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Lets talk about how NFTs are a giant scam (twitter.com/smdiehl)
119 points by amin 8 days ago | hide | past | favorite | 124 comments





If you’re buying NFTs with hopes of profiting from them, i.e. as assets, you’re an idiot. If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there.

If you’re playing middleman, frankly, I think you’re wasting your life, but then I don’t see how you’re so different from an art dealer or auction house. At any rate, you’re probably a better allocator of those dollars than whoever gave them to you. (Exception: if you’re pitching NFTs as investments to unsophisticated investors, you deserve to be prosecuted.)

All that said, NFTs do something similar to what much of fine art and religious prohibitions do: demonstrate group membership by submitting to arbitrary prohibition and sacrifice requirements [1] with the aim of accessing club goods [2], e.g. in-group access and standing. When someone calls NFTs a scam, they’re saying those club goods are worthless. Objectively, as a crypto sceptic, the wealth made by crypto insiders would appear to reject that hypothesis. (Whether buying an NFT or expensive painting alone confers those club goods is a separate question.)

[1] https://www.nber.org/system/files/working_papers/w6715/w6715...

[2] https://en.m.wikipedia.org/wiki/Club_good


> If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there.

I think there's a significant group who are buying because under their understanding of what NFTs are, they're silly/funny/make them happy, but that they are mistaken about what NFTs are.

Arguably if it's bringing them joy, who cares, but at some level this is still a scam.


I feel like most people see the art dealing world for what it is: a clout-chasing game that’s basically a scam. And I hear some NFT people take the stance of “yeah art dealing is a scam, but it’s going to happen anyway, so I might as well make some money.”

Which is all well and good in a sense, I’m not gonna cry over rich people spending their money on bs. But it’s also the case that if you take this position, you do abdicate any ability to advocate for NFTs as something other than a scam. And if you try and flip this around and argue that “art dealing is a legitimate business actually”, people will (correctly) look at you weird.


It’s dumb but it makes sense if you live in the meta verse.

As an artist I would love to sell something for $69M. But I have not yet put a single item up for sale as an NFT as it seems so silly, you are selling a node in a merkle/patricia/etc tree, not a piece of art. The NFT art that is actually generated when you pay for it (and lives entirely in the blockchain), such as the bored apes, etc, is mostly predrawn parts assembled randomly; i.e. digital Potato Head toys. Some are based on interesting algorithms, but that has nothing to do with blockchains or crypto (other than using the hash as the random seed). I would rather create art (I do generational art as part of my work) on my own time and with my own tools. I would also prefer to sell art that people can put on their walls.

Some of what I see people selling for 10ETH are so unimaginative. But then again people in the past bought rocks as pets, so there is always someone with too much money and no sense...

Art itself is often overpriced, but it has a long history of increasing in value over time (since generally it is only made once and the artist eventually dies), and is a legit investment (and often handy for money laundering but then so is real estate and even startups). But NFTs are mostly uninteresting art, can be made in huge quantities with no work by an artist, and have no useful value other than bragging rights I guess. Museums who want to display NFTs are seriously hilarious.

Some NFTs are made by real artists who actually work hard on the works, but very few make any money at all (Beeple for example is a hard working real artist who got lucky) since NFT people seem to only gravitate to the auto-generated things like the apes.


Yeah, I’ve noticed this too. I feel like a lot of people in the NFT space have a pretty nihilistic view of art (i.e. “all art is worthless, so these procedural mix-and-match apes are as good as anything else”). They’re correct that the value assigned to art is often arbitrary, but the thing is that once you acknowledge that, the correct response isn’t to start buying random crap for thousands of dollars, it’s to buy things you want in your life for hundreds of dollars.

Like, would I pay $100 for a super high quality 2ftx2ft print of a diagonal gradient with two really well chosen colors? Yeah, possibly, if I thought it would look nice in my living room. Would I pay even $10 (let alone thousands) to “own” a PNG of that gradient in some abstract sense? Absolutely not.


What's silly is not embracing new ways of making your art a revenue stream so that you can live off of it.

Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts.

Art also has no intrinsic value. Art is also used for money laundering. When you buy art, you don't own the copyright, you just own the original production. The copyright owner can continue to manufacture prints and reproductions, but they are worth a fraction of the original. If it were possible to create one, an exact atom-for-atom duplicate of a piece of art would likely also only be worth a small fraction of the "original".

