> will have all the staying power of a beanie baby.
You're making a future prediction about an entire category invoking a specific instance from physical collectibles. Have all physical collectibles been subject to the fate of beanie babies?
> That doesn't mean there is an infinite number of any given collection.
For digital collections, there are an infinite number. The only finite thing, in this case, is the NFT.
NFTs are not digital representations of art. They don't create scarcity. They're digital trading cards: their scarcity is only relevant and verifiable in and of themselves.
Interesting. I actually think that scarcity is the only thing that NFTs have. I almost think of them as the purest distillation of scarcity. Everyone knows you can get a perfect copy of a Vermeer done for $10k. Why is the real Vermeer worth more? Because the guy with the real Vermeer knows that while you can have the lighting and you can have the shadows, you can’t have the scarcity. And the concept of an NFT is just the end game of that line of thinking.
Right, because the creator of the NFT totally can't just mint another token right after you buy the first one. Oh wait, just kidding they can. And there's absolutely nothing you can do, because you don't _actually_ own the thing, you just own a trivially replicated pointer to the thing.
It's ok though, because at least the original will definitely be the one to be valuable, and not the 42nd, 69th, or 420th. Right? Right??
But that’s exactly what the scarcity value of a Vermeer is (which is 99% of the value). People can make infinite numbers of copies. NFTs just kind of lay that bare. It’s almost like the concept itself a performance art. “Can we cleave off the scarcity from the art/history/je ne sais quoi that fuels the hoarding of other scarce artifacts, and just sell that disembodied scarcity in a marketplace?”
You seem to have missed the fundamental truth that NFTs are not scarce. With the example of a Vermeer, you create one original thing, and then imitations of that thing. Minting multiple NFTs of the same thing is creating more originals, but of the same thing. One is not somehow "more original" than the others.
This is a difficult concept for people to get their heads around because of the obvious but incorrect parallel between original art and reproductions. It would be slightly closer to say that an NFT is a photo of a Vermeer. Anyone can make more originals at any time and there's nothing you or anyone can do about it.
Yes - NFTs are not scarce, but the only property of an NFT is scarcity! It's like something Marcel Duchamp Salvador Dali would have thought up. It's exclusivity without having to drag yourself out of bed and get to an exclusive nightclub.
Have you heard of artists selling limited edition prints? The number of dot paintings Damien Hirst has his assistants produce is limited by what exactly?
My understanding is the NFT is essentially a signed object like a URL. So I think the analogy would be Vermeer signing photos of his painting. A nice thing to own sure but as the number of copies increases the market value tends towards 0.
The venn diagram of crypto people who think NFTs are absolutely idiotic almost exactly matches the venn diagram of crypto people who haven't really dug in and tried to understand NFTS.
This is exactly the sort of shallow understanding I mean to point at. NFTs are so much more than "owning jpegs." This is the same mistake as saying "owning bitcoin is just owning a cell in a spreadsheet."
Can I have the title to your car? After all, it's just a piece of paper.
NFTs are access tokens to social communities, where owning a particular token grants you access to a community that shares ownership. Collab.Land is a tool communities use for NFT ownership based roles, revoked upon sale. NFTs are a distributed system of title. I'd be shocked if every concert ticket isn't a form of NFT in ten years--you can transfer them verifiably on the secondary market while giving a royalty to the issuer, use them to access a concert, and keep them as a souvenir like a traditional ticket stub. And yes, some people make profile pics, and generative art projects. You don't have to like or participate in those. But dismissing all NFTs as idiotic is not a position that is going to age well.
Why would you put a concert ticket on a distributed ledger if there's only a single party who can honor this ticket? There's a company who issued the ticket, and it's the same one that will either let you in or not at the date and time the concert is supposed to happen.
Why would they put it in a distributed ledger instead of a database managed by themselves?
because once you have a global, indestructible infrastructure that embeds the same principles, companies would find it more efficient to do so, instead of building their own unique and non-compatible version.
Why? When is the last digital bank heist you heard of? When has anyone mass produced fake concert tickets? Security behind digital commerce is fine, even good right now. What does blockchain actually improve ?
