Great interview. Just waiting on the HN hate of crypto to pile in here. Let's applaud the Etherium efforts to reduce energy consumption. Crypto is not perfect but projects like Etherium are making crypto better in terms of energy usage, tx/second, and smart contracts.
Its probable that everything you've ever heard about crypto, is a post-hoc justification. That 'number go up' is the result we all want. And anything that's said about the matter, was said because 'number go up' is the technology behind blockchain.
Sigh. If any of the downvoters knew how well connected parent commenter is (as in, has had years of extensive and direct communications with) basically everyone of note in crypto, Buterin included. Many of these discussions are published, as well. He's choosing to use a handle here on HN so I'll just leave it at that.
This perspective is blunt, but correct. Crypto is successful primarily by virtue of its unregulated rube goldberg casino revenue model, with just enough of a plausible tech veneer to allow people to rationalize behavior otherwise indistinguishable from naked gambling.
Crypto does not solve the centralization of leverage over liquidity (and thus the ability of a few to manipulate the wealth of many), which is the sole centralization "problem" that matters to the vast majority of people who would use it.
Take away the Potemkin decentralization apparatus known as a blockchain (the premise of which holds that The State and its central bank minions are the only centralizing agents capable of public harm) and you are left with plain old unsexy digital currency.
Hate? So when you do POS what happened to the supposed bullet proof security of of crypto coins? Cause I m not to sure how that's compatible. Also I would like to see the chart of adoption of these cryptos in unbanked countries/populations.
POS = "Proof of stake" here, not the more common use of POS. PoS if implemented with the correct incentives is as secure as PoW. I don't have much faith in crypto helping unbanked populations, as there is a pretty high learning curve. You can easily wipe away all your money if you do a step wrong or loose a private key.
It is yet to be proven if it is "as secure" because no PoS network has operated at scale.
It also certainly defeats much of the original purpose of decentralization when a few stakeholders have total control of the network because they hold the most coins...
Regardless if the network has "correct incentives" or not, things can happen to those stakeholders outside their control, or other incentives could easily develop to act in bad faith against the network.
> It also certainly defeats much of the original purpose of decentralization when a few stakeholders have total control of the network because they hold the most coins...
As opposed to a few stakeholders that have total control of the network because they hold the most computational power?
And before you bring up mining pools, you can replicate that in Proof of Stake by creating staking pools.
I'm not sure what you mean by "at scale" but ETH2 PoS has been operating for several months now, and currently has over 100,000 validators with over $6 billion staked.
Have a look at cosmos.network for successful decentralized dPoS network. Also Binance chain is built using Cosmos SDK, one could argue it is not decentralized enough, but it is certainly secure enough.
While slightly out of date by now (doesn't have the latest years) and only having data from two sources (localbitcoins & paxful), this research from CoinDesk shows that the P2P market for cryptocurrencies have been growing solidly in the "unbanked" world, especially Venezuela: https://observablehq.com/@coindesk-research/localbitcoins-pa...
That's a good idea, but even if I did, I don't think it would give a fair view and creating new accounts/addresses is cheap enough. So someone holding a lot of volume is most likely not holding it in the same address.
However, it's important to notice that Ethereum is not money. It doesn't have a clear monetary policy, and it has a major utility risk, making it a bad store of value. It solves completely different problem than Bitcoin. No one really knows what problem it solves, but it's getting there.
Storing “value” in a crypto currency is a concept I will never understand. What value do you store? How can you store value in something that can drop by 20% in a few hours?
It seems to me to be a way to say “put your money there and it will eventually become more”, which is just speculation, and not a store of anything.
Edit: to add to that, how is Bitcoin a store of value if a bear market is >90% lower than a bull market?
That seems to be a meme that people repeat to justify their Bitcoin bet, but I don’t see how that makes sense.
The trough tends to be higher than the previous peak so if you're willing to hold for ~5 years it has been a good investment. Even that has to end eventually though.
Sure, but that’s speculation. I can speculate on Tesla shares, but that’s not considered storing value. What is the store of value in the case of Bitcoin? The bull market will stop at some point. Is it still a store of value in this case?
If you’re storing value in a physical bar of gold you‘re speculating on its price not to fall (aka to increase). So do you suggest gold not being a store of value?
On the other hand, if you decide to store your savings in the form of Dollar bills under your pillow, you’re probably not speculating its purchasing power to increase (as that would be against its historic trend). Rather, you’re speculating to need it soon to buy goods. Essentially, you’re betting on an economic crisis to come soon and prepare yourself with a decent amount of cash.
Either way you are trying to anticipate the future and, hence, engage in “speculation”.
IMHO, the “store of value” vs “speculation” is a false dichotomy.
It has all the properties of a store of value. Scarcity, durability, portability, fungibility and divisibility. If we compare assets on their fundamental properties, then we arrive at the conclusion that bitcoin is the best asset for storing value. Then, markets decide the relative value to other assets by buying and selling. The upwards movement in price discovery will continue until value from inferior assets, such as gold and real estate, has transferred to bitcoin. After that, bitcoin's price will stabilize around $15 million per bitcoin, and continue increasing with economic growth.
If an apple falls from a tree, does the apple move away from the tree, or does the tree move away from the apple? In order to determine whether something has "dropped", you need to have a frame of reference to compare it to. You have arbitrarily chosen a frame of reference which fits your existing world-view, the dollar. If you are fixated in this view you will struggle to comprehend alternatives.
Consider instead, that a bitcoin (or satoshi) could be a frame of reference, and from it, you can determine whether a dollar is dropping. Here's a visualization of this: https://usdsat.com.
Since it is very clear from this visualization that over the course of years (rather than hours, which you have limited yourself to) that the dollar is in decline w.r.t bitcoin, then anybody wishing to "store value" over the course of years (not hours) would be making a poor choice if they selected dollars to do it.
This is part speculation, as you suggest, but this speculation is not random or guesswork - it is a result of other processes which go by names such as "quantitative easing." These processes (deliberately) devalue the dollar. Since not everybody wants to hold onto an asset which is being devalued, they look for alternatives, and they find one which, by design, cannot be deliberately devalued.
Further, the reason the value of dollars declines so rapidly w.r.t bitcoin is because people are betting against the currency which is being devalued, and for the one which can't be deliberately devalued. As more people make this bet, others become more confident that they can also make the same bet, which then leads to a situation where the more astute savers will front-run other savers because they expect that the dollar will continue to decline in value w.r.t bitcoin - and since the monetary policy of the federal reserve is to keep devaluing the dollar this is a very asymmetric bet.
Isn't this true of any asset? You’re not really addressing GPs concern that the term “store of value” usually applies to more stable valued assets.
> You have arbitrarily chosen a frame of reference which fits your existing world-view
It’s not really arbitrary. The earth and things anchored directly to it is an obvious frame of reference for objects moving in space because it is by far the largest gravity well compared to anything you’d be referencing it against.
The US dollar is the world’s reserve currency, and fiat currencies have armies and police backing them and their use for paying taxes in addition to massive distribution, velocity, and proven utility.
Might be tough to hear but it is money if people use it as money and they certainly are within the Ethereum ecosystem. Bitcoin's promise of only 21m is based on a wing and a prayer (very suspect whether fees can ensure security in place of mining rewards) whereas ETH is based on 1) primacy as money within Ethereum, 2) utility - required for paying Ethereum tx fees, 3) earning potential with PoS staking, 4) deflationary pressure from fee burning under EIP 1559.
The monetary policy is becoming much clearer with proposals like EIP-1559 which has been approved for the summer upgrade.
But beside that, I can buy things with it, and I regularly do buy things with it. I pay people with it, and get paid with it. So that makes it money to me. Peoples experience with it make it something else to them. ether is more useful to me than $ (as a european).