Even weirder, nowadays, much art doesn't really have an "original" as it was produced electronically in the first place - so what does owning the original even mean? Is it really an original, or is it just a blessed instance that everyone commonly understands as the one with value?

Arguably NFTs distill the essence of art ownership into its core proposition: you become the owner of intangible that is commonly understood by all market participants to truly represent the artwork and is valued as such.

The NFT market is odd, but the art market is odd in general.


> Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts.

But none of your arguments apply to 'art in general' at all, do they? Because when you "buy art" you are actually... buying a piece of art.

The way we value 'art' obviously has culturally historical oddities attached to it. But none of them are comparable to what people are paying for when 'buying' NFTs (ie: their name in a database).

Which was the entire point of the Twitter thread.


You're not just buying "a piece of art" though. If that was the case, duplicates/prints/casts/reproductions or whatever would be worth a substantial portion of the original, relative to their true-ness.

The value in owning art isn't the physical object. The value comes from how owning that specific physical object means you "own" that art, whatever that means. I don't really understand why anyone would care about that either, but people clearly do.

And even if you disagree with that point, the other points about not owning copyright, lack of intrinsic value and using art for money laundering definitely apply to real art too.


>But none of your arguments apply to 'art in general' at all, do they? Because when you "buy art" you are actually... buying a piece of art.

It's naive to think that the majority of the value of buying a painting of a pure black square comes from having the physical painting itself rather than almost exclusively out of the story and recognition by others. Once you recognize that it's not so hard to see that you can remove the physical painting aspect altogether.


> that the majority of the value of buying a painting of a pure black square comes from having the physical painting itself rather than almost exclusively out of the story and recognition by others

Most art isn’t celebrity art. It’s bought to support the artist and/or the gallery, with the side advantage of having something beautiful and/or culturally meaningful in your home.


That doesn't invalidate the argument for the portion that is. And at any rate, there are also NFTs bought just to support the artist, too.

Eh, I can see a difference between commissioning a new piece (or likewise attending a live performance or a cinema) and spending the cost of the average U.K. home on William Shatner’s prop phaser: https://www.today.com/popculture/william-shatners-star-trek-...

Sure (plus inheritance tax funk, which I learned thanks to my dad’s stamp collection), except:

> If it were possible to create one, an exact atom-for-atom duplicate of a piece of art would likely also only be worth a small fraction of the "original".

Is a hypothetical for now.

I don’t get most of the famous artists — Picasso, The Beatles, Shakespeare and so on all seem overrated to me — but high-value original works are mostly that way because they are distinguishable from copies. I expect atomically precise duplicates would destroy the market for collector items unless you can re-attach scarcity in some way.


I imagine you're correct that if a theoretical perfect duplicator existed, the physical art market would be destroyed, but only because there would be no way of authenticating the original. The original still has value if you could prove it, but nobody would know which one the original is.

Let's say this theoretical duplicator was perfect in every way EXCEPT you could tell it wasn't the original because the isotopic signatures didn't match. That is, for all intents and purposes, each duplicate is exactly the same but each instance encodes an unreproducible signature that can be used to identify it.

I postulate the original would still carry an enormous value relative to the exact duplicates.


>Like all crypto scams, the essence of the NFT grift is in recruiting new believers by convincing them a blessed database is an authoritative registrar of value. Just like star naming the grift isn't about utility it's simply a shared delusion in a get rich quick scheme.

I think this gets to the core of why so many people (like the entirety of Hacker News) seem to irrationally hate NFTs, to the point of posting about it almost every day instead of just ignoring it.

There are shared delusions that are useful as social coordinating forces. Religions are generally this. Social justice is this. And crypto is also this. I find that a lot of the irrational hatred for NFTs and crypto in general tends to come from people who hold certain shared delusions and who don't like that another competing one is so successful at coordinating behavior.


It is the "get rich quick scheme" part people don't like about NFT's, not the "shared delusion" part.

There are plenty of NFT platforms that are not about getting rich quick yet no one talks about them because it doesn't fit their narrative. This leads me to believe that what I said is correct, rather than you said.

Scam NFT's are talked about since NFT scammers posts about theme everywhere. Non-scam NFT's are not talked about since nobody cares about them. When non-scam NFT's gets popular then people will start to talk about them, but until then it is only natural that people talk about the more popular use case.

If what you believe was true then we would see plenty of people talk about all those things, but as you said nobody talks about it so those communities doesn't exists. It is basically all scams and people talking about theoretical scenarios of people maybe caring about NFT's in the future.