Interoperability out of the box with protocols for escrow/dispute and resolution without having to solely trust the company issuing the nft ticket, esp with PII (I'm thinking hotel/bnb bookings, I know of a DAO[0][1] that has already partnered with a few places in europe and facilitated this). Just have to walk in, sign a message with the address that holds the nft and then you have access to the space for the duration. They're trying to solve all the kinks before trying to scale though.
Granted, I really can't be bothered to care about all the stuff going on out there with nft's but i'm not going to let it sour me on those trying to build decentralized alternatives for systems people like to engage in now while cutting out the centralized platform rentiers/censors.
I still don't understand why this needs to be decentralised?
> without having to solely trust the company issuing the nft ticket
For the transaction yes, but what about the thing you are buying? Perhaps I am not thinking creatively enough, but I can't think of a use case where there isn't ultimately some trust required other than solely digital assets.
Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
You are not cutting out the middle man of some SaaS provider, you are substituting them.
Perhaps, but its ok either way, it's not really limiting the DAO or the places leveraging the DAO to pursue this stuff.
> Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
Its not just about honoring the ticket for the duration of any particular booking, but also mitigating the risk between multiple parties and being able to easily integrate such information with as many decentralized protocols are needed for the parties involved without extra dev overhead to connect them.
For some places, you need to have a card on file in case of damages (this is where the decentralized escrow/dispute and resolution protocol come in) and rely soley on visa/mastercard and the hotel unilaterally being able to say that you were the cause of an issue that may come up or being able to decided whether or not you are on the hook.
Incentivized actors (these need not be people, it could be automated, but since everything has an address, no one can tell the difference) of those other protocols on chain need visibility with the address that held the nft. So yes, its trust the protocols and incentives associated with them around handling dispute and resolution and non custodial locking of collateral in escrow (or allowing another protocol to time lock collateral on ones behalf).
And this assumes that the place someone buys an nft stay has the in house capability to do all that without using a particualr nft stay protocol (which alot of places dont esp for random bnb) or ok with giving a large cut to airbnb/booking.com/visa etc if they don't.
> You are not cutting out the middle man of some SaaS provider, you are substituting them.
Yes, for code that can take a lot less of the cut than existing SaaS providers (if any at all). A protocol != SaaS provider, even though a SaaS provider could manage a protocol[0], or a protocol can just be an set of immutable contracts deployed on chain, or anything in between.
If I have a NFT concert ticket, how do I get into the concert? What do the people at the gates do to determine that I may enter?
Do I print a piece of paper? Do I show them a picture on my phone or something? Can't the previous owners of the NFT show the same picture? Can't anyone show the same picture on their own phone?
No infrastructure in venues integrating NFTs but it’s no different than a traditional ticket.
Your NFT could have an associated QR code read at the door. In case of conflict there’s only one owner with access to the associated wallet and will be able to proof ownership via app / website…
Someone could make an app that only shows a QR code for NFTs you own. Someone else could make an app that shows QR codes for NFTs they don't own.
I suppose your right that it usually wouldn't matter, but in case of conflict you better be prepared to sign something with your private key. If NFTs make most of society familiar with public and private keys, message signing, etc, it will be a win.
A QR code is a number too and not a very large one. Small enough I think to fit on-chain in the tokenURI field of an ERC721 contract. Not eve need of ipfs or arweave to store an image.
Yep, if someone else tries to access with your ticket you can always sign with your wallet somewhere to resolve the conflict.
We will probably see crypto wallets integrated in our phones and associated OSs pretty soon to make everything smooth.
I don't think that will work. My public key is public. The ticket's public key is public. Right?
Thus, anyone can make QR codes that show the 2 public keys. It's trivial. This is the "showing a picture" scenerio I mentioned above. Anyone can show the right picture, especially since the picture that needs to be shown is public information.
You hold the ticket on a wallet on your phone, then you scan a QR code at the door that prompts you to sign a message from your wallet. Signing a message is instantaneous and verifies you control the key that owns that ticket.
> you can transfer them verifiably on the secondary market while giving a royalty to the issuer, use them to access a concert, and keep them as a souvenir like a traditional ticket stub.
Which of these can you not do on TicketMaster today?
Ticketmaster is the middleman. NFTs skip all of that and give much more flexibility to the issuer. You can code anything you want in the smart contract. Variable royalties depending on when is sold, increasing royalties on each transaction… Any incentive structure you can imagine is possible and nobody is gatekeeping.
