter, but in case of conflict you better be prepared to sign something with your private key. If NFTs make most of society familiar with public and private keys, message signing, etc, it will be a win.
A QR code is a number too and not a very large one. Small enough I think to fit on-chain in the tokenURI field of an ERC721 contract. Not eve need of ipfs or arweave to store an image.
Yep, if someone else tries to access with your ticket you can always sign with your wallet somewhere to resolve the conflict.
We will probably see crypto wallets integrated in our phones and associated OSs pretty soon to make everything smooth.
I don't think that will work. My public key is public. The ticket's public key is public. Right?
Thus, anyone can make QR codes that show the 2 public keys. It's trivial. This is the "showing a picture" scenerio I mentioned above. Anyone can show the right picture, especially since the picture that needs to be shown is public information.
> you can transfer them verifiably on the secondary market while giving a royalty to the issuer, use them to access a concert, and keep them as a souvenir like a traditional ticket stub.
Which of these can you not do on TicketMaster today?
Ticketmaster is the middleman. NFTs skip all of that and give much more flexibility to the issuer. You can code anything you want in the smart contract. Variable royalties depending on when is sold, increasing royalties on each transaction… Any incentive structure you can imagine is possible and nobody is gatekeeping.
It is an open API to deal with ownership rights. Every behavior that you can program into ownership, is now available. The profile pictures are stupid, yes, but the idea that property is moved to an open database which anyone can program a behavior is exciting.
Aston martin can now have a lounge in France where only Aston Martin owners can join, even if your car is in New York. Even if they can do that now, they haven't, and would not do it in an open api that anyone can build any application they want for owners.
We are learning what is possible at this very moment, a lot of the experiments are memes, and there are twice as many scams. Open and permissionless means that scammers as well as innovators are invited. However, there's excitement there which is very palpable and I would encourage you not to dismiss it.
What's the point of the database being open? That doesn't seem all that exciting and there are plenty of examples of other open databases.
> property is moved to an open database
But it's not really in most cases. Only the claim of ownership is in the database.
And the claim part is important.
> Aston martin can now have a lounge in France where only Aston Martin owners can join
What if I sell my car and don't transfer my NFT showing ownership of the car? Who will enforce the requirement that I must transfer the NFT when I sell my car?
>What if I sell my car and don't transfer my NFT showing ownership of the car? Who will enforce the requirement that I must transfer the NFT when I sell my car
Buying a car without getting the NFT would be as dumb as buying a car and not getting the title. Sure it's possible to do but it's a pretty basic fundamental step and if you don't trust yourself to do it then maybe just go to a dealer and let them take care of you.
Selling a car and not transferring the NFT is akin to selling a car and not transferring the title. Sure it's possible and you could con some really dumb people but it would be an expected part of the deal and the kind of people who buy used cars are already wary of scammers for this reason.
You're answering a different question. If I keep the car and the title, what stops me from selling my NFT? Or, even, transferring my NFT to a wallet and then giving the wallet away in the physical world (like selling a MMORPG account)? Or sharing my wallet containing the NFT with several people who can all use it to gain access to the exclusive benefits? "Hey bro, send me your private key so I can get into this club."
There's no legal reason any of those things can't be done.
>If I keep the car and the title, what stops me from selling my NFT?
Nothing, but you lose all of the benefits that come with the NFT along with making the car much harder for you to sell in the future.
>Or sharing my wallet containing the NFT with several people who can all use it to gain access to the exclusive benefits? "Hey bro, send me your private key so I can get into this club."
This already happens with things like airport lounge access and other things like Netflix where you share your credentials with your friends. Nothing is stopping you but if the services find out they will likely ban you and you will lose access and the resale value of your car will also go down.
Most of this is common sense and people won't even give it much thought in the future but it's interesting that a lot of these cases need to be explained when technology is new.
I'm not seeking an explanation. I'm trying to draw attention to my argument that NFTs won't allow us to do anything fundamentally new.
NFTs are hyped as a grand new thing, then someone asks about some tricky edge cases or how abuse will be handled, and then NFT proponents say those abuses already happen and it will be no different with NFTs. Like a lot of blockchain technologies, it's just another way to do what we already do.
edit:
Actually, I see your original argument is that NFT's are an "open API". You never did claim that NFTs allow us to do things we cannot already do.