>but as you said nobody talks about it so those communities doesn't exists

Here is a very simple example of a community that's just a normal community of people buying and selling NFTs https://www.hicetnunc.xyz/ without it being about "getting rich quick" like you said. There are other communities like this. Again, no one talks about it because it doesn't fit their narrative, not because it isn't popular or because it doesn't exist.


That site has multiple people owning the same NFT, so I don't see how it is an NFT site and not just a regular image trading site. Paying money to have a site say you have a new picture is reasonable, but I don't see what NFT's has to do with that.

That doesn’t make sense. People can’t own the same NFT, just the same way two people can’t own the same bitcoin. Can a creator make multiple copies, aka a limited ‘print run’ of the same artwork? Of course, and this is common in the physical the art world as well. It shouldn’t be a surprise they are doing it in the digital at world.

What is this then?

https://www.hicetnunc.xyz/objkt/417332

It logs all trades here, no sign that any of it are unique stuff. I don't really see how it is related to NFT's etc, but the guy linking the site said it had to do with NFT so I used that language. I assume the site owner call it NFT's as well, but since they take 10% royalties it can't really be, can it?

Anyway, at least it isn't a good example of NFT's being functional. It is just a site where you can trade images associated with your profile. NFT's doesn't add any value to being able to trade pictures between profile process, it is just there to make people think this is a new valuable thing. But nobody who cares about images cares about NFT's, they care about the image being associated with their account or that money goes to the author. The whole NFT thing is just nonsense.


No offense, but you are either being purposefully obtuse/ closed minded, or your are ignorant of how the underlying technology works. Look, like many, I thought it was silly at first too. But I think part of the problem is the way it’s been sold to us hasn’t been the best. But I think it’s important to think about why you are so aggressively opposed to this?

> ”NFT's doesn't add any value to being able to trade pictures between profile process”

I think this is incorrect. And I think ‘profile pictures’ & avatars and such will be the first ‘real’ application of NFT art.

In a few years, most likely all the major social media platforms will integrate whatever the few most popular NFT chains are. Then your avatar badge can be whatever cool NFT art you own, and it will be able to be verified on the blockchain.

So to your point that you linked to, there are 25 copies. That’s not 25 people owning the same NFT, that’s 25 different NFTs owned by different people. So if you aren’t one of those 25 people, you won’t be able use it as a ‘verified’ avatar on “some_social_media_platform”.

Sure, anyone can copy and paste a picture and ‘steal’ it, but if you don’t control a token with that picture in it, then you don’t own it, not really sure why that concept is so hard?

Yeah I can put up a print of the Mona Lisa is my living room, but I obviously don’t own the actual Mona Lisa. The same way I could copy and paste a picture of some very popular NFT art, like a CryptoPunk or something. But my copy can’t be verified on chain, and hence I would just be displaying a ‘fake’ on my profile. And everyone would know it. Who knows how this will be implemented, but some have suggested something similar to the ‘verified’ check mark for famous people.

If you control a token, then Twitter or whoever can show some indication that is indeed verified, and not a copy.


As the parent told you, same model as limited print runs, allowing the artist to decide how many copies of the same "object" they want there to be.

Ok, so just nonsense then. Thanks for clarifying, if that is what NFT's is then they are even more of a scam than I thought. If they could loosely be tied to image rights it would be something, but this is just nonsense.

There are zero reasons for a site to have an NFT tied to what images you display in your profile on that site. Having a market for images for that site is fine. But if there was a huge demand for such sites then they would exist before NFT's. Their massive explosion in popularity thus must be that the space filled with NFT scammers with little to no real demand.


They can be loosely tied to image rights, what does that have to do with this? Some of the platforms have explicit licenses attached detailing what you can do, in other cases the artists have directly declared it, ...

How is that different from me buying imagines and stuff in Unity store? Or me buying images and packages in other online marketplaces? NFT's added nothing there. The rights comes from the site contract, not the NFT. Site goes down, NFT is worthless, same as if you didn't have an NFT.

Licenses don't expire just because the site used to broker them goes away, unless they are worded that way. (E.g. if unity were to close their store, would you loose usage rights for assets bought there? Maybe, but the license wouldn't have to be that way)

Also, I don't remember ever seeing a limited edition in asset store, and tracking ownership changes of digital assets is annoying to say the least. NFT folks argue that tracking them on a blockchain works well, isn't reliant on the original creator "approving" the resale unless its setup that way and makes it publicly transparent that the claims about "only one" or "only X" are true.