Cue the standard quote about Bozo the Clown[1]. The fact that a bunch of people (idiot or non-idiot) have done a thing isn't itself positive evidence that that thing is good.
Many NFTs either come with or are designed for a physical representation. 100s or 1000s are already installed and viewable IRL. Being an NFT does not preclude the art from being traditionally enjoyed.
Being an NFT does not preclude anyone else from hanging the exact same physical representation on their wall. Exclusivity matters if you want to impress your rich friends.
That is a circular argument. That is the same argument as print vs original -- NFT owners are paying for the original to support the art regardless of how accurate a print may be.
It's much more impressive to those people to have paid to support the original rather than having a knockoff... This has been true as long as goods have been produced.
Most paintings don't have (much) value. Behold my latest work, the brown ring of quality... do I hear... 5 cents?
A few paintings have value, primarily due to the fame of the artist or the history of the piece (It hung <place>). Supply is frequently capped by the fact the artist is dead...
Yes, the historical and social context, etc, which are subjectively valued. I expect that those who purchase NTF with the hope that they appreciate also count on the value of the token being part of a "limited collection", or being one of the first (an NFT from 2021 becoming a "historically significant" thing due to being one of the first ever produced), or such speculative considerations.
> Scarcity is fundamental to any store of value. There are an infinite number of potential NFTs.
I'm a pretty big crypto-skeptic, and I'm especially an NFT skeptic, but this is a weird argument. It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much? Even more, it's possible to create extremely high quality reproductions of famous Picasso paintings, but they would have just a teeny amount of value of the original.
Reason being, with very expensive art, and other things like a signed book or baseball card, what you're really paying for is the provenance of the item, not so much the thing itself. While I'm skeptical that the NFT form of "digitally assigned provenance" will be valued similarly, I can understand the argument for why a piece of digital artwork with an associated NFT isn't that different from a piece of physical art with the artist's signature.
Scarcity is necessary but not sufficient. What sets BTC apart from NTFs is its fungibility. In theory, there are an infinite number of potential cryptocurrencies, sure. But everyone has already embraced bitcoin (and a small handful of others), and replacing that userbase is an incredibly tall hurdle.
On the other hand, minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.
I think you're missing the purpose of NFTs. Again, I think the best analogy is really the art market.
Most art in the art market is pretty worthless (at least monetarily) - just go to one of a bajillion garage sales to see why. But a few pieces of art will be worth a lot because something about them is desirable.
It's the same with NFTs. There will be a bajillion "beanie-baby-NFTs" that will be close to worthless. And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".
> And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".
Not necessarily. The original creator that issued that "Charlie Bit My Finger" NFT could also create 1,000 more of them tomorrow. And all of those NFTs would be exactly as valid as the original, it wouldn't be equivalent to making a print of the Mona Lisa. It wouldn't be downstream of the original NFT, the original NFT is just a link to a publicly hosted asset.
You're trusting the creator that they won't do that, but you have no real guarantee that they won't. That's doubly true when you start looking at corporate-backed NFTs like what the NBA is doing. They control the entire supply of the NFTs they issue, you have no way to guarantee that they won't re-issue all of their NFTs that you own.
This is no different than any current artist with a limited print run. The earliest prints are typically still the most valuable and the artist has incentive not to create additional runs of the same artwork.
> This is no different than any current artist with a limited print run
Right. But also nobody acts like limited print runs are mathematically non-fungible.
If the best argument for NFTs is that they're scarce in the exact same way that existing systems produce scarcity, and that this scarcity is enforced using the same systems we already have, that's not a good argument for the existence of NFTs. You might as well just do normal token issuance using existing technology.
> Right. But also nobody acts like limited print runs are mathematically non-fungible.
You misunderstand the word non-fungible here. They are non-fungible because 2 copies are recorded like this:
- token 1, owned by Alice
- token 2, owned by Bob
Bob and Alice may are may not be willing to make this trade, that is up to them. The two tokens are distinct. After they trade, it is still clear who the owner of each token is.
A fungible token is recorded like this:
- Alice owns 1 unit of token CHARLIE
- Bob owns 1.3 units token CHARLIE
If Alice sends their one unit to Bob, he now owns 2.3 units. No one knows which one these 2.3 units was Alices. It's just a counter
Note that no one acts like this is any different than I explained it just now. NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".
> NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".
What NFT people do is argue that the uniqueness of individual tokens matters. It doesn't. They try to have their cake and eat it too, they try to argue that the NFT's link to the individual artwork doesn't matter when evaluating the technology, but that it does matter when trying to determine whether or not NFTs have value.
There are two ideas being conflated here about fungibility. If you want to argue that NFTs actually represent an artwork in some way, and that owning an NFT is somewhat similar to owning a piece of art or that it carries some meaningful connection to that artwork, then for all practical purposes NFTs are fungible resources. The attributes of an NFT that link it to an artwork are not guaranteed to be unique.
If you want to argue that the part of an NFT that matters is the individual token itself, then sure, they're non-fungible. But if that's all we care about then they're also worthless, because nobody cares about owning serial numbers, they care about owning a token that meaningfully points towards a socially or personally valuable item. They care about the thing that the token represents.
The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.
I brought this up elsewhere, but if I pull a $20 bill out of my pocket, it will have a unique serial number on it that corresponds to only that bill, and no other bill. So technically, by your criteria, a $20 bill is just as non-fungible as an NFT. It's technically unique in the same way that an NFT is.
But what I'm getting at with that comparison is that it's not enough to have each NFT be technically unique. They have to be unique in a way that matters, they have to be unique in a way that somebody would care about. Otherwise you might as well just collect $20 bills. Back to my original point, if the only thing that NFTs are providing is that the token itself is unique, that's not an improvement over any of our existing systems. You can already issue unique tokens without bringing NFTs into the equation, issuing a unique token is easy.
> The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.
I don't really understand your concerns to be honest. It is exactly as you say. The connection to the artist and art matters.
Yes if an artist releases 10-editions for their JPEG image (which happens frequently), then those 10-editions may be semi-fungible, in the same way that say "floor-price cryptopunks" are, where many people are sort of happy to put them in a basket and trade the floor without caring too much about whether they have token 1 or 3. But someone might well decide to care, because token 1 is the one their grandfather used to own many years ago.
Some people may value the edition number 1 more than the remaining 9, but maybe edition 8 was previously owned by Elon Musk and carries a premium.
beeple can decide to release 10 thousand more tokens representing the artwork sold at Christies for $69m, equivalent in every way except the serial number It's anyone's guess what would happen, but presumably it would cost him in reputation, and the original would still be able to command a large premium.
Artists releasing physical prints also on occasion release another series some years after the first; Damien Hirst is releasing more dot paintings, and they are all so fucking similar they may well be considered fungible.
The question becomes, what are NFTs adding to this system?
It sounds like the current system is working, that the social system for determining value based on context is working. NFTs aren't making that better or worse, we're using the same social process that we used before.
And I mention elsewhere, NFTs aren't even really helping that much with the distributed ledger either, they still have to hook into the existing systems for determining seller trust and authenticating that the NFT you're buying is "real". There's little benefit in decentralizing the ledger when sellers have to coordinate with each other to ban bad actors anyway.
So we have two systems that already work, that have worked for ages, and now they're linked to the blockchain because... why? All of the use-cases people talk about with NFTs are stuff that you could always have been doing, you don't need a blockchain for any of this. And it's not clear that the blockchain makes any of it easier to do.
That is actually correct and very smart. I can mint an infinite number of ERC20 tokens on Ethereum, and I can create an infinite number of Bitcoin clones. Bitcoin is only scarce in terms of its social support base being different than other coins; the same is true for any NFT. They simply have a supply of 1.
> minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.
I'll add onto this that the core technology has no way of verifying which beanie baby NFT is "valid" outside of traditional centralized mechanisms like IP law and large validators. You can duplicate NFTs that point to the same beanie-baby-NFT link, are totally indistinguishable, that don't have any artwork that you own, and nobody can stop you outside of centralized mechanisms. As soon as you try to build a market on top of NFTs, you're right back inside the current system of ownership enforced by legal contracts and centralized validators.
At least with Bitcoin, you don't have to tie your wallet to a Twitter verification system to figure out whether or not your funds are real or just a low-effort scam.