This whole rant assumes that people just buy NFTs to sell them to the next guy, but that's not the case. Some people buy NFTs to support artists (like Patreon) - others are gamified to represent something in a dapp, for example metaverse parcels are like domain names. And of course some just collect them for the flex. It's not really an MLM anyway you slice it.
Why wouldn't you just support an artist on Patreon? Or by actually buying something from them? What's the point of buying NFT instead? It's to sell to the next sucker before the bubble bursts. That's the only thing it does that other platforms don't already do better without having a blockchain involved.
If you buy an NFT for a piece of art, you can't even sell prints of the piece of art. You can't take a pic of it and sell a t-shirt of the art. You own nothing associated with that piece of art, except for the NFT itself.
It's such a strange, strange concept to want to invest in.
What if they create a new NFT blockchain standard. Does the previous NFT become invalid? Is there anything contractual saying you can't have multiple types of NFTs on a single piece of art? I kind of doubt it.
If you buy a Babe Ruth baseball card you aren't buying the rights to Babe Ruth. It's the card itself which is valuable, as a product of the context it was issued in. I don't know why that part, as it translates to NFTs, is so difficult for people to understand.
You have the right to copy of that Babe Ruth baseball card and place it on a t-shirt. If someone uses that exact card's image to do this, you can sue them for copyright infringement.
What? Surely not. Someone else still owns the copyright of baseball cards, don't they? Or are baseball cards special in that they come with a kind of copyright ownership when they're sold? I doubt that.
They’re valuable to collectors as there is a finite supply of them. There is literally an infinite supply of NFTs, and the works they are a pointer to can be cloned digitally. There is no comparison.
There is a finite supply of a given NFT and infinite cards can be printed by someone else, you just only care for those minted by a particular authority in either case.
It gets worse: if someone hard-forks the blockchain the NFT is on, it's possible for there to be two entirely different claimants to the NFT.
And then there's all the times people's artwork has been straight up ripped off and minted into NFT's without their permission. The only provenance record a blockchain can authoritatively track is its own internal transactions -- it can't even prove that the original artist was involved at all; you're still relying on trust for that.
If you bought let's say a signed physical print of the piece of art you can't do that either. Even if you own an original painting you can't do that unless you explicitly got granted permission. So why expect it from NFTs?
Because when I buy a piece of art, I can hang it on my wall and look at it.
If I buy an NFT, it doesn't give me the right to print a picture of the art and hang it on the wall. I have no rights to display the picture of which I own the NFT. All I can say is that I own the NFT of that piece of art.
So, I can hang the hex code of the NFT on my wall and look at that I suppose. But the actual piece of artwork that is associated with that NFT? I can't even display it on a digital display in my house, because that's copyright violation.
Many NFT platforms attach legal terms that explicitly allow you to print or otherwise display the media for NFTs you own, artists generally grant permission for it or consider it a social convention that it is allowed.
This isn't true, it depends entirely on the project and the rights assigned. Meebits and Bored Apes give commercial rights up to 100k USD/yr (a formal agreement is required if exceeded), and Cryptoadz grant fully open CC0 rights to the owners to use in any purpose. - Also, when in the past few decades have you ever bought a piece of art from a creator and assumed that would give you commercial rights to their creation?
NFT license are dependent on the project. That's up to you to research. NFT license from crypto kitties allow you up to 100k. BAYC has full commercial rights.
You wrap the token into the new standard if there is a new one when there is a new standard. Look at cryptopunks, they are wrapped into ERC-721.
Why do people want Picassos? Show them off, appear sophisticated, an investment, etc. Crypto Punks are something a wealthy segment of society likes and because they are graphical and fit neatly into an avatar, they become like an expensive watch except for the digital set. This phenomenon is not hard to understand.
A Picasso actually has cultural and historical significance. And we probably had to think about it hard after the work was done. And collections even of the super rich are not necessarily random pieces. They may have hired a curator.
An NFT can be some shitty gif hardly worth mentioning let alone displaying.