If those differences have any value to you is of course a personal thing. For me personally, the "own a unique digital thing" isn't really something I care about, but I get how the logic works if you do. And selling purely digital artworks has been a problem for artists before, so apparently this "public scarcity" is something some buyers care for that wouldn't just pay to download something from the artists website for whatever reason. (And plenty people who think anything "limited" doesn't have extra value and are just as happy with a unlimited print than with a special limited edition - but clearly there is a large enough market that disagrees, since otherwise more expensive limited editions wouldn't be a thing)


It was obvious from the start that all this NFT market is pure nonsense, but it is nice that someone takes time to clearly explain why. Maybe it'll save some innocent souls from losing their money.

The maxim "The market can stay irrational longer than you can stay solvent" applies (sort of).

Just because it's nonsense doesn't mean that a bunch of people aren't going to make significant amounts of money before it fades away.


That bunch of people is not going to make significant amounts of money, they will take significant amounts of money from other people, giving nothing in return.

I believe that in English language fraud is an appropriate word for such enterprises.


Of course. And a lot of people will lose a lot of money. And it is tricky to ensure you are in the former group.

I mean people literally buy "property" and space ships in virtual game worlds. NFT are no different, it's microtransactions but for rich people.

Is it a scam? well it depends whether the elite values NFT or not... it certainly is a speculative "asset" by nature.

It's not a scam provided people know what they are exactly buying. It's more of yet another "get rich quick" scheme for some.

However, beyond the speculative aspect of NFT, artists need to know that putting their art in a virtual gallery as NFT WILL COST THEM money, so the business model for the middle man is to make artist believe that they will make money from NFT. The house always wins...


There's more of tangeable value from buying property in virtual game worlds in the sense people get to use those property or items when normally in the game they would not be able to.

For things like ship preorders on Star Citizen it's much more of a risk that the value will ever be delivered but it's still offers more than just a note of ownership of an abstract token on a blockchain sequence.

If someone decides to honor these tokens as proof of ownership of property/items in the real world/ a virtual world then they may offer some value but there's a very great risk that will never happen.


IMO, someone’s tangible value of putting an Ape as their avatar pic on social media might be greater than that of someone being able to use a ship purchased in Star Citizen.

It’s a little crazy to me how Twitter profiles with Apes are viewed as “influencers” and “pioneers” and get treated as such. Not my cup of tea per se, but there is tangible value for some people there.


Space ships and virtual property is virtual property, at least you got something. Something to look at maybe, something that distinguishes you in game?

NFTs give you NOTHING. They don't give you the right to anything. All you own is a (hopefully) unique cryptographic sequence.


If you think of Cryptopunks (or whatever) as a game then buying one gives you as much or more in the context of the game as buying a skin or a plot of land in the context of another game.

>Something to look at maybe, something that distinguishes you in game?

You pretty obviously get that here, too. I honestly don't see why you'd think it gives you less other than out of general dislike for NFTs.


People are still saying this about cryptocurrencies too.

Many people also say EVs and green energy are a scam.

People also frequently accuse public companies of being scams or trash (there's a certain intersection between the previous sentence here).

Healthy skepticism is a powerful weapon of thought. But you have to be able to acknowledge where skepticism ends and stubborn refusal to accept reality starts.

Humans value certain things. They may not be the same things you value. That doesn't necessarily mean they're just "a giant scam".


Yeah I’m totally with you. I think many of us had a similar reaction the first time NFTs were explained to us. But the not I learn about them, an see them in action, it’s definitely starting to make more sense.

This (very uninteresting) Twitter rant doesn’t really make any good arguments. The comparison to ‘star naming’ services is very contrived & makes absolutely no sense.


This says nothing. You could just as well be arguing in favour of three-card monte or any other obvious scam.

Yeh but sometimes what people value and like is a scam. You know, some people do like certain MLM brands or even cults, that doesn’t mean those aren’t scams/cults. Stop trying to normalize predatory behavior and institutions under the banner of “people value different things”

How are NFT's "predatory behavior"?

Some stuff is for sale. Nobody is being tricked into buying it. Everyone knows you click right click and save if you want.


Sure, do you know anything about NFTs from the side of the artist and what they have to do to get a token for their pieces? Seems like you don't. Educate yourself first, young boy.