> Just waiting on the HN hate of crypto to pile in here
Please omit flamebait from your comments here. Nothing good can come of it! Even if other commenters are annoying, we all need to learn the discipline not to react to annoyance—and especially not to pre-react to pre-annoyance.
I am going to stake eth 2.0 in hopes that it and other POS coins can provide an alternative to POW (despite any security or other technical shortcomings). And then if prices of POS coins can be made stable, perhaps by the use of synthetic baskets of POS coins, they could achieve some utility beyond hoarding
There are services like Lido which is live, and RocketPool which is launching soon. You can essentially just buy lido staked ether (steth) on uniswap, steth is a token which represents staked ethereum and accrues interest via rebasing.
RocketPool would be the preferred method once it is live as it maintains the decentralised ethos letting people run rocketpool nodes and anyone pool any amount they want, like how mining pools work today (except running on a raspberry pi, rather than maxing out gpus).
Ethereum is on the forefront of some of the hardest problems in distributed systems and security today. If anything, public blockchains have really pushed the edges of research in some of these spaces, particularly around consensus, crypto, and mechanism design.
Also in governance! Lot of research is now financed directly by grants from the Ethereum Foundation! That’s a game changer for researchers. I know a few people who were able to get grants for their research projects, without the need to pass by the traditional academics system (I mean, they are academics but didn’t have to play the usual academics politics game to be funded).
So instead they were able to get grants on the basis of....what? Knowing some key people involved with Ethereum? Telling a persuasive story on Twitter? Having the right buzzwords in their bio?
Sure, "the academics politics game" may often be an issue. But I don't see how "blockchain!" suddenly solves the problem of deciding where research funds should go in a better way.
I honestly do not know what might be the actual conditions of the academics of the comment above. However in most of the cases of the research funded by the eth fundation it seems, it is because they have a good proposal, that is properly structured and detailed to seem valuable to the foundation. On top of that they likely happen to have an impressive resume and citations that give them the credibility. No need to quite aggressively shill the outdated academic politics, just because you mad about the fact that things like this are better.
Grants from the Ethereum Foundation work like grants from any foundation that funds research: the foundation has a lot of money and employs people with the expertise to evaluate grant proposals.
So why should I believe they're more able to choose worthwhile projects to finance than any other foundation?
As your link says, the "ESP team will work with you to refine and rescope your proposal as needed, then evaluate the final proposal with input from technical advisors before a funding decision is made".
There are lots of foundations that finance research projects in whatever areas they're interested in, based on the funding decisions made by a panel/committee/team/whatever-you-like-to-call-it. What makes this one different/better?
I wonder if the pursuit of crypto is equivalent to our aspirations in space. We may not get to Mars but we'll learn a lot by attempting and will have valuable biproducts.
Of course there is a waste product as well and the pursuit holds some cost but it motivates people and that shouldn't be underestimated
I think they are dumb. But, people are getting more and more used to having a lot less physical things. Maybe the truth is they don't really care about the thing itself, but the feeling they are special because they hold it, and others don't. For that reason, maybe NFTs are going to be valuable. I didn't say, intentionally, they will be useful, just valuable. Value is in the eye of the beholder.
Things don’t need a coherent reason to be thought valuable like “feeling special” they can be thought of as valuable just because everyone else thinks of them that way. The problem is that a sudden lack of confidence causes valuable things without backing to collapse in value. Tulips and every other bubble that collapsed ever.
That we’re seeing NFTs trading well isn’t an indication that it’s the art behind them that matters rather than the popular view of it as an asset.
> I'm all for the potential of cryptocurrency... But can we all agree NFTs are dumb though?
Sure, given how they're being used for now; but with some refinement this could displace deeds and titles for property for instant verification. Possibly even validating credentials and degrees and maybe even passport and associated visas.
I'm not sure how you get over the enforceability aspect, but I can see a country like Estonia could opt to build their architecture around this.
Also, if I'm honest ETH is the last blockcahin of the big 3 that I'd consider putting something critical given all the exit scams: DAO and the first ETH etc...
Art NFT is dumb in my opinion. However, I'd love NFTs to prove ownership of car titles or real estate. Think of how much easier transfer of ownership of titled assets would be with NFTs.
I think you nailed it. NFTs could be useful for a lot of boring applications. What if your software license was an NFT that you verified every time you opened it. Or maybe a book you bought on Amazon for the kindle. That way you could sell these digital assets you own.
I have thought about this quite a lot. NFT for software license would only work for applications that work with the blockchain. Something like a blockchain client where the user needs to authenticate to interact with the blockchain. Without authentication the application is useless. With authentication their account/wallet would have a license key and software use authorized.
For other types of software, without authenticating to the blockchain, there is no way to verify that the user is the owner of the license.
If they are authenticated to their ledger account then simple possession of the token in the account is sufficient verification.
The use case I considered was a client for trading on XRPL. For an application like this they are going to be signing transactions to interact with the ledger. If they are able to sign and own a license token in their ledger account then they are the valid user.
> Think of how much easier transfer of ownership of titled assets would be with NFTs.
How is that going to fit in with tax assessment and ownership transparency legislation without making things complicated enough you haven't gained anything?
you can build replicas of archaic systems on top of crypto based systems for better UX, while still maintaining the possibility of self custody for those that desire it. The inverse is not true.
This is just adding unwanted complexity to an otherwise simple problem.
The purpose of a distributed cryptographic ledger is that no authority may commit to it without the required cryptographic private keys. If you have some party who can commit to the ledger arbitrarily, or who has a skeleton key, then you don't need the distributed ledger - you just need a centralized ledger with replication (far more efficient).
Any situation where ownership is enforced by a central party is a poor fit for this technology. You either want the cryptographic keys to secure the property, or you want the humans in charge to secure the property through a legal system. There is no sensible marriage between these systems. A system controlled by humans undermines cryptographic security, and a system controlled by cryptography obsoletes human control.
Therefore, the only thing worth owning w.r.t a digital ledger is the digital token itself. As a proxy for anything else, a digital token cannot assert right of ownership.
they might understand, but they also want to profit as much as possible on it ;)
anyway, I like to talk about "archaic" systems in terms of fast and slow (rather than old/archaic/obsolete. for example when I talk about the reason why election processes should not be "computerized"/networked it's because you want a slow system, it's a feature. The slow system gives you a slow result (but in an acceptable time), but it also avoids fast/at scale fraud.
I think slow while still holding slightly negative connotation is not as negative as archaic and other option (slow food is good)
Or a mix of slow and fast. Like for voting I was thinking maybe give you an ID and passcode to vote online via a web form but then as well as an electronic tally "Joe Blogs is voter ID 12343473" is sent to a printer and "ID 12343473 voted Trump" to another printer with the results going in a big heap. That way people can't find what you voted without going through two huge stacks of paper which would presumably be guarded anyway but there is a paper record to audit / recount people worry the votes are wrong. Though I guess you still have the issue of people offering to buy your id+code.
I guess with a house owner token you could trade it electronically but have to go register the change and a government office within 30 days for something for it to be legally valid.
I guess I was thinking ease of voting rather than having to trek to a polling station. But yeah I see your point especially in places like the UK where no one complains much about the system.
I don't think anyone wants to get rid of the legal stuff. Just digitize it in a way where we get rid of outrageous notary fees and other middlemen. Those shouldn't probably be bearer tokens as theft/loss is a big deal
It's actually the other way around. The government needs a court to be able to force the transfer of deeds, so essentially control over the ownership of those NFTs. At this point, there is little reason to use a blockchain.
Art NFTs are digitally native. Like Bitcoin, the blockchain entry is the thing you own. That is why they are seeing the success that they are.
NFTs are fine to tokenize things that are valuable because they are limited, say, like property deeds. You own the token, you own the deed, and it's possible to establish an one-to-one relationship.