People can disagree with whether Bitcoin has value (I think it's a bad system), but at least it doesn't completely fall apart as soon as you leave Coinbase. NFTs really don't work at all unless they're tied to centralized services, because anybody can make an NFT for anything, regardless of whether they have any real relationship to the asset they're issuing. Even official accounts that are validated: you can mint 5,000 NFTs of the same beanie baby, nobody can stop that from happening. Any scarcity in the system is only self-imposed by the actors within that system.
Is this really a meaningful thing? I mean, of course it is somewhat in terms of how things are viewed. But, theres no religious law that NFTs must be a pure blockchain thing. Possibly they're finding their niche, and that is to be a sort of intermediate, which uses traditional systems as the origin of verification/trust, but can then go forward on its own with no further verification. (Of course, your wallet keys could be stolen and used to impersonate you, but the same is true for login credentials of twitter blue checkmarks)
What does the addition of a blockchain help with here? Selling? Not really, because the recommendation to avoid copycat NFTs is to sell/buy them through official platforms that will verify them. Display? NFTs do nothing to prevent link rot, and in fact make it harder to correct when it does happen. Coordination/portability between platforms? There's nothing that guarantees that platforms will respect each other's NFTs.
> But, there's no religious law that NFTs must be a pure blockchain thing.
Every time someone tells me that verification and enforcement are inherently social/legal processes and not processes that the blockchain is designed to solve, I feel like they're just one step away from finally understanding why people don't like NFTs. The only value of adding all of this math and environmental impact and complication and fragility to the system of buying digital assets is if doing so decreases the social/legal burden of verification. And NFTs don't do that, they don't do anything. They don't even make the secondary market safe.
There are of course systems you could build on top of NFTs that would help solve some of these problems. But you could also build these systems without using NFTs. None of the proposals I've heard about enabling decentralized verification on the secondary market, or making it easier to pay artists, or building a web of trust for issuers -- none of those proposals need NFTs to exist before they can be built. The vast majority of these proposals don't require anything other than basic federation, and many don't even need that.
The blockchain part isn't adding anything, it's useless. We could have the exact same conversation we're having right now, and come up with all of the same solutions for verifying and distributing digital assets without ever needing to talk about or consider a blockchain. It's not adding anything, it's just kind of there.
And you're right, there's no strict law that everything must happen on the chain. So we could also just drop the chain entirely, use the same token issuance systems that have existed for ages, and focus only on solving the problems that actually need to be solved.
Let’s look beyond the “art” NFTs for a moment and think about how else they can be used.
NFTs, in addition to being collectibles, can be used to unlock access to features, like an exclusive chat room or give the holder access to bonus content only available to those X number of NFTs which were minted. Furthermore, secondary markets could easily exist for transferring access, something that is not really doable these days with accounts.
I’m with you that the current art/collectible NFT craze seems a bit much, but I actually think the future utility of this “access” property is where things will get interesting.
You know what's actually useful - today - for compensating artists and unlocking access to features? Patreon. A glorified mailing list with a subscription fee. NFTs are inferior to that; at least the artist gets your email address.
In my view there's a finite number of Picasso paintings, but an as yet unlimited possible number of digital artworks, and an unpredictable number of things that could compete with digital artworks for the dollars of buyers.
To fix the supply of digital artworks, there has to be at least a loose consensus on what the accepted "canon" of those works consists of. For now, that's an unknown.
There's a finite number of Picasso paintings, but an infinite number of non-digital artworks. Digital art is no different from physical art in terms of availability.
True, all of the paintings in hotel rooms. In my view, the value of Picassos is partly due to a loosely accepted "canon" of paintings that are considered to be of particular value. If hotel paintings were discovered to be of equal artistic quality, it would not put them in the "canon." The supply is artificially limited by social convention.
Art prices are also driven in part by a partial record of sales, so at least we know what some paintings sold for in the past.
What we don't know about the digital art world is what conventions will emerge, that define the "supply" of works of particular value.
> It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much?
We could mint an infinite number of Picasso NFTs, though. None of them are the actual piece of art.
You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting, but it’s still just a fancy hyperlink to a page that says “This is a Picasso NFT”.
NFTs are basically fancy blockchain transactions with a memo field that can say “This represents a Picasso painting” and we’re all supposed to believe that it means something.
The closest equivalent would be something like baseball cards. There is a market for baseball trading cards, but everyone is fully aware that they’re still just arbitrary prices of printed cardboard.