I agree, they are profoundly historically significant, they are the prototype for the ERC-721 token standard, and are event cited in the whitepaper proposal.
NFTs are a platform. I don't think this analogy applies.
NFTs are standards for digital ownership. If you think digital ownership will not stand the test of time, I don't know what to say. It's a critical technology for the future of the web and metaverse.
I'm sure that within the NFT ecosystem, some trends will fade with time. Maybe it's animal profile pics, or AI generated art collections or maybe it's autobattler gaming that falls out of favor, but as long as humans like gaming, music, art, and entertainment, I suspect NFTs will thrive.
For me nfts provide an easier way for me to support digital artists I love that I've been following for a while.
I don't really like the collectable scarcity kind of thing, but I like building a collection and having an easy way to explore and find art and artists. Also a lot of these websites are providing this art at higher resolutions and quality than social media would allow for (IPFS) and without direct hosting.
I think it's here to stay in some form but it'll definitely undergo some change.
Not everything exists for function, let's enjoy our time.
Indeed, and I'm much less skeptical, if it's seen as akin to buying tickets to a concert. The value is in enjoying the music in the present moment, and knowing that the musicians are receiving some income. A concert ticket is an NFT of sorts. Nobody will ever be able to attend that concert again.
I've missed concerts that I had tickets for. Fortunately I'm mostly into classical, jazz, fiddling, etc., where Ticketmaster doesn't have much of a presence.
Massive speculation scam to take advantage of the uninformed. Let them enjoy their time without making digital beanie babies and pretending they have value.
I've read a lot of very well meaning, starry-eyed opinions of NFTs and to be honest, most of what is claimed is true. But it belies the pragmatic reason that NFTs are popular: mass speculation.
People have been collecting things for years, often at prices that make outsiders scratch their heads. The difference is that the current mainstream hype around NFTs has nothing to do with the true fandom of collectibles of yesteryear, where speculation is a side-effect of scarcity. Current NFT hype is rooted solely in the fact that some people are (seemingly) making money flipping NFTs.
If there was a huge market for buying digital collectibles from artists, athletes, etc pre-NFT then we would see large markets for that. It's not as if there was anything stopping A-list celebs from dropping limited availability collectibles...there just must not have been much demand for it. Gaming has seen healthy digital asset economies because there is utility to use these items in-game. But prices have remained moderated because there is (usually) no secondary market, so people are paying roughly whatever utility they gain from using the items in-game.
So whilst NFTs have potential, and I'm sure we will see some successes, the current popularity is simply down to speculation, as with pretty much everything else crypto.
It's also market manipulation. Most of the celebrities are just hypemen who get a cut for helping someone sitting on a ton of crypto pump NFTs and then dump them on idiots who bought into the get rich quick hype.
I can think of one genuinely useful application of NFTs for collectibles: fractal art, and (guaranteed reproducible) procedural art in general. In that case, the artwork itself can be fully on-chain, since it's defined entirely by its input parameters, which are rarely large - the real value comes from finding those parameters! And yet the visuals, once computed, can be stunning:
For something like this, I can actually see the value of owning a token that represents "the original". And when the artwork is on-chain, this claim can be easily verified so long as the author immediately puts its on the chain: the one and only "true" NFT for it is the one that is the oldest in blockchain history.
Most of the comments assume that with NFTs you are buying just a piece of digital image with no utility whatsoever. And yes, it is the case with most of the things we see on https://opensea.io/.
But on the other hand, there are a bunch of interesting projects out there where you can do some cool things with your NFTs, like the "card game" Axie Infinity and other ripoff projects - with a very few original ones - inspired by it.
NFTs for collectible card games is promising and maybe this can lead to some other interesting use cases in the future.
Anyway, I recommend searching for "utility nft projects". Most of them seem just like something to steal money from other people, but again... there are some interesting things coming out from it.
But online collectible card games have existed for well over a decade without any need for NFTs, including the ability to trade and sell your rare cards. What does having an NFT add?
It's a new implementation of the same thing, but now with no team, no servers, no company, just some code that runs on the blockchain (which is a ton of servers lol)
NFTs make me think our society has gone completely insane. People sometimes ask me to explain them because I, like, "understand technology", and I have no explanation for what they want explained.