Attaching a token to something that's inherently reproducible such as digital art yet with granting no means to actually enforce copyright is pretty much lunacy and it's just muddying the waters further when it comes to cryptocurrency.
Yeah there are all kinds of edge cases when a digital token represents ownership of a physical object that just aren't accounted for. What if I get foreclosed on but smash the hard drive containing the key out of spite. Who owns the house now? The chain says me, the law (central authority) says the bank and under the rules we live by today the central authority is correct.
The problem with this line of thought is that the Venn diagram of cases where there is a potential natural fit for NFT and the cases where there is both a need for them and likelyhood of adoption may well have an empty intersection.
Property deeds are a good example. They can't practically replace the current system without radically rethinking that system, and it's unclear that the stakeholders would find any compelling reason to consider that.
e.g. a secret bank account that can be accessed by presenting a token. It's like a transferrable password: once it's given to someone, the previous owner forgets it.
That seems to have the same problem as property deeds. Unless the compelling example is something like "tax evasion" it isn't obvious why this is particularly useful or desirable, so we're right back where we started.
For one, if I want to sell/give something to someone, I just transfer the NFT representing the agreement.
Imagine if you could transfer car ownership without having to deal with the government or anything else? Just a transaction away. If the seller/buyer also uses cryptocurrency, you could safely write a contract that swaps the funds for the NFT without any risk of either parties running away with both of them (funds and NFT).
Sure, it makes sense from an "imagine a world where..." perspective. Sounds convenient.
I'm looking at it from a "why would any government on Earth choose to use a 'decentralized' blockchain as a source of truth to keep track of property deeds in their jurisdictions" perspective.
Well, imagine the car maker when creating the car creates a NFT. At that point it's registered and government can read all the details from there.
When it reaches the reseller, it changes hands from the manufacturer to the dealer. Once the dealer sells it, it reaches the owner. At that point, government can still see all the details, transfers and more by just doing queries, instead of relying on people filling out forms.
> Imagine if you could transfer car ownership without having to deal with the government or anything else?
Even if there wasn't any value in registering a car with the government, people buy how many cars in their lifetime? I expect that the number of cars that I'll ever sell in my life is less than ten. So this would save me like 30hrs in my entire life in DMV trips.
Maybe there is some utility here for dealerships who are dealing with a lot of government paperwork involving titles, but for a general population this seems like an incredibly tiny benefit.
Yeah, just as dumb as buying an original art piece for your wall instead of a print. But... it's not dumb to other people, just you and me. Other people like buying things that are provably 'only theirs'.
When you buy a painting you have genuine rights to the physical object. When you buy an NFT you have genuine rights to the NFT but usually none to the linked item. When you buy digital art more normally you’re essentially licensing use of it within a specified context. As you do with other IP. In theory you could do that with NFTs I think but in practice it doesn’t seem to be the case.
The Venn diagram overlap between people with sizeable art collections and people who don’t back up their computers and store their passwords on a piece of paper under their keyboards is definitely not zero.
NFTs are dumb for physical items. Who enforces the ownership? Ok so your NFT says you own it. So the centralized governmental police force has to ensure the actual NFT? Defeats the decentralized purpose lol.
NFTs are dumb mostly. Digital collector items, ok I get it
Even NBA Topshot, the golden child of NFTs right now, is only useful when backed by NBA centralized infrastructure.
There's a _little_ value of decoupling the ownership from the centralized infra that controls the thing you own..but tbh it's not much different than an NFT for a physical trading card lol.
But even for digital collectors items, it still seems dumb to me. Digital things can be copied. There's nothing you can do to prevent copying the payload. And only outside legal authorities can enforce property rights, making the whole blockchain part of it redundant.
Precisely, there's zero linkage to the physical world from an NFT unless it's recognized and enforced by some sort of central authority. At which point it's orders of magnitude easier and more efficient to use a centralized database.
I did some contract work with an Ethereum NFT startup several years ago (now defunct), before the recent hype, and the only "value" proposition was that they were selling "genuine" NFTs blessed by particular large consumer brands.
Behind the scenes it was all a centralized SQL server that only touched the blockchain when you exported your tokens to a private wallet because that was slow and expensive -- and turns out almost no one actually cared about that part. As long as you left your tokens in custodianship of the company, the company technically owned them as far as the blockchain was concerned.
And then even for digital goods where the concept of the "original" is meaningless when exact digital duplicates are zero-cost, just... who cares? What do even own, and why should anyone else respect your "ownership"?
All this NFT noise just feels like those scams where you "buy" a plot of land on the moon or name a star. No authoritative body in the world recognizes that claim, and if we ever start colonizing the moon you can be sure as shit that no entity is going to respect your "ownership".
It all feels very regressive in the face of decades of efforts of open source and work to liberalize things like copyrights and fair use in software and digital goods and services. Not to mention that it is an environmental disaster.
Someone I follow who is always right is big on them. Their argument is that people buy expensive and rare shit just to have it and project superiority.
Thus “owning” the HD Clíp of Lebron slam dunking is like cred they are willing to pay USD for.
> there's zero linkage to the physical world from an NFT unless it's recognized and enforced by some sort of central authority
Not at all the case. All the artist needs to do is publicly declare that they listed their art on an NFT platform, such as Rarible or Zora or what have you and that's enough. Direct communication with the fans is all that's needed, no central authority required.
Not all NFTs are created equal. Some have all the data necessary to reproduce the work of art embedded right on the blockchain, such as Euler Beats: https://eulerbeats.com/ . Others use IPFS hashes and embed the hashes on the NFT itself, so all you need is a single server in the world serving up that file and you can validate authenticity.
An NFT is sort of like a signed, autographed copy of something. Sure, I can have a reproduction of the Mona Lisa printed for about $50, but can I have the original canvas that Da Vinci himself painted on for $50? Of course not.
When I was a kid, I liked to collect baseball cards. I knew a mint condition Mickey Mantle rookie card was exceedingly rare and valuable. A signed and rare card can go for tens of thousands or more dollars. Signed baseballs or gloves can also have additional value compared to the underlying physical item. What is it about the signature that changes the value of something? You know that the player themselves interacted with that item.
That is the case with NFTs. They won't be going away. You can try to mint a copy of an NFT, but it will always have a later timestamp than the first one, and it won't have the original block number, so it's quite easy to root out counterfeits.
> All the artist needs to do is publicly declare that they listed their art on an NFT platform, such as Rarible or Zora or what have you and that's enough.
What happens if the artist declines to participate in the NFT marketplace, or (gasp!) even in social media altogether? In practice, one of the things that can happen is someone impersonates them, steals their art, mints tokens for it, and the artist gets nothing.
That's a risk in the real world too. It's called forgery, it's an ancient practice. There's a concept called providence for which the art world uses experts to determine authenticity. But in the meantime, if an artist, such as Beeple, who is known publicly and has developed a reputation associated with an Ethereum address, has their art encoded on the blockchain, it's as as good of a title transfer record as any that exist in the physical world, if not better.
Digital goods as NFTs have exactly the same problems as physical ones.
There was a case where someone stole a JPEG of someone else's art off their website, minted an NFT, and sold it, claiming to be the original artist. You still need a centralizing authority (like with NBA Top Shot) to ensure authenticity and prevent fraud.
The one maybe advantage I can see of decentralized is that the secondary market doesn't have to be governed by the rules of the centralizing authority. In other words, maybe the authority provides for the initial minting of the good (ensuring authenticity, which can subsequently be verified using the blockchain), but don't have to be involved in the secondary sales.
This isn't one case of stealing digital art. A lot of work is being scraped off of twitter causing artists to go into protected mode. I've been seeing a ton of hate for NFTs among artists.
There’s a massive forgery issue with physical items - Shoes, Fashion Brands, Art.