Just minting something does not give it value. Sure, you can give it a price. Likely nobody will pay for it unless they think it truly has value. It’s the responsibility of each NFT creator to convince people that it’s worth anything.
> You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting
I’m pretty sure the analogy would be that Picasso himself actually issued the NFT. Anyone can “argue” that Picasso issued an NFT, but that’s just like arguing that your extremely skillful forgery is a Picasso original. What’s important is if it actually is an original.
With an NFT everyone has access to the exact same byte-for-byte copy of the art work, but one person gets to hold a special token saying that they have some special pseudo-ownership relation to it.
So, a more apt analogy would be Picasso donating a painting to a museum, but trying to sell you a certificate saying that you own the artwork, but you're unable to move it to your private collection or gain any additional access than the general public.
A signed print of a picasso painting would quite likely go for quite a bit, even if you could get the same print sans signature for $20 in the gift shop. Even one created post-death by family foundation etc as a limited edition probably would. Some people do value the scarcity and it being tied to the creator more, think an NFT represents that and thus pay more money. (I personally am not interested in owning NFTs, but "people spend money on scarce things I wouldn't spend money on" isn't exactly a new phenomenon)
Your argument is about digital art, and has little to do with NFTs. No one is claiming that the owner of an NFT has different access to the piece of digital art itself, of course.
The link is a red herring. Just like an original Picasso, the content of the thing you own is responsible for very little of its value (an excellent forgery would deliver all the aesthetic value of the original, but it would be much less valuable). The provenance of the thing is the reason it is valued. There’s really nothing new or unique about NFTs other than the technology used to implement them.
But they aren't. They're pieces of cardboard with a particular story. The card has no value itself, which is why a rookie card isn't very valuable, unless its of someone famous. Why? because one is a story right at the beginning, which may not even be a good one, where there other has an established success story behind it. Owning the card is representative of owning a chunk of that story. You can say its arbitrary, but the fact is the picture on the card is of a real person with a real story, and their image on the card is part of literally that same story.
So with NFTs, its the same, anyone can write a document that says "this certifies ownership of a picasso painting" and it doesn't mean much of anything. However if Picasso writes up a document broadcasts somehow he has done so and the document says you own x painting, then its easy enough to certify to anyone that you own a Picasso from the man himself. The story is not arbitrary, this is precisely why it has value. The arbitrary easily copied stuff is cheap and meaningless and known as such. The "rare" NFTs and stuff selling for massive prices is expensive because it is genuinely so. You can write a comment here about how easily you can create a counterfeit NFT, but how easily can you actually convince someone to buy it from you? You can observe that baseball cards are just pieces of cardboard but how easily can you acquire a card printed when batter X was a rookie?
I'm not saying this sort of value is easily quantifiable, but it is easily observable, identifiable that its reflective of a real element of reality and not (entirely) arbitrarily imagined.
Orson Wells' F for Fake is a terrific film about an art forger, that explores concepts of art, authenticity, and value.
In the film, an artist forges works of art by famous artists and fraudulently sells them to museums. It's implied that the museums don't know they are forgeries or don't care. So why is a Picasso more valuable than a perfect reproduction of it?
I think the point is, it's all just perception, and greed.
Cryptography is a highly significant technology, but cryptocurrency and now NFT too often just smacks of a money making scheme, promoted by self-serving people who happen to own a lot of it.
Store of value requires being backed by something, scarcity alone is irrelevant.
Nfts satisfy the same ponzi urge as memecoins (bitcoin, doge, etc) but also work as visible status symbols - expensive nft can be used as a profile picture, which is why they're taking over.
And certain NFTs also have scarcity built in. Both NFTs and crypto coins can choose the level of scarcity they want, and all of the value for that scarcity is determined by whatever people believe it to be. NFTs are the exact same thing as crypto coins.
There are only a few cryptocurrencies that have any significant adoption, and fungibility is fundamental to that value. If I exchange a bitcoin for $N, that validates the value of all the other bitcoins. And folks exchange large numbers of bitcoins for $N every day.
By definition, every non-fungible token is its own unique snowflake. There are new snowflakes made every day. Few ever trade, and the ones that do are probably wash trades.