[...] What do NFTs do that DRM doesn’t do? Not much. To me, the only interesting thing is that NFT schemes make public the identities of people who paid money for the NFTs that point to digital objects, so that those people have help from the NFT platform in exercising bragging rights. DRM technologies generally don’t do this, though they certainly could.”
I watched the link below to try to understand what is going on with NFTs. This helped a bit but I don't quite understand how to apply the token to a physical or digital thing. Does it make sense that for a digital item (like a jpg) it would be a hash of the file, the entire file or something else? Also, how would one use an NFT with a physical item (if that is in fact possible)?
Trying to parse your question, for the digital answer first.
An NFT is verifiable metadata that can link to any other arbitrary data, such as a PNG, JPG, MP4, or whatever. Following the standards set forth by ERC721, you can add an image, external URLs, names, and various attributes that define the item's traits in relation to a broader collection that it belongs to.
It is very common to use IPFS for hashing the contents of both the metadata and the image (or other linked media), since it's an easy standard to adopt to back up in multiple places. You can even back up IPFS files permanently using a storage solution like Arweave.
NFTs have been linked to physical items. Typically the way it's handled is the NFTs are sold, but are redeemable for the physical item by the creator. So you can either hold the NFT or redeem it for the physical item. At which point the creator will need your shipping info to get it to you.
NFTs could also be used to represent things like real estate titles and mortgages, but at some point there would need to be a centralized connection or oracle connected with a centralized entity for that use case.
They're also used to represent liquidity positions in decentralized exchanges such as Uniswap v3.
Thanks, this is helpful. I had a look at this link (https://eips.ethereum.org/EIPS/eip-721#simple-summary) based on your response (specifically the json schema). Is it correct that the actual NFT is three strings: name, description and image? It seems that "image" contains URL that you mention. Is there any limit to the size of the NFT (i.e. could you save the entire jpg base64 encoded in the image field for example)?
At first I was a little confused by the fact that it seems that the purchaser essentially owns a URL and they would have no control over the information that the URL is pointing to. However, the concept of permanent/decentralized storage (Arweave as you mention) starts to clarify things a bit. If you have a digital asset located at a URL that can never be altered and is permanently accessible then it does start to make some sense - though I will have do some reading to understand how this is actually possible.
Technically yes you could use base64 as your url in the image field, however, I wouldn't recommend it unless it's an SVG or something small (a few KBs) since the metadata cannot be cached or asynchronously fetched by browsers on page load. So a massive metadata file could cause issues viewing your NFT in most marketplaces or galleries.
What many people seem to do is associate NFTs with art. Art is a subset of what NFTs are used for. We're in that phase where the first apps on the iPhone were the beer pouring ones, as that was the only way they could figure out how to use the gyroscopes. More use-cases will come, as the tech matures, the tulip manias fade.
I'm incredibly bearish about art via NFTs, but I see potential in non fungible tokens / smart contracts more broadly. Look at how successful NBA top shot has been...collecting digital moments that can be seamlessly traded on a market place. That's like baseball cards, but more convenient. In a future that will increasingly be more digital and VR is slowly gaining stronger foothold, it will be easier to show your friends your digital collectibles collection than it will be to show your baseball card collection. You can also guarantee its authenticity instead of hoping the shady seller on ebay is honest.
This is NFTs 1.0. The current issue is that there's a gap between your NFT and a suitable metaverse.
People love to customize their avatars, it's just what we like to do. NFTs 2.0 will be able to take your purchases and add them into whatever metaverse dominates at that current time.
As much as people like to say why buy things digital I remember reading a HN thread where many, many, many people preferred to live in a digital world VERSUS the real world. Therefore if you live in a metaverse you probably will want to customize and make yourself digital twin unique to your likes, desires etc.
What we are seeing right now is a standard progressive of a new digital product that some take advantage of, others don't see it and some will see the potential.
QR Codes have been around for years, dropped off the map and then came storming back even though they are unsecure, some people hate them, others love them and so on.
