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[flagged] People Don't Understand NFTs (robert-chung.medium.com)
8 points by altrum 12 days ago | hide | past | favorite | 35 comments





Just bc people don't agree that a surprisingly shitty rendition of a pixel alien is worth $140,000,000, that doesn't mean they "don't understand NFTs", it just means their bullshit detector actually works.

Well you see that's the whole idea, pixel alien isn't the NFT, the NFT is a cryptographically-secure blockchain that records ownership. They exist so that people can "own" the "real copy" of data that has no reason to be scarce. And like the article says, this worthless math is indeed mostly used for cash grabs and money laundering.

Yeah, I get that. You don't even own the thing at all, which makes it more of a ripoff. You essentially own a digital record that says that someone agrees that you paid money so that there is a record that you paid them money.

As soon as 1 person issues a replacement NFT due to theft or something the entire idea comes crashing down bc now the "real copy" is actually "owned" by some thief and a new "real copy" is being created. From what I read a while back you kind of just have to trust that ppl won't sell the same "real copy" over and over again. This works fine in the real world of tangible goods but when people can be anonymous it's just begging for abuse.


That's a bit of nonsense there.

You don't own the artwork, you own an URL pointing to the artwork which can change or stop working at any moment and likely isn't maintained by you.


I thought that going into the article but after reading it it provided some interesting analogies to luxury goods that expanded my perspective a bit.

> Finally, here’s where Gucci & Chanel differ from CryptoPunks — and one of the main ideas of why NFTs are revolutionary: you can’t fake it.

Why not?

This seems to be a popular sticking point in the NFT crowd, but it's never really been made clear to me. There seem to be oodles of duplicate NFTs out there (much less ones based on stolen art), so why can't I just make another?


Not only can anyone create another NFT; there's no reason the rightful ccreator can't decide they want to pretend the og NFT was "1 of N" and then create more later, diluting the value of the original.

I figured as much. It seems like a nightmarish substrate to base ownership on.

Because the picture of Calvin peeing isn't the NFT, the NFT is a cryptographically-secure blockchain that records ownership. They exist so that people can "own" the "real copy" of data that has no reason to be scarce. And like the article says, this worthless math is indeed mostly used for cash grabs and money laundering.

I know the picture of Calvin peeing isn't the "proof," it's just the public facing instrument.

But this still isn't satisfying: anybody can put another transaction on that same blockchain (or a different one) with another proof of ownership. So which one is the real one?


Author here. Again, this is where "branding" comes in. Once people know which smart-contract is the real one, putting another transaction won't work.

Sure, some people may fall for fakes and buy an NFT from a duplicate smart-contract, but this only happens due to the current lack of infrastructure in the ecosystem.


> Again, this is where "branding" comes in. Once people know which smart-contract is the real one, putting another transaction won't work.

I'm sorry, but isn't this exactly the problem you pointed out with luxury goods in your own article? It's all about authenticity and provenance ("the real one"); you've just offloaded the proof from physical quality (which I or anybody else who's sufficiently informed can assess) to a proof of work or some other scheme without solving the actual problem (the bootstrapping of trust).


Obviously what we need is another blockchain of NFTs that tell you which NFT is the real one. We'd probably also need a blockchain to keep track of which blockchains have the real NFTs for the real NFTs.

> (which I or anybody else who's sufficiently informed can assess)

But you can’t—that’s why the fake industry is a multi-trillion dollar industry and why StockX, a 4 billion dollar company, still end up selling fakes to consumers


> But you can’t—that’s why the fake industry is a multi-trillion dollar industry and why StockX, a 4 billion dollar company, still end up selling fakes to consumers

Two things:

First, let's say I bite the bullet and accept the claim that a human with sufficient information is no better at verifying the authenticity of an item than an NFT would be. Where does that leave me? Now my Burberry jacket and my monkey JPEG are fakes. How has the state of affairs improved for me?