Yeah come on it should be pretty simple to explain why Bitcoin has value. It's because there is demand for it, for whatever reason. A "scarcity theory of value" feels like someone hamfisted the labor theory of value into the cryptocurrency space. No, even if labor is scarce and precious then making beanie babies for which there is basically zero demand (I assume) is still producing no value.
I'd say most of the value of Bitcoin comes from the ability to do payments that are not possible in the current legal system. Some of them may be illegal. Some of them might be genuinely useful like in El Salvador.
I think there's a big overlap -- if you're a crypto skeptic, you are almost certainly going to be an NFT skeptic as well.
But the reverse is not necessarily true. NFTs are just fundamentally a lot worse than cryptocurrencies. They have every problem that cryptocurrencies have, except they're also not scarce, require centralized verification mechanisms, have bad incentive structures around hoarding, are prone to link rot, etc, etc, etc...
NFTs are much harder to justify than cryptocurrencies are. They're all of the drawbacks with virtually none of the upsides. I don't know anyone who likes NFTs but dislikes cryptocurrency.
Most NFTs are just links to a publicly hosted asset. They're not meaningfully unique in any of the ways that matter.
Sure, technically you're making a new NFT when the same creator mints an NFT that points to the same work as before. But also technically you're making a new dollar with a new serial label when the government prints money, and we don't call paper money "non-fungible". It's not a kind of uniqueness that matters to anyone.
For the vast majority of people hyping NFTs, the metadata is the only part they care about. The metadata is the part that links the NFT to an actual piece of artwork -- the issuer and the work that it's linked to are the only reasons why some tokens are worth more to collectors than others.
Without the context of the person who issued it and the work that the token is being paired with, you're just trading numbers around and assigning completely arbitrary values to them.
Which to be fair is a common criticism of NFTs. It's just weird to hear an advocate lean into that argument themselves, normally advocates are trying to convince me that NFTs mean something.
Yes, a lot of NFTs will represent some kind of visual media, and you want to know what that visual media is that they represent. But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
Note that the argument that NFTs are useless if you need to rely on social consensus to link token and asset is not valid - the use case is in having a common ledger to track ownership of the token.
> But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
You voice your objection to this point below, and I'll get to that, but I just want to be clear: the NFTs are adding nothing to the existing social systems we use to determine value. We could have a collective memory/agreement without NFTs.
We're going to get to having a shared ledger below, but I just want to be clear about where we're starting -- NFTs do not add any value to the link between a token and an asset, we use the same social contracts that could always have been enforced before.
> the use case is in having a common ledger to track ownership of the token.
Now, a common ledger is a nice thing, but it also doesn't require NFTs, you could set up the exact same system with a little bit of federation.
Of course, federation would require some degree of trust and moderation, but here's the problem: NFTs require all that too. The only way that the NFT community has figured out to deal with copycat NFTs is to introduce secondary off-chain validation of which NFTs are "real" and which ones aren't. You end up recreating the exact same ecosystem of services that validate which NFTs are safe to buy, and the end result is that the secondary market isn't safe to use unless you run it through one of those services. Those off-chain validators will log fraud NFTs and refuse to validate them. As the ecosystem grows, they'll eventually shift to only validating NFTs that come from sources they trust. It's the same systems of moderation that already exist.
It's really hard to claim that NFTs add any value in the form of a trustless distributed ledger when one of the biggest recent events inside the space is Twitter verification. How much more centralized than that can you possibly get?
I bring this point up in a previous comment, but for all the criticism I have of Bitcoin (and I have a lot), Bitcoin at least doesn't suffer from this problem quite as much as NFTs do. The entire ecosystem for Bitcoin doesn't fall apart as soon as somebody stops trading on Coinbase. The NFT ecosystem has no idea how to keep the secondary market safe from copycat NFTs for normal buyers without cloning the same centralized systems for "genuine product" guarantees that we already have today.
And since NFTs aren't changing anything about our social consensus of value, and since NFTs aren't changing anything about how we verify goods on the secondary market, what on earth are they doing that's of any value? It's just an over-complicated system trying to reinvent federation. If the secondary market for NFTs was safe to use without hooking into a 3rd-party validator, or if the distributed ledger was safe to trust in its entirety without filtering out a socially determined list of bad actors, then you might have a point. But it isn't safe, NFTs have done nothing to make it safe.