> You're buying an expensive entry in someone else's database

Nope, you're buying a non-fungible token on a public ledger where the data and association with a specific address (or addresses) can be read without permission. This ownership and permission can then be moved around (potentially for large sums - potentially for near-zero amounts) by means that are independent of the client used. So for instance an NFT could give me access to an exclusive Discord channel (the client here being a Discord bot) and I could potentially sell or otherwise pass that onto someone else who wants access. The ownership of that token could also afford me access to, for instance, buying another token on another smart contract (the client here being another smart contract).

That they are commonly linked to metadata associated with JPEGs is really missing the opportunity here.

Furthermore, since everything's on a public ledger the much-stated money laundering is surprisingly difficult. And in fact multiple people have been caught out by this (a simple example being one of OpenSea's PM's wallets showing that they were frontrunning; another is VCs front-running their portfolio companies' air drops). That NFTs are often exchanged between bot accounts and multiple wallets (often tracked back to known individuals) to pump prices is also well-known and visible on the blockchain.

Whether or not you think expensive JPEGs are 2020s' Beanie Babies, it's hard to imagine a programmer on HN not being able to think of interesting non-JPEG things to do with an open source, public and permissionless ledger/database.

EDIT: disclosure - I have some JPEG NFTs. They weren't super expensive to me but I bought them so I had skin in the game that forced me to investigate this market rather than shouting "but money laundering!" from the sidelines. I'm glad I did this. Via getting into the weeds I've discovered a vibrant and super interesting ecosystem of developers, entrepreneurs, cryptographers and opportunities I'd never have known about otherwise. Are my JPEGs worth it? Doubt it. But the experience has been super interesting so far.


> it's hard to imagine a programmer on HN not being able to think of interesting non-JPEG things to do with an open source, public and permissionless ledger/database.

You underestimate the extent at which working-for-a-living has utterly destroyed my sense of imagination and ability to have an original thought.

It’s depressing. Very much so.


> it's hard to imagine a programmer on HN not being able to think of interesting non-JPEG things to do with an open source, public and permissionless ledger

The history of cryptocurrency is exclusively people trying to come up with ideas for this extremely interesting class of data structures, yet consistently only reaching variants of "fraud." (And, those people who just jump immediately to fraud without much thinking.)


There's some truth in what you say. But then same also applies to a lot of tech startups for instance (we could pick many but let's say Thaneros)... in fact it's true of the wider financial system. Just check out the latest HSBC news in the last week.

The problem is that people find it easy to jump to "money-laundering! beanie-babies!" and not spend the time thinking about what they might want to do with the tech. Strikes me as a bit curmudgeonly versus the optimistic, open-minded and innovative roots of HN...


> fraud

Link?



You just used 4 paragraphs to say the same thing as the text you quoted.

How is this "someone else's database"? It's literally a 100% public permissionless ledger. If I store an NFT in Facebook's database is that not "someone else's database" by definition.

That the database has been implemented as a ledger does not make it "not a database". And since you don't own the database, it belongs to someone else. In the case of (almost) every cryptocurrency, it collectively belongs to the miners.

I've said it before and I'll say it again: If that "public" permissionless ledger is not there anylonger, your NFTs is at zero face value. Zero.

Yes, it's absolutely someone else's database, if not even worse.


Isn’t that a type of a database? And is it yours?

It's on a public ledger, but the data is in a proprietary format. Anyone can read and validate if they want, but equally they could put up their own NFT for the same thing, and/or choose to not accept the legitimacy of that NFT's publisher. In a way it's proprietary semantics in public data.

I'm sure there are open standards in the formats of NFTs that make them less proprietary, but sticking to these is optional, rather than necessitated by participation like the ledger is.

Perhaps an analogy... this is an "I got the vaccine" sticker, not a vaccination record. It's publicly visible, yes, and you can check that the sticker looks like it's supposed to, but as a proof of vaccination it's pretty weak as anyone can create them and hand them out on their own terms.


How _could_ an NFT give me exclusive access to a Discord channel? I see how it could let me read some sort of access token that I could use, but I dont see how it would prevent others from seeing/using that same token, particularly those who have previously owned it.

You sign a message containing your Discord username with the address that's registered as owner of said NFT. The bot then approves your Discord account, while also watching for changes in NFT ownership to revoke your access if you transfer the token out.

It's pretty common to do this for Patreon rewards so it's not really much different to how you'd approach that except instead of connecting to their API it does it using the records on chain.