Second: I think the way you're approaching this belies a misapprehension of the counterfeit market. Duplicitous counterfeiting (where the seller deceives an unwitting buyer) is just a fraction of that "multi-trillion dollar industry" -- a very large chunk of it is made of the fake Scott toilet paper and fake Duracell batteries that people knowingly buy at their local dollar store, to say nothing of fake luxuries. There are more harmful examples (adulterated honey and olive oil), but the underlying point is the same: NFTs either (1) don't solve the problem (I eagerly await cryptographic proof that my olive oil is authentic), or (2) are irrelevant because people don't want the problem solved ("I know damn well that my batteries are fake, and I don't care").


I agree with you on the physical components but you’re missing the point. If you’ve read the article you’d understand physical goods are different than digital ones. Look at the footnotes, I even point out that NFTs for physical items is not solved.

With digital goods, it is solved. If you have a brand (like cryptopunks or say, the US gov) and you produce some NFT—people can see and verify that the NFT is produced from those parties.

Again, I’m reiterating the same points in the article— it’s the same idea with open-sourced software. You can fork some code and “attempt to sell it” but you won’t go far because it lacks branding and trust.

Half the battle is branding.

Hope that clears it up


Fun fact: the entire NFT crypto system is powered by Walter Benjamin[1] spinning in his grave!

1. https://en.wikipedia.org/wiki/The_Work_of_Art_in_the_Age_of_...


Even worse, what happens when Bill Watterson sues for copyright violation and wins? What happens when a court serves an order on every US person / exchange to remove the NFT from their platform or be shut down?

Note: The Calvin peeing image is derivative and was never drawn by him. The artist might have a defense of fair use but it is not clear in precedent.


My understanding is that the blockchain records ownership of just a token. If OpenSea or Nifty (or whatever NFT marketplace) shuts down, who then associates the artifact to the token on the blockchain? Would the token you own on the blockchain go worthless?

It only imbues value if the downstream IPR uses carry a subsidary fingerprint to prevent the assumption all copies are liars.

Sure, you can NFT the mona lisa. It's only viable if you NFT cross sign every postcard, puzzle, tee shirt ...


blockchain "baseball cards" is the best quick description I have for NFTs.

It makes less sense than that to me though. Isn't an NFT just, within a specific blockchain, claiming to 'own' or control a bit of datastream? Like a photo, or video, or object model. Except this isn't even insanity normally practiced like copyright or patents; you don't get any of those artificial 'land grab' rights. Just your name attached to the thing within that blockchain?


I think "baseball cards" is a limited view of the NFT model, which is what's being argued in this article; it's essentially a programmable, global database.

Just like how we trust certain government records to be accurate & representative of ownership, each chain, if secure, can achieve the same functionality in a more open and decentralized way (also its inherently global, which can have huge implications wrt globalization)


> I think "baseball cards" is a limited view of the NFT model, which is what's being argued in this article; it's essentially a programmable, global database.

NFTs are built on a preexisting global programmable database, but are specifically a use of that database to create digital baseball cards.


> Imagine the U.S government started incorporating this global ledger to account for home ownership — automatically, they have a reputable brand. Since the code itself is out in public, it can be trusted and audited. Take this idea further and imagine the UN starts to keep track of land ownership for the entire world! Same deal — brand and trust, both satisfied.

Where to even begin with this idea? First of all, many local governments in the U.S. already have public databases of who owns what land. This is a problem that can be solved with a SQLite database, it doesn't need a blockchain.

Second, controlling access to individual pieces of land through ownership is a fundamental function of capitalist states. It's even more important than coining money. Why would a government delegate that to the UN? What would the benefit be? If a state can't effectively control access to land, that's an existential threat and not something the UN's "brand" can solve for you. The potential downsides are huge for everyone involved - sorting out disputed ownership or inheritance now requires a call to Brussels or Luxembourg?

If this is supposed to be a reason why NFTs are useful rather than stupid, I still feel like I'm not getting it. That isn't to say there couldn't be valuable use cases out there.