The benefit of NFT for psychical goods isn’t so much proving who the current owner is as much as it is proving the historical ownership so the authenticity of an item can be ensured. You don’t need a central government for this. For example, as long as you know Nikes address, I can confirm a shoe I want to buy is truly authentic by verifying that address is the original owner.
How do you attach a digital address to a physical item? Let’s say I buy a Nike shoe and then give 10 fake Nike shoes the same digital address. They are amazing fakes. Same issue as today right?
Unless there is a clever crossover to convert from digital verification to physical and back... seems worthless to me.
The only thing I can think of is embedding a physical unclonable function into the thing. As long as Nike holds on to custody of the physical tokens and only embeds them in real Nike products, then you could verify with the Nike database that it's a real token and a real product.
Sure you do. Nike could go out of business and their records lost forever. Nike could suffer a hack. Nike could have a rogue employee manipulate the database values. Nike could be thrown off the internet by AWS. A public blockchain like Ethereum is plausibly neutral, decentralized into tens of thousands of nodes worldwide who carry copies of the ledger, and there is a strong economic incentive baked into the blockchain to keep blocks consistent and persistent.
And if you want to trade your Nike NFT with someone's Reebok NFT, it would help to use an open standard with an economic mechanism for trade between counterparties built-in.
Nike can just produce a set of PUF keys, cryptographically sign that list, and publish it. Then they embed one of these into a bunch of otherwise identical Nike products. The message could also describe the product's physical attributes so someone couldn't swap a PUF between differently-rare Nike products.
Knowing the PUF key doesn't let you fabricate a physical widget with the same key (that's the unclonable part). So they can all be public, and anyone can keep a copy of the batch of PUF keys that includes their object's PUF key. When they want to prove it's an authentic item, they can prove the PUF produces a key on that list and prove the list was signed by Nike by normal public key cryptography.
In this scheme, Nike published their public key in an SEC filing, so in the worst case you can go ask the SEC for it. Nike could also stick a copy of their public key in every product and advertisement they make if you want to be paranoid about verifying this in 50 years.
This seems more bombproof in some ways than relying on Ethereum to keep existing and well-governed.
Well, for any collectible item an important factor is "provenance", i.e. is there a legitimate reason to believe the item originated from a credible source.
At least nfts now require people to also forge the provenance, which provides an additional hurdle to forgers (my best attempt to steelman the "pro nft" argument)
For instance, if a great great grandson of Henry VII sells a medallion that he claims belonged to his ancestor, that would have more weight than a similar medallion from a random individual, because it's far less likely for a relative to also be a blatant forger. In theory at least, nfts provide a similar (limited) assurance.
The difference is provenance with NFTs is about the NFT itself, but not the item. Like mentioned elsewhere here, block # and timestamp will differ. But digital items don't have provenance.
To put it another way: the analogue is not original medallion vs new fake one. They're both 100% identical medallions in every conceivable way, but the receipt for one is older than the other. I don't know about you but I don't give a damn if your receipt is older than mine if the items are not unique in any way.
You can’t give 10 Fake Nikes the address of Nikes original wallet, that’s not how this works. You can’t just assign an NFT any address you want, this is all verified via smart contracts. The point of the block chain is that it’s immutable.
And if someone intercepts the shoe in transit and replaces it with a counterfeit, how does the token notice?
Nike could just publish a public key in an SEC filing and you could use that to verify that you're actually talking to the company. That would be exactly as good and much simpler.
The token does not notice, and that’s exactly what we want. As the original buyer, the token is already stored in my wallet when I bought the shoes from Nike.
Whoever stole the item can try to sell it, but given they don’t own the wallet that the token lives in - everyone will know it’s a stolen good. Another benefit of NFT for psychical goods.
Anyone who’s been involved with crypto for more than a month or tried to help people to sign their email with PGP knows how often people lose their keys even when access to fungible cryptocurrencies is on the line.
So what happens to the shoes I want to sell if I lose my private key or it is stolen (probably more likely than someone stealing the physical shoes)?
Do I simply lose the right to sell? Or do I go to jail for not being able to prove that I own them? What if the person I’m selling the shoes to believes me or doesn’t care?
What is the real cost of stolen or fraudulent goods to the shoe market in percentage terms? Does it justify all of these extra transaction costs being layered on the honest shoe traders?
Are there probably good reasons that the idiom, “possession is 9/10ths of the law” is so common?
Counterfeit or pirated goods accounted $522 Billion or 3.3% of all global trade last year according to the EU Intellectual Property Office (EUIPO).
And Shoes are the most counterfeited product in the world. 2 I don’t have specific shoes figures, but here is an article about a $400 million fake shoe bust customs made 3.
Yes, counterfeiting is a major problem worthwhile of extra transaction costs.
In the art business, confirming the legitimacy of a painting is a $1b per year market.
What happens when you lose your key? Price would drop in value, I imagine. Similar to if you accidentally dirtied your shoes, both requires being careful and aren’t mistake proof. However, I’ll let people smarter than me figure this out.
I mean that you've transfered the NFT along already, because you thought the real product was received by the recipient. Now the recipient has a fake product and a real NFT. Now what?
I think about it as a post-modern art performance. The goal of NFTs is to deconstruct the concept of ownership. It’s absurd by design, and relies purely on faith, forcing us to consider its deep implication in our lives and societies.
I don’t know if I’m writing this as a joke or not :)
I think you are right on. The world is struggling to define what "digital ownership" means. Enter NFTs. I think they are here to stay as a baseline even after it bubbles up and pops.
Concur, NFTs are only good for digital assets, which was the driving rationale behind Ethereum in the first place (a distributed place to capture digital assets so that one party could not unilaterally decide to modify or delete them).
The real interesting NFTs are those that don't even try and pretend to have a claim to a real-world item. For example, you can currently buy an NFT for a destroyed Banksy piece (https://www.cbsnews.com/news/banksy-nft-injective-destroy-ar...). I mean if this isn't evidence of a cryptomania I don't know what is. I think the most saddening part is that almost everyone pushing NFTs are pushing a get-rich-quick scheme, and trying to get as many un- or misinformed people in on the scam as possible. Lately I've seen relatives buying art NFTs thinking that they get some kind of ownership in a piece of digital artwork (and no, they don't get the copyright. That stays with the artist.)
Honestly, once Jack Dorsey sells his first tweet, he just sell it again. What's stopping him? He got 2.5MM for it one time and gets to keep ownership. Why not just keep selling an NFT to the fabled First Tweet and rake in the cash. This is clearly an irrational market and seeing how crazy it can get would be amazing.
So i have a pretty clear view of how bitcoin operates, but what i don't understand about ETH is the description of it being a generalized protocol, or a "world computer". They talk about dns or messenger accounts, etc, but is all this data stored on the blockchain? How does the size not balloon out of control?
It does balloon and has already ballooned. There's company called Infura that hosts most of Ethereum full nodes. Because of this, the system is quite fragile and not properly decentralized. https://www.theblockcrypto.com/post/84232/ethereum-infrastru...
You can buy a 1 TB SSD for about a hundred bucks. There are various reasons people use Infura, but inability to run a full node locally is not one of them. (The devs are working on removing some of the reasons for using Infura, by improving light clients.)
Now if you want an archive node, that will use a lot more space. But a full node already has the entire transaction history and entire current state. An archive node adds the ability to do fast queries of historical states, like "how much of this token did that address own in block number X last year."
If you have a full node, then you can generate an archive node from local data, but if you don't need fast historical queries there's no need for it.
Full nodes are around 500GB, so they do fill up faster than bitcoin does. Archive nodes are bigger, but you can get everything in an archive node from a full node as it contains all the proofs. There are other data pruning techniques, and lots of work being done on light clients for eth2 (so you could connect via a light client running inside an app on your phone, rather than the app connecting to infura/alchemy).