You'd run a bot or similar on Discord that would grant you a role to access the channel and it would use your wallet to verify your identity (ala public key crypto) and the ownership of the NFT by your wallet to verify the permission to join.

Most of the time you're a centralized thing anyway in this case so the NFTs don't really add much (unless you want users to be able to trade access) even if you wanted to take payment via crypto-currencies.


The implementation is usually cryptographically signing a message from the account that owns the NFT.

Another Interesting NFT thread from today https://twitter.com/moxie/status/1448066579611234305 .

The fact that this kind of art NFT (direct link to a centralized resource without a hash) is so widespread, at least proves that a huge portion of the NFT ecosystem is indeed a scam.

This is a great explanation. I know people who "bought"/"named" stars. Never understood it. And NFTs are this.

You don't own the thing you think you do.


> Never understood it.

It’s clearly just a joke gift. I’m sure nobody is actually confused that they’ve really bought some legal right.

It’s like criticising a ‘kiss me quick’ t-shirt by asking if people realise the t-shirt actually has no legal power to compete people to kiss you. They already know. It’s a joke.

Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it.

I feel like people are working so hard to not see the joke.


From what I've been reading in quite a lot of comments, people are indeed confused that an NFT is or can be some kind of legal ownership title. If people thought it was a joke, you wouldn't see so many people thinking that it's going to revolutionize X (whatever X is, apparently everything can be disrupted with NFTs).

> Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it.

Except people are getting scammed out of large amounts of money.

For example the Evolved Ape scam that broke last week. Or artists that have their work minted and sold without permission. People pumping the value of their assets through wash trading. And so on.


If NFTs are just a joke, then there's a surprisingly large number of people who are playing along. Like, far more than I could believe could actually keep a joke like this going with a straight face.

Wait till you hear about companies selling plots of the Moon surface and people buying them with a straight face as a high-risk investment.

The main difference between NFT's and stars is that people think they will get rich reselling NFT's but nobody thought they could buy a star and then sell it for more money.

Wrong.

I can sell you stars on paper too. Exactly the same. It all depends on the underlying agreements.


This was an insightful thread, but I think these arguments miss the "bigger picture" that NFTs carry with them. Yes the popular use case right now of expensive art and "selling a JPG" is rather silly, just like the art world always has been. What I see in the space however is a lot of opportunities to grow community-building tools - POAPs for example are rarely sold for profit (some still try to) and are a great way to encourage participation and attendance of events, with added functionality of rewarding said participation after an event for example. A lot of media coverage is on the absurd art market use cases, and though the possible profits make it a loud use case, it is just one sliver of potential of Blockchain technology. I am excited to see NFTs move beyond these cases, and I see that happening quite often.

> What I see in the space however is a lot of opportunities to grow community-building tools

Technological solutions to what are fundamentally social problems don't typically work out.


What exactly does the blockchain contribute, that could not be accomplished in a superior way with an SQL database?

The primary advantage is increased trust. With a SQL database, it is necessary to trust the organization that hosts the database. With blockchain it is necessary to trust a distributed network of organizations (or more precisely their computational power).

If you think that NFT issuers are more trustworthy than banks or big companies then I have bad news for you. The NFT you get is as trustworthy as the paper you bought saying you own the golden gate bridge. Nobody can take that paper from you, but they sure can take the bridge.

The question was (paraphrased) "what value does blockchain add over SQL database table with a unique index?" - not whether NFT issuers are more trustworthy than trusted organizations or if NFTs are a valid asset class.

But it isn't the same, with NFT's the trust comes from the NFT issuer and not the blockchain. With bitcoin you just have to trust the chain, but with NFT's you have to both trust the chain and the issuer.

I think this is a misevaluation of the trust involved. NFT's are using the blockchain to whitewash trust, the blockchain contains a smart contract and a URL. It provides no assurance that the URL contains the same contents as when the NFT was first minted.

With how most NFTs are implemented you need to have trust in the blockchain it self, in the implementation of the smart contract, in the server hosting the referenced metadata URL, and the server hosting the actual digital asset the NFT represents. If trust in any one of these is misplaced it can undermine the trust placed in the others.

The blockchain can not provide more trust than the least trustworthy part of the rest of the NFT chain. Since the URL referenced in the blockchain is likely stored in some single organization's SQL database, the maximum trustworthiness of an NFT is never going to be larger than the trustworthiness of that SQL database.