> Where to even begin with this? First of all, many local governments in the U.S. already have public databases of who owns what land. This is a problem that can be solved with a SQLite database, it doesn't need a blockchain.

I believe you're missing the opportunity that exists for automation. That database is heavily guarded by layers of human administration. I can't sell you my land without involving a bunch of humans who interpret contracts and push buttons. In a world where land ownership were recognized by tokens on a distributed ledger, buying and selling land no longer requires the overhead of all that administration.


> That database is heavily guarded by layers of human administration. I can't sell you my land without involving a bunch of humans who interpret contracts and push buttons. In a world where land ownership were recognized by tokens on a distributed ledger, buying and selling land no longer requires the overhead of all that administration.

Those layers of human administration are called a "state". Without that, the concept of property is pretty much meaningless to begin with. I can claim to own any piece of land I want. The state pays people to show up with weapons if I'm using land that they've decided "belongs" to somebody else. It gets to set the terms of land ownership and to insert itself into every transaction because of the ability to use force, not because it has the most efficient record-keeping system.

What that means is that the fundamental premise of blockchain technology, that there's no need for an external authority, is completely at odds with the reality of how property works. If there's a smart contract that says I own parcel X, but the people with guns say I don't own it, who wins that argument? That means the state needs a way to insert itself into and modify the blockchain, but that kind of obviates the whole point of the blockchain. If the state can't alter it, it's not a meaningful source of truth.

That of course leaves the benefit of automation. But all of that automation could be done with a SQL database and a PHP web app. The reasons it isn't done that way are policy ones, not technical ones.


What happens when the owner of the NFT representing their land loses their private key or they die without passing the key to someone else? There are only two options: either the land exists ownerless forever or the blockchain is hardforked which would undermine the whole system.

Blockchain in general doesn't really work well when it has to interact with the physical world.


Let's spouse I have two properties, one big and one small, and I sell you the small one for $X. But I miskick and send you the big one. If you don't want to return it to me, can I go to a judge?

What about kidnaping? If someone kidnaps me and use a wrench to send my property, can it be returned?


What about the very unlikely event that someone loses access to their private key or gets hacked? Does that mean their house now belongs to someone else? I suppose this speeds up the ability to lose one's home through cryptocurrency scams.

Author here; I agree, and this is something I've been wrestling for years. The lack of centralization means it's impossible to reverse hacks or scenarios you mentioned--I personally think _some_ centralization is crucial, but not sure to what extend (and if that basically just means we should just have private companies like we do today).

NFTs or whatever we call them in the long run will probably be important. I started working on an Ethereum game dApp in 2017. My NFTs are actual assets in a game that also runs on-chain. By following the ERC721 standard, I don't have to build a marketplace for my game assets. Gamers can just use any marketplace they like. I'm also going to have an ERC20 token that is just the in-game currency. It doesn't have to be ERC20 but by following the standard, again, I get the benefit of being able to trade the currency using most wallets. We're definitely heading towards a new kind of ecosystem where the concept of tokens are going to play a huge role. But I think we're also still pretty early in the cycle of innovation. Exciting times imho.

That sounds like a user experience that's going to be pretty prohibitive for most consumers though. Only hardcore crypto enthusiasts who also want to play your game are going to be willing to set up a wallet and figure out how to trade your NFTs.

Sounds like when gaming companies said that micro-transactions and pay-to-win were exciting times because they allowed people with less time to still play as if they had wasted lots of time.

Except here it sounds like just being able to be part of groups.


As far as I can tell the current artwork NFTs are just beanie babies or tulipmania; they're valuable because the buyer thinks they have a resale value.

I suppose some minority may buy them just for bragging rights, a la "I am Rich" or that wutang album.


I’m considering a spin-off of NFTs which cryptographically proves that you dont own a link to a real or virtual object.

Of course it won’t prove whether or not you do own the real or virtual object, but that’s a tired old argument by people who don’t “get” the technological advancement.




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