Though contrary to what people think about this being a weakness for ethereum, there are still ~10000 nodes running, so pretty close to the amount bitcoin has.
The world computer idea does help to understand it. If you are playing a game or running some other processes on your discrete computer sometimes you accidentally pin the CPU, RAM, and IO, then you’ll run into issues where copying files to a USB disk or even doing simple things like editing cells in Excel becomes next to impossible until you force quit some applications.
In the “world computer” known as Ethereum, operations are prioritized via “gas” payments in ETH. A bunch of people you don’t know on the other side of the world might get interested in trading drawings of cats with each other[1], and suddenly the “world computer” has no resources available, and the cost of inserting simple records into the “world database”, or moving some tokens to an exchange suddenly goes from $2 to $50, or $500. This can happen right in the middle of an operation so you have to be careful to consult “gas prices” and probably the I Ching wouldn’t hurt, and then kind of make a guess and hope your transaction doesn’t get stranded.
If you have some tokens you want to get out of your wallet and you don’t have any ETH in the wallet to pay for the transaction you may need to beg, borrow, or steal some, and you’ll almost certainly be left with some dollars worth in your wallet that you may never be able to empty completely.
Imagine what it would have been like to work on a big timeshare mainframe in the sixties where booking time to do simple things cost massive sums of money, except that the bids for resources can come in from all over the world and things are being repriced constantly.
People like to call this decentralized, because no one is in control, but it actually centralizes the allocation of resources in a way that makes things many multiple times more expensive than they should be.
[1] The “world computer” is not actually trading images, because that would be impossible given its limited compute resources, so all of the hard stuff like transmitting or decoding a gif is actually happening on the normal internet and discrete computers. The “world computer” is just spending tonnes of resources recording which user currently “owns” the cat via a database entry.
Transactions getting stuck because of gas prices spiking: This was one of the main drivers of the 1559 improvement proposal which was recently accepted for the summer upgrade. Hopefully it fixes the UX around transactions and estimating gas fees.
On demand for blockspace: as the linked interview goes into, scalability has been the main point of research for the past 5 years and has come on remarkably, we should hopefully see improvements over the next few months and the rest of the year leading up to pos.
On making things more expensive than they should be: the goal is always make it as cheap as possible whilst maintaining security. Now, you may not value that security of the ledger, but others do. It will be cheaper than it is use right now, but it will always cost more than mysql. Some people value that, others don't. I would argue the constant demand for blockspace (and so the high prices) show pretty clearly there is significant demand for that security.
The decentralisation is about resilience of the system, security of the information, and transparency (but not surveillance). We cant fix money and centralised forces of money and power overnight (through id argue theres a decent number of ethereum devs working on projects around UBI etc) but we can try create systems that allow people to work together with infrastructure they know wont be pulled out from under them when they need it. There are payment networks for sex workers who get relentlessly hassled and accounts blocked by banks, there are ubi scripts that you can adapt for your own community, there are quadratic funding mechanisms that can help us fund public goods. Beyond the stigma of the hype-moon-kids hustling money and crypto-scammers that seems to get most of the media attention, there is good work being done to actually help people. CryptoKitties is silly, but it proved something. the nft hype is a bit silly now, but it is creating interesting royalty and distribution ideas that allow me to e.g. sell my music without needing a stripe account and a bank account either of which could decide they dont want we anymore and screw me over. That is valuable to me.
I’ll admit to being a bit facetious in my comment, but I really appreciated your thoughtful reply. There are definitely cases where the extra expense and inefficiency is worth it because of being able to route around broken centralized systems, but there are also a lot of things where there a trusted central authority is likely (NBA trading card presume the existence of a league), and maybe even necessary (UBI?). One of the early hyped examples of an Ethereum based app was a car sharing system, but there was never really a good explanation about why this couldn’t be done better with traditional brokers and servers.
Too often there is a lot of hand waving around this tech and a reluctance to admit and account for the serious trade-offs. It’s hard to have a realistic discussion because there are too many people talking up their book, either ETH holders themselves or even worse, VCs
For sure, I completely understand the resistance a lot of people have to cryptocurrencies and blockchains, I imagine they can seem invasive or unnecessary to people who imagine them being imposed in their communities. The side people generally hear about is people speculating and making/losing money. The hyper-capitalism unregulated markets can be off putting to people because in some ways it is the worst of the society that we already have, but personally i see the tech as being very useful for social-democracy and allowing us new ways of working together and handling this money stuff that might actually help us escape that capital led world.
I'm definitely in the camp of it being up to those of us who work in the space to prove our point and deliver on what we've been saying. I really believe we are getting to at least delivering the tech that might make the ideas possible to explore at scale.
There will be waves of mania, price bubbles, bad crypto ideas, and the general internet scammers, but hopefully something good comes from it all. And I expect the space to be belittled and rejected until it is able to show its value, probably rightly so, we have big promises to live up to.
Vitalik says that layer 1 optimisations can enable a scaling up by a factor of 100 and layer 2 optimisations by another factor of 100. Does anyone know where the evidence to support these claims is? And if scaling up by these huge factors is possible then why haven't we seen them be successfully implemented already. I understand that zero knowledge proofs involve a huge amount of complex maths but I didn't think they actually enable a scaling up as they need huge amounts of data in the proof and massive computation.
> why haven't we seen them be successfully implemented already
They require cutting edge cryptographic and blockchain research and development which has only recently been achieved. Many teams are racing to solve this because there is a fortune to be made for whoever does. So probably these developments will be delivered no later than possibly can be.
Vitalik actually has an excellent blog post on rollups. [1]
As well as the Rollup Centric Roadmap posted last year which is a little more technically specific[2]. All the evidence/math is there to read, or in the developer forums.
Currently Ethereum has 15 transactions per second. Optimistic rollups can rollup 200 or so transactions per second into each ethereum transaction. Optimistic rollups are launching onto mainnet this month after successful testing for the past few months[3]. So straight away with ORs we can hit 3000tps. Then on top of that general purpose zk-rollups aren't far behind [4][5] and they can get into the thousands of tsp themselves.
Once we get data sharding on layer 1 this amplifies the number of rollup transactions we can handle pushing us up to ~100000tps (a combination of increasing how much the main layer 1 chain can handle, and this multiplying with the rollups). And then there is computation sharding further down the line which will push it up again.
This has taken so long and hasn't been seen before simply because nobody knew how to do it! The researchers have spent the past 5 years intensely working on it. But its actually starting to happen, and this month too! Which is pretty wild for those of use who've been working on it along the way, lots of previously unfeasible and expensive applications are suddenly going to be possible and cheap.
We scale up with rollups this year, then move onto a full Proof of Stake network (not DelegatedPos)early next year, finally ditching energy inefficient PoW to everyones relief, and we have a much greener, better distributed, easy to participate in, scaleable for mainstream use, beautiful ledger.
The first blog post only seems to suggest a 10 times speed up.
"A simple Ethereum transaction (to send ETH) takes ~110 bytes. An ETH transfer on a rollup, however, takes only ~12 bytes"
But the 12 byte number makes some assumptions that will probably not be true or only be true if many transactions are made by the same addresses.
Computationally there didn't appear to be any scaling since checks still need to be made by someone and verified by other nodes that fraudulent transactions aren't in a roll up.
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[ 4.5 ms ] story [ 184 ms ] threadThis perspective is blunt, but correct. Crypto is successful primarily by virtue of its unregulated rube goldberg casino revenue model, with just enough of a plausible tech veneer to allow people to rationalize behavior otherwise indistinguishable from naked gambling.
Crypto does not solve the centralization of leverage over liquidity (and thus the ability of a few to manipulate the wealth of many), which is the sole centralization "problem" that matters to the vast majority of people who would use it.
Take away the Potemkin decentralization apparatus known as a blockchain (the premise of which holds that The State and its central bank minions are the only centralizing agents capable of public harm) and you are left with plain old unsexy digital currency.