Suggest having a look at arweave.org (and related). This is the solution to the mutable URL problem as discussed above.

You still can't trust what is fed to the database though, right?

> Yes the popular use case right now of expensive art and "selling a JPG" is rather silly...

There's nothing silly about "selling a JPG". Billions of dollars are spent annually on digital copies of photos. People pay for (high) resolution and rights.

Selling an NFT is usually "selling an NFT", not even "selling a JPG". Most of the time the NFT just points to a piece of digital media accessible to anyone, and it conveys no rights of ownership or use of that digital media.


> Most of the time the NFT just points to a piece of digital media accessible to anyone, and it conveys no rights of ownership or use of that digital media.

Or very surprisingly any guarantee that the media pointed to is immutable or won't disappear.


The saddest part is that the NFT concept has a practical use: ticket sales. But it seems just like with all the other practical uses the investor class keeps passing them by for the "to the moon!" nonsense schemes. Seriously, why are boring ventures that have solid business models baked in the thing that modern would-be investors avoid? Is it because there's not enough digits on the ROI? Sorry for the rant but I've seen this a trend across many other industries such as power generation. I read a comment of a CEO in a trade magazine years ago talked about how he had investors snub investing into utilities because they felt 5-7% a year was too low or pointless as a return.

The NFT ecosystem is people with bad engineering skills, poor social skills, and no understanding of economics, attempting to create a new economy of social contracts based on technology they have created.

When you buy an expensive piece of art, you often never physically see it, and a warehouse just notes that it belongs to you instead of the previous owner.

Maybe, I've never bought expensive art. But I know people who have, and I've sat around their kitchen surrounded by 10's of millions of dollars worth of art. It was mostly kept covered up from sunlight, but it was not in a warehouse.

With NFTs, another warehouse can also note that the art belongs to you and you have equal legal rights to enjoy and sell the art as the original owner.

You're missing the point.

When you buy a piece of art, you own the piece of art.

When you buy an NFT, you own a row in a fundamentally meaningless database that points to some image on the internet. The database has no value, no one recognizes it, you don't own the image.

There is a fundamental difference there.


In these cases though people are buying the art not for the sake of actually owning the art but for another use that it's high value provides them. Which is an apt comparison to NFTs because they mostly seem to be used for speculation.

Before the 20th century technological advancements, when you bought a piece of art you not only owned it, you were in control of who gets to actually see it.

As usual, selling something for inadequately high price is a standard money laundering scheme. Often, VERY often used on modern (or not) "works of art" auctions. It's just a way to transfer sometimes ridiculously high amounts of money in front of everyone's eyes and getting away with it.

There's this something that I have read that he randomly created NFT just for the memes, and yet he made a fortune out of it. Also, many NFTs are powered by pumps and dumps. Have you seen the scandal of one of the OpenSea executives?

I'm so waiting for somebody selling pieces of the moon as NFT, like the good old 1900 scams.

They already redid the million dollars home page, NFT edition.


Stephen Diehl is unfortunately blinded by anti crypto hate, so his arguments on the subject usually don't make much sense. Which is weird, because he's obviously a smart guy. This is no different, I don't know why his posts keep ending up on HN.

For sure this thread of his is passionate, but I can't really refute any of his points. The current NFT market is hot potato.

Attack the argument, not the person

I'm providing context based on his previous crypto opinions. Strong feelings don't make good arguments, they do tend to give rise to fallacies. A scam is something where you are being maliciously tricked. Yet nobody is claiming NFTs give you any legal rights. It's a non sequitur.

Crypto attracts blind love/hate ("shilling"/"FUD"). Very few express rational views about it in public. Our social fabric is not used to everyone having skin in the game.

I predict this will calm down once the Ponzi-era fades out (whenever central banks finally decide to tapper), but it's still always going to be a problem which we need to find solutions to.


While I agree NFTs are dumb, argument that they are scum is weak. People pay for all kinds of dumb things, like penny stocks or collectibles.

I am sure there can be people that pay for database entry and are happy with their purchase.


Then why have I never seen anyone talk about the cool NFT's they own and instead everyone talks about them making quick bucks on NFT's? Look at youtube search results, not a single person talks about the cool NFT's he has, just a lot of people trying to sell their NFT's for a quick buck.

https://www.youtube.com/results?search_query=nft

Compare with stamps, I see some people talk about making a quick buck on stamps but also a lot of people talking about their stamp collections. There is a huge difference here, the nft case you see 99% scum and 1% calling out the rest of them as scum, and not a single enthusiast who cares about the NFT. Stamps I see mostly enthusiasts and a few scum posts.

https://www.youtube.com/results?search_query=stamps

So until you can find me all these "enthusiast NFT collectors", I'll assume that they don't exist. They could exist in theory, but I have seen no evidence that a single NFT collector actually exists in this world.