Except no, not easier to trade/verify if you have to hook into off-chain validators to verify that the token is legitimate. The part of transaction security that matters for most people are the trust parts that NFTs explicitly don't try to solve.
The big problem with trust in any token system (and really any art market) is figuring out which tokens are being issued by whom and whether the token/work you're looking at is "real" and actually issued by the artist.
Which NFTs don't even try to help with; they leave that to off-chain validators.
I mean, you are certainly right that, again, an NFT is just a blockchain ledger entry, and there could be other kinds of ledger entries. Some examples include:
- Paper certificates of ownership of ideas/ingantible works, which have been used for art in the past going back some decades, and maybe somewhat more common now with certain conceptual / digital art pieces.
- A centralized leger, as the folks from Blain|Southern tried to do with seditionart.com.
- Or, maybe you can do something with federation, as you suggest?
That is just a tech argument of whether a blockchain (say Proof of Stake-based to avoid the energy argument) or something else is better, but note: It changes nothing about what the NFT is (and we can still call it that for simplicity). It would seem to do nothing to alleviate the concerns of people who don't understand paying for a pointer to a media file; since that is still what the federated ledger tracks, right?
If people feel a federated system works better for this, they can certainly build it. But Twitter is just Instagram from a purely technical perspective. There is more to product-market fit than the underlying database.
The whole thing came together with blockchains, maybe because you need an easy way to buy that stuff too, because there was a bunch of rich crypto people actually willing to spend money (when no one before was much interested in paying digital artists for their work), maybe cause the tech was there.
In general, I don't see what the argument is about; the ledger works quite well on a blockchain, and would work less well in a federated system from a trust perspective. I.e. your analysis about the trust vectors involved making the chain useless is wrong. Sure, platforms can choose not to show certain NFTs, and OpenSea has some dominance in the space, but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
There is really nothing centralized at the center of it in the end. Artists publish work on their own websites and their own contracts all the time, and if deafbeef posts on Twitter about his new NFT on this website, I will trust the existing social verification system (my friend telling me about it, his Twitter account being a known-entity).
This is distinct from Twitter avatar verification, which I predict a) will not happen and b) is indeed useless unless Twitter wants to be in the business of deciding which Punk-derivative project is looking too much like the real thing, which I doubt it wants to do.
If the argument is that tokens in general have a use-case, then I agree with you, they do. My concern is specifically with NFTs (not the general concept, the specific example that springs to mind when most people say the word). I have problems with:
A) the technology
B) the average consumer's understanding of the technology
I think we need art-tokens to be on a blockchain, and in a lot of ways the blockchain might even make this kind of stuff even harder. It's often desirable when working with non-fungible tokens to be able to easily update their metadata, block them, or link them together. NFTs are slowly making movement in this direction, but they're moving very slowly, and it's not clear how the blockchain is helping with any of those features.
I also think it's worth asking why this scene exploded specifically with NFTs even though the systems to make it work existed long before NFTs were on the scene. Frankly, I don't believe you that the average NFT investor understands that the ledger is just a ledger. I've talked to people who are involved in casual NFT collection, and they think the technology is magic. They think that the blockchain magically makes their tokens valuable.
> but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
It's not really the blockchain that makes this happen though; federated systems can split from each other and route around each other just as easily. If a federated ledger tries to remove tokens, communities can still choose to recognize those tokens and either fork the ledger or run in parallel alongside it.
What you're seeing with OpenSea and clone projects is the social side of this, not the blockchain part.
As with any other kind of collectable, scarcity is created artificially. There is a potentially unlimited number of baseball cards. I can print one for myself today. Yet it is the authenticated 1933 Goudey #53 which is worth $4.2 million. NFTs provide this authenticity.
Except that they don't, and still rely on experts to give any kind of authenticity. NFTs are like the serial numbers on dollar bills - if the dollar is genuine, then that serial number is unique, but the serial number itself doesn't prove that the dollar is genuine.
I like to think about NFT as an easy method of buying art from artists. There are many platforms for this with classical purchase mechanics, but as an artist myself, I love the idea of an auction-based platform for this era of digital art.
Right now, there are no mechanism for extraordinary digital artists to make their art expensive like IRL art. The best thing is you can do commissions for people