It also certainly defeats much of the original purpose of decentralization when a few stakeholders have total control of the network because they hold the most coins...
Regardless if the network has "correct incentives" or not, things can happen to those stakeholders outside their control, or other incentives could easily develop to act in bad faith against the network.
As opposed to a few stakeholders that have total control of the network because they hold the most computational power?
And before you bring up mining pools, you can replicate that in Proof of Stake by creating staking pools.
Lol. And we're just supposed to believe you, right? Show me one POS which is as secure as POW.
It seems to me to be a way to say “put your money there and it will eventually become more”, which is just speculation, and not a store of anything.
Edit: to add to that, how is Bitcoin a store of value if a bear market is >90% lower than a bull market?
That seems to be a meme that people repeat to justify their Bitcoin bet, but I don’t see how that makes sense.
On the other hand, if you decide to store your savings in the form of Dollar bills under your pillow, you’re probably not speculating its purchasing power to increase (as that would be against its historic trend). Rather, you’re speculating to need it soon to buy goods. Essentially, you’re betting on an economic crisis to come soon and prepare yourself with a decent amount of cash.
Either way you are trying to anticipate the future and, hence, engage in “speculation”.
IMHO, the “store of value” vs “speculation” is a false dichotomy.
Consider instead, that a bitcoin (or satoshi) could be a frame of reference, and from it, you can determine whether a dollar is dropping. Here's a visualization of this: https://usdsat.com.
Since it is very clear from this visualization that over the course of years (rather than hours, which you have limited yourself to) that the dollar is in decline w.r.t bitcoin, then anybody wishing to "store value" over the course of years (not hours) would be making a poor choice if they selected dollars to do it.
This is part speculation, as you suggest, but this speculation is not random or guesswork - it is a result of other processes which go by names such as "quantitative easing." These processes (deliberately) devalue the dollar. Since not everybody wants to hold onto an asset which is being devalued, they look for alternatives, and they find one which, by design, cannot be deliberately devalued.
Further, the reason the value of dollars declines so rapidly w.r.t bitcoin is because people are betting against the currency which is being devalued, and for the one which can't be deliberately devalued. As more people make this bet, others become more confident that they can also make the same bet, which then leads to a situation where the more astute savers will front-run other savers because they expect that the dollar will continue to decline in value w.r.t bitcoin - and since the monetary policy of the federal reserve is to keep devaluing the dollar this is a very asymmetric bet.
> You have arbitrarily chosen a frame of reference which fits your existing world-view
It’s not really arbitrary. The earth and things anchored directly to it is an obvious frame of reference for objects moving in space because it is by far the largest gravity well compared to anything you’d be referencing it against.
The US dollar is the world’s reserve currency, and fiat currencies have armies and police backing them and their use for paying taxes in addition to massive distribution, velocity, and proven utility.
What a joke. Using big-boy words doesnt make such ridiculous ideas any more sane.
Bitcoin is an experiment at providing an alternative to infinite debt expansion, by defining a finite quantity of the asset which can ever exist.
The idea behind MMT is that you can kick the can down the road forever and the road will never end. Whose ideas are ridiculous, you say?
But beside that, I can buy things with it, and I regularly do buy things with it. I pay people with it, and get paid with it. So that makes it money to me. Peoples experience with it make it something else to them. ether is more useful to me than $ (as a european).
Please omit flamebait from your comments here. Nothing good can come of it! Even if other commenters are annoying, we all need to learn the discipline not to react to annoyance—and especially not to pre-react to pre-annoyance.
https://news.ycombinator.com/newsguidelines.html
RocketPool would be the preferred method once it is live as it maintains the decentralised ethos letting people run rocketpool nodes and anyone pool any amount they want, like how mining pools work today (except running on a raspberry pi, rather than maxing out gpus).
Sure, "the academics politics game" may often be an issue. But I don't see how "blockchain!" suddenly solves the problem of deciding where research funds should go in a better way.
The Ethereum foundation is using their funds to finance open research in a lot of different domains, you can check https://esp.ethereum.foundation/en/grants/.
Anyone can submit a proposal, present their research topic.
It’s an actual community based way to finance some open research projects. That’s a fantastic development IMHO.
Well, one of the criteria appears to be "the potential to positively impact Ethereum", so it's hardly unrelated.
> The Ethereum foundation is using their funds to finance open research in a lot of different domains, you can check https://esp.ethereum.foundation/en/grants/.
So why should I believe they're more able to choose worthwhile projects to finance than any other foundation?
As your link says, the "ESP team will work with you to refine and rescope your proposal as needed, then evaluate the final proposal with input from technical advisors before a funding decision is made".
There are lots of foundations that finance research projects in whatever areas they're interested in, based on the funding decisions made by a panel/committee/team/whatever-you-like-to-call-it. What makes this one different/better?
Of course there is a waste product as well and the pursuit holds some cost but it motivates people and that shouldn't be underestimated
That we’re seeing NFTs trading well isn’t an indication that it’s the art behind them that matters rather than the popular view of it as an asset.
Sure, given how they're being used for now; but with some refinement this could displace deeds and titles for property for instant verification. Possibly even validating credentials and degrees and maybe even passport and associated visas.
I'm not sure how you get over the enforceability aspect, but I can see a country like Estonia could opt to build their architecture around this.
Also, if I'm honest ETH is the last blockcahin of the big 3 that I'd consider putting something critical given all the exit scams: DAO and the first ETH etc...
For other types of software, without authenticating to the blockchain, there is no way to verify that the user is the owner of the license.
Do you need to add a transaction to the ledger for each use/verification?
The use case I considered was a client for trading on XRPL. For an application like this they are going to be signing transactions to interact with the ledger. If they are able to sign and own a license token in their ledger account then they are the valid user.
How is that going to fit in with tax assessment and ownership transparency legislation without making things complicated enough you haven't gained anything?
The purpose of a distributed cryptographic ledger is that no authority may commit to it without the required cryptographic private keys. If you have some party who can commit to the ledger arbitrarily, or who has a skeleton key, then you don't need the distributed ledger - you just need a centralized ledger with replication (far more efficient).
Any situation where ownership is enforced by a central party is a poor fit for this technology. You either want the cryptographic keys to secure the property, or you want the humans in charge to secure the property through a legal system. There is no sensible marriage between these systems. A system controlled by humans undermines cryptographic security, and a system controlled by cryptography obsoletes human control.
Therefore, the only thing worth owning w.r.t a digital ledger is the digital token itself. As a proxy for anything else, a digital token cannot assert right of ownership.
anyway, I like to talk about "archaic" systems in terms of fast and slow (rather than old/archaic/obsolete. for example when I talk about the reason why election processes should not be "computerized"/networked it's because you want a slow system, it's a feature. The slow system gives you a slow result (but in an acceptable time), but it also avoids fast/at scale fraud.
I think slow while still holding slightly negative connotation is not as negative as archaic and other option (slow food is good)
I guess with a house owner token you could trade it electronically but have to go register the change and a government office within 30 days for something for it to be legally valid.
Art NFTs are digitally native. Like Bitcoin, the blockchain entry is the thing you own. That is why they are seeing the success that they are.
(disclosure: I have interest in the company)
Attaching a token to something that's inherently reproducible such as digital art yet with granting no means to actually enforce copyright is pretty much lunacy and it's just muddying the waters further when it comes to cryptocurrency.
The strength of smart contracts are also their greatest weakness - they're code, so any bug in the code is a de facto rule of the contract.
What now?
The problem with this line of thought is that the Venn diagram of cases where there is a potential natural fit for NFT and the cases where there is both a need for them and likelyhood of adoption may well have an empty intersection.
Property deeds are a good example. They can't practically replace the current system without radically rethinking that system, and it's unclear that the stakeholders would find any compelling reason to consider that.