I worked at a company that's done several record breaking NFT auctions and sales. The top tier NFT collector / whales I've know have been constantly talked about how much they like the things they are buying / bidding on. Both in public, and in private.

User interviews seem to go like this:

Us: Why did you bid on this NFT [for upper six figures] Them: I liked it.

Or just take a look at most of this guy's tweets:

https://twitter.com/crypto888crypto/status/14448949722478960...


That account is an advertisement account for NFT auctions, not sure how that would convince me that NFT's aren't a scam.

https://www.888innercircle.com/


Hi, I’m an NFT collector. A bunch of my friends are too.

Problem is that calling yourself an NFT collector is a way to raise the value of NFT's and therefore something an NFT scammer would do, so you doing that doesn't prove anything. Similarly buying an NFT from yourself for a million dollars is a good way to trick people into a buying frenzy buying all your other NFT's. So until I see evidence that these eccentric billionaires who pays a lot of money for these actually exists and aren't just parts of the scam I can't trust you on this.

But at least you are a data point, now I have seen one person claiming to buy NFT's to keep rather than resell, even if I don't necessarily trust you. So thanks!


Ok, why do you collect NFTs?

Do you invite dates in to see your NFT collection? Do you occasionally open it up to admire the hash values? Do you enjoy posting on forums telling people you own NFTs? something else …?


People keep talking about using NFTs for laundering but as a criminal I’d be very wary and just go with the traditional ways. Has there been any actual studies on money laundering through crypto?

its for laundering cryptocurrencies, not "money". e.g.ransomware bitcoin payments.

Any evidence that a significant fraction come from those? It'd be incredibly easy to prove if that's the case and I only ever see guesswork rather than Blockchain analysis behind those claims.

Moreover, most of the big NFT investors seem to have a long history and as far as I can tell are often just collectors who are already rich from crypto.


no idea, just clarifying what the article inferred

Right, but there are mixing wallets and private coins so why bother with NFT?

When money laundering, you're not only hiding the origin of the money, you also want to have a good explanation why you have it.


But this isn’t NFT? I was hoping for an analysis on methods and volumes in the whole ecosystem.

It's hard to do a quantitative study on something that has inherent deniability. The ones who could map the flows (centralized exchanges, which are de-facto tumblers), will obviously not publish public studies on this.

The connection between pointless star registries and the NFT industry is exactly what I've been looking for. I could never put it into words.

Same influencers that flog the grind culture, selling vitamins one minute and NFT’s the next.

Can't NFT's be linked with copyright ownership? The whole story about "Charlie bit my finger" NFT suggests that there could be a legal link. If not now, maybe laws could be adapted to support it.

So let's assume the law supports linking NTF's to copyright ownership. What would be the scammy part then?


If you manage to get legally accepted copyright contracts into a crypto then that has value, yes. But NFT's aren't that.

Are you sure? I'm not a lawyer, but it seems copyright is basically "whatever you can prove in court".

The family of "Charlie Bit My Finger" sold that video through an NFT. So I wonder if the family would still use that video, and the NFT owner would sue them... who would win. I would actually think the NFT owner.

See https://www.bbc.com/news/newsbeat-57227290


If the auction contract says they own the media then they own the media. It has nothing to do with the NFT, if the NFT buyer then gave away the NFT and the auction was seen as a valid purchase of the media the purchaser would still retain the media rights.

My point was, if the media rights could really be tied to the NFT rather than the auction contract then you would have something of value, but right now it would just be "Here is an action for media rights. Oh and btw here is also an unrelated hash you get with the purchase". As is for the media rights to go with the NFT you'd need to write a similar contract for every trade. At which point the NFT is totally superfluous, why not just write normal contracts skipping the NFT?


The owner of the NFT was allocated a license to display the NFT and sell it but not ownership rights of the underlying media. Based on the wording, if you sell it the rights are terminated and not transferred to the new owner.

https://www.charliebitme.com/#/auction-terms


Am I on Reddit?

You too can use the classic fudster starterpack:

-- it has no use

-- it is used by criminals

-- tulips




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