As financial holdings or blockchain assets they also seem speculative at best to me. I participate, however, because some digital artists are truly truly good; and they are finally seeing success/sales.
Without getting too far into it, the Mona Lisa is of undeniably high quality. But its (is saying “her” gauche?) value is certainly not just a function of quality. Cultural relevance, scarcity, etc. I like that digital artists found a way to participate in the culture and make money. This is why I buy NFTs.
It’s also the most transparent “shill” pump and dump scheme ever. :) The article is not wrong, but there ARE other motivations. Especially on PoS low-electricity blockchain technologies.
Strange that no one mentions Algorand in this context. There are several NFT marketplaces on Algorand and the fees for transactions are less than a penny. It costs around 20-40 cents (depending on ALGO price) to fund the escrow for a sale or auction on our site. Transactions complete within about 5 seconds, with confirmation within around 15-20 seconds. https://gifeconomy.com if you are interested. You can also exchange ALGO easily on places like Coinbase.
And if you search you will find multiple other NFT sites using ALGOs.
Never before have I found the technically competent so divided. I sit in both HN and crypto camps I find this article catches all of the negative and none of the positive. I think everyone needs to zoom out.
You can buy them with money and maybe redeem for goods/service where accepted. Or convert back to money by selling to some other sucker, probably at a loss.
NFTs are a scam as old as markets themselves. Buy your own supply at any price, then sell to a sucker at a "discount".
Sprinkle around marketing bullshit about how all real world things will be NFTs one day, be really good at capturing imaginations and creating fantasy. More suckers get in.
They'll end the same way as similar scams too - founding teams had no skin in the game since they just paid themselves, pros will ride the wave and cash out in time, and suckers will be left without bids.
There's a missing perspective in a lot of these comments: some people like to support artists and aren't that naive when it comes to "buying NFTs". They see stuff they like and want to support the creator. That's also an aspect of this. Some fraction of the art NFT space is people literally investing directly in artists with the possibility of getting a return on investment, but not necessarily an expectation of that.
You are quite actually purchasing time and food for the artist to make more art.
That said I am interested in the possibility of NFTs being linked to a key that decrypts some openly licensed content or source files. I think that'd be really cool.
NFTs are just another attack on the concept of ownership and wealth and a step in making a class of people who own tangible things and then everyone else who either just rents them or scrambles to hold ephemeral things like this that grant no true value. True ownership, of a physical good or legal asset is what you actually want to shoot for. Going back to the PG essay talking about wealth. NFTs are strictly not in that class.
Can't we just be honest about it and say that NFTs are highly priced for exactly the same reason "tokens" were a few years ago? Or indeed dot com before that.
Mundane things become valuable when you link them to something new and hyped like crypto or the internet. It's as simple as that.
Hopefully there will emerge some meaningful use cases on the other side, in the meantime a lot of people will end up holding the bag.
This week I learned it's not.
NFT are Non Fungible Tokens, which means tokens that can't be divided, unlike crypto currencies like Bitcoin that can be divided in Satoshis. So you exchange the totality of it, or not. Basically it's a unique number in the blockchain you change ownership by applying cryptographic signatures during a transaction. Most of the time it's an ethereum smart contract address + a token id.
But wait, where are the pics ? The gifs ? The videos ?
I mean, opensea.io does allow you to mint (the term for magically turning a media into an official NFT backed by the blockchain) up to 100MB of content.
So where is it? Not in the blockchain, obviously, it's already fat enough with tiny transaction data.
Well, it's just stored in the centralized platforms like opensea, rarible, etc.
Basically, the NFT is not even that piece of art, baseball card or whatever, it's just the number linked to the proprietary, centralized, privately own trading platform that hosts the content.
The platform disappears, or bans you, or changes policy, or is blocked, or whatever, and your NFT is back to being a bare-bone blockchain contract number and a token id.
It's even more bullshit that I though! You don't even have control on whatever you make believe to virtually own. It's madness.
But you know what, the week I spent in this weird universe was also so much fun. There is an atmosphere of creative WTF, a mix of scams, community bonding, money laundering and genuine experimentation all bathed in some frenetic craziness that reminds me of the early days of the internet.
Despite all that crap, I kinda like it.