Do you have a compelling example?
What advantage is gained by tying it one-to-one with an NFT or storing it on a blockchain at all?
Imagine if you could transfer car ownership without having to deal with the government or anything else? Just a transaction away. If the seller/buyer also uses cryptocurrency, you could safely write a contract that swaps the funds for the NFT without any risk of either parties running away with both of them (funds and NFT).
I'm looking at it from a "why would any government on Earth choose to use a 'decentralized' blockchain as a source of truth to keep track of property deeds in their jurisdictions" perspective.
uh you still have to register with the government, for good reason. and that's not going away.
When it reaches the reseller, it changes hands from the manufacturer to the dealer. Once the dealer sells it, it reaches the owner. At that point, government can still see all the details, transfers and more by just doing queries, instead of relying on people filling out forms.
Or am I missing what you mean?
Even if there wasn't any value in registering a car with the government, people buy how many cars in their lifetime? I expect that the number of cars that I'll ever sell in my life is less than ten. So this would save me like 30hrs in my entire life in DMV trips.
Maybe there is some utility here for dealerships who are dealing with a lot of government paperwork involving titles, but for a general population this seems like an incredibly tiny benefit.
NFTs are dumb mostly. Digital collector items, ok I get it
Even NBA Topshot, the golden child of NFTs right now, is only useful when backed by NBA centralized infrastructure.
There's a _little_ value of decoupling the ownership from the centralized infra that controls the thing you own..but tbh it's not much different than an NFT for a physical trading card lol.
I did some contract work with an Ethereum NFT startup several years ago (now defunct), before the recent hype, and the only "value" proposition was that they were selling "genuine" NFTs blessed by particular large consumer brands.
Behind the scenes it was all a centralized SQL server that only touched the blockchain when you exported your tokens to a private wallet because that was slow and expensive -- and turns out almost no one actually cared about that part. As long as you left your tokens in custodianship of the company, the company technically owned them as far as the blockchain was concerned.
And then even for digital goods where the concept of the "original" is meaningless when exact digital duplicates are zero-cost, just... who cares? What do even own, and why should anyone else respect your "ownership"?
All this NFT noise just feels like those scams where you "buy" a plot of land on the moon or name a star. No authoritative body in the world recognizes that claim, and if we ever start colonizing the moon you can be sure as shit that no entity is going to respect your "ownership".
It all feels very regressive in the face of decades of efforts of open source and work to liberalize things like copyrights and fair use in software and digital goods and services. Not to mention that it is an environmental disaster.
Someone I follow who is always right is big on them. Their argument is that people buy expensive and rare shit just to have it and project superiority.
Thus “owning” the HD Clíp of Lebron slam dunking is like cred they are willing to pay USD for.
Not at all the case. All the artist needs to do is publicly declare that they listed their art on an NFT platform, such as Rarible or Zora or what have you and that's enough. Direct communication with the fans is all that's needed, no central authority required.
Not all NFTs are created equal. Some have all the data necessary to reproduce the work of art embedded right on the blockchain, such as Euler Beats: https://eulerbeats.com/ . Others use IPFS hashes and embed the hashes on the NFT itself, so all you need is a single server in the world serving up that file and you can validate authenticity.
An NFT is sort of like a signed, autographed copy of something. Sure, I can have a reproduction of the Mona Lisa printed for about $50, but can I have the original canvas that Da Vinci himself painted on for $50? Of course not.
When I was a kid, I liked to collect baseball cards. I knew a mint condition Mickey Mantle rookie card was exceedingly rare and valuable. A signed and rare card can go for tens of thousands or more dollars. Signed baseballs or gloves can also have additional value compared to the underlying physical item. What is it about the signature that changes the value of something? You know that the player themselves interacted with that item.
That is the case with NFTs. They won't be going away. You can try to mint a copy of an NFT, but it will always have a later timestamp than the first one, and it won't have the original block number, so it's quite easy to root out counterfeits.
What happens if the artist declines to participate in the NFT marketplace, or (gasp!) even in social media altogether? In practice, one of the things that can happen is someone impersonates them, steals their art, mints tokens for it, and the artist gets nothing.
There was a case where someone stole a JPEG of someone else's art off their website, minted an NFT, and sold it, claiming to be the original artist. You still need a centralizing authority (like with NBA Top Shot) to ensure authenticity and prevent fraud.
The one maybe advantage I can see of decentralized is that the secondary market doesn't have to be governed by the rules of the centralizing authority. In other words, maybe the authority provides for the initial minting of the good (ensuring authenticity, which can subsequently be verified using the blockchain), but don't have to be involved in the secondary sales.
The benefit of NFT for psychical goods isn’t so much proving who the current owner is as much as it is proving the historical ownership so the authenticity of an item can be ensured. You don’t need a central government for this. For example, as long as you know Nikes address, I can confirm a shoe I want to buy is truly authentic by verifying that address is the original owner.
Unless there is a clever crossover to convert from digital verification to physical and back... seems worthless to me.
But you don't need a blockchain for that.
https://en.m.wikipedia.org/wiki/Physical_unclonable_function
And if you want to trade your Nike NFT with someone's Reebok NFT, it would help to use an open standard with an economic mechanism for trade between counterparties built-in.
Knowing the PUF key doesn't let you fabricate a physical widget with the same key (that's the unclonable part). So they can all be public, and anyone can keep a copy of the batch of PUF keys that includes their object's PUF key. When they want to prove it's an authentic item, they can prove the PUF produces a key on that list and prove the list was signed by Nike by normal public key cryptography.
In this scheme, Nike published their public key in an SEC filing, so in the worst case you can go ask the SEC for it. Nike could also stick a copy of their public key in every product and advertisement they make if you want to be paranoid about verifying this in 50 years.
This seems more bombproof in some ways than relying on Ethereum to keep existing and well-governed.
At least nfts now require people to also forge the provenance, which provides an additional hurdle to forgers (my best attempt to steelman the "pro nft" argument)
For instance, if a great great grandson of Henry VII sells a medallion that he claims belonged to his ancestor, that would have more weight than a similar medallion from a random individual, because it's far less likely for a relative to also be a blatant forger. In theory at least, nfts provide a similar (limited) assurance.
To put it another way: the analogue is not original medallion vs new fake one. They're both 100% identical medallions in every conceivable way, but the receipt for one is older than the other. I don't know about you but I don't give a damn if your receipt is older than mine if the items are not unique in any way.
Here’s Nikes patent for this:
https://pdfpiw.uspto.gov/.piw?docid=10505726
Nike could just publish a public key in an SEC filing and you could use that to verify that you're actually talking to the company. That would be exactly as good and much simpler.
Whoever stole the item can try to sell it, but given they don’t own the wallet that the token lives in - everyone will know it’s a stolen good. Another benefit of NFT for psychical goods.
Here is Nikes patent for this use case: https://pdfpiw.uspto.gov/.piw?docid=10505726
So what happens to the shoes I want to sell if I lose my private key or it is stolen (probably more likely than someone stealing the physical shoes)?
Do I simply lose the right to sell? Or do I go to jail for not being able to prove that I own them? What if the person I’m selling the shoes to believes me or doesn’t care?
What is the real cost of stolen or fraudulent goods to the shoe market in percentage terms? Does it justify all of these extra transaction costs being layered on the honest shoe traders?
Are there probably good reasons that the idiom, “possession is 9/10ths of the law” is so common?
And Shoes are the most counterfeited product in the world. 2 I don’t have specific shoes figures, but here is an article about a $400 million fake shoe bust customs made 3.
Yes, counterfeiting is a major problem worthwhile of extra transaction costs.
In the art business, confirming the legitimacy of a painting is a $1b per year market.
What happens when you lose your key? Price would drop in value, I imagine. Similar to if you accidentally dirtied your shoes, both requires being careful and aren’t mistake proof. However, I’ll let people smarter than me figure this out.
1 https://www.france24.com/en/20190318-counterfeit-pirated-goo...
2. https://www.redpoints.com/blog/fake-shoes/
3 https://qz.com/1778276/how-counterfeit-nikes-get-into-the-us...
I don’t know if I’m writing this as a joke or not :)
Honestly, once Jack Dorsey sells his first tweet, he just sell it again. What's stopping him? He got 2.5MM for it one time and gets to keep ownership. Why not just keep selling an NFT to the fabled First Tweet and rake in the cash. This is clearly an irrational market and seeing how crazy it can get would be amazing.
It does, which is why they are looking into scaling solutions (sharding, layer 2 solutions, etc).
https://etherscan.io/chartsync/chaindefault
You can buy a 1 TB SSD for about a hundred bucks. There are various reasons people use Infura, but inability to run a full node locally is not one of them. (The devs are working on removing some of the reasons for using Infura, by improving light clients.)
Now if you want an archive node, that will use a lot more space. But a full node already has the entire transaction history and entire current state. An archive node adds the ability to do fast queries of historical states, like "how much of this token did that address own in block number X last year."
If you have a full node, then you can generate an archive node from local data, but if you don't need fast historical queries there's no need for it.
> You can buy a 1 TB SSD for about a hundred bucks.
And Ethereum is supposedly doing just over a million transactions a day [1] And it already requires a terabyte of data to support it.
That's 1% of Alipay [2]
That's 0.02% or thereabouts of Visa [3]
How... How many terabytes will it need for those kinds of volumes?
[1] https://etherscan.io/chart/tx
[2] https://www.adyen.com/payment-methods/alipay
[3] https://usa.visa.com/dam/VCOM/download/corporate/media/visan...
https://vitalik.ca/general/2021/01/05/rollup.html
There's also work on things like clearing data that hasn't been accessed for a long time, and allowing it to be restored by supplying a Merkle branch.
for example NFT metadata/data is often stored in IPFS & only linked to from the contract.
but confusingly some people still call data stored on IPFS "on-chain data".
Though contrary to what people think about this being a weakness for ethereum, there are still ~10000 nodes running, so pretty close to the amount bitcoin has.
Its an area under active research though.
In the “world computer” known as Ethereum, operations are prioritized via “gas” payments in ETH. A bunch of people you don’t know on the other side of the world might get interested in trading drawings of cats with each other[1], and suddenly the “world computer” has no resources available, and the cost of inserting simple records into the “world database”, or moving some tokens to an exchange suddenly goes from $2 to $50, or $500. This can happen right in the middle of an operation so you have to be careful to consult “gas prices” and probably the I Ching wouldn’t hurt, and then kind of make a guess and hope your transaction doesn’t get stranded.
If you have some tokens you want to get out of your wallet and you don’t have any ETH in the wallet to pay for the transaction you may need to beg, borrow, or steal some, and you’ll almost certainly be left with some dollars worth in your wallet that you may never be able to empty completely.
Imagine what it would have been like to work on a big timeshare mainframe in the sixties where booking time to do simple things cost massive sums of money, except that the bids for resources can come in from all over the world and things are being repriced constantly.
People like to call this decentralized, because no one is in control, but it actually centralizes the allocation of resources in a way that makes things many multiple times more expensive than they should be.
[1] The “world computer” is not actually trading images, because that would be impossible given its limited compute resources, so all of the hard stuff like transmitting or decoding a gif is actually happening on the normal internet and discrete computers. The “world computer” is just spending tonnes of resources recording which user currently “owns” the cat via a database entry.
Transactions getting stuck because of gas prices spiking: This was one of the main drivers of the 1559 improvement proposal which was recently accepted for the summer upgrade. Hopefully it fixes the UX around transactions and estimating gas fees.
On demand for blockspace: as the linked interview goes into, scalability has been the main point of research for the past 5 years and has come on remarkably, we should hopefully see improvements over the next few months and the rest of the year leading up to pos.
On making things more expensive than they should be: the goal is always make it as cheap as possible whilst maintaining security. Now, you may not value that security of the ledger, but others do. It will be cheaper than it is use right now, but it will always cost more than mysql. Some people value that, others don't. I would argue the constant demand for blockspace (and so the high prices) show pretty clearly there is significant demand for that security.
The decentralisation is about resilience of the system, security of the information, and transparency (but not surveillance). We cant fix money and centralised forces of money and power overnight (through id argue theres a decent number of ethereum devs working on projects around UBI etc) but we can try create systems that allow people to work together with infrastructure they know wont be pulled out from under them when they need it. There are payment networks for sex workers who get relentlessly hassled and accounts blocked by banks, there are ubi scripts that you can adapt for your own community, there are quadratic funding mechanisms that can help us fund public goods. Beyond the stigma of the hype-moon-kids hustling money and crypto-scammers that seems to get most of the media attention, there is good work being done to actually help people. CryptoKitties is silly, but it proved something. the nft hype is a bit silly now, but it is creating interesting royalty and distribution ideas that allow me to e.g. sell my music without needing a stripe account and a bank account either of which could decide they dont want we anymore and screw me over. That is valuable to me.
Too often there is a lot of hand waving around this tech and a reluctance to admit and account for the serious trade-offs. It’s hard to have a realistic discussion because there are too many people talking up their book, either ETH holders themselves or even worse, VCs
I'm definitely in the camp of it being up to those of us who work in the space to prove our point and deliver on what we've been saying. I really believe we are getting to at least delivering the tech that might make the ideas possible to explore at scale.
There will be waves of mania, price bubbles, bad crypto ideas, and the general internet scammers, but hopefully something good comes from it all. And I expect the space to be belittled and rejected until it is able to show its value, probably rightly so, we have big promises to live up to.
They require cutting edge cryptographic and blockchain research and development which has only recently been achieved. Many teams are racing to solve this because there is a fortune to be made for whoever does. So probably these developments will be delivered no later than possibly can be.
Currently Ethereum has 15 transactions per second. Optimistic rollups can rollup 200 or so transactions per second into each ethereum transaction. Optimistic rollups are launching onto mainnet this month after successful testing for the past few months[3]. So straight away with ORs we can hit 3000tps. Then on top of that general purpose zk-rollups aren't far behind [4][5] and they can get into the thousands of tsp themselves.
Once we get data sharding on layer 1 this amplifies the number of rollup transactions we can handle pushing us up to ~100000tps (a combination of increasing how much the main layer 1 chain can handle, and this multiplying with the rollups). And then there is computation sharding further down the line which will push it up again.
This has taken so long and hasn't been seen before simply because nobody knew how to do it! The researchers have spent the past 5 years intensely working on it. But its actually starting to happen, and this month too! Which is pretty wild for those of use who've been working on it along the way, lots of previously unfeasible and expensive applications are suddenly going to be possible and cheap.
We scale up with rollups this year, then move onto a full Proof of Stake network (not DelegatedPos)early next year, finally ditching energy inefficient PoW to everyones relief, and we have a much greener, better distributed, easy to participate in, scaleable for mainstream use, beautiful ledger.
[1] https://vitalik.ca/general/2021/01/05/rollup.html [2] https://ethereum-magicians.org/t/a-rollup-centric-ethereum-r... [3] https://optimismpbc.medium.com/ [4] https://aztec.network/ [5] https://ethereum.org/en/developers/docs/layer-2-scaling/
"A simple Ethereum transaction (to send ETH) takes ~110 bytes. An ETH transfer on a rollup, however, takes only ~12 bytes"
But the 12 byte number makes some assumptions that will probably not be true or only be true if many transactions are made by the same addresses.
Computationally there didn't appear to be any scaling since checks still need to be made by someone and verified by other nodes that fraudulent transactions aren't in a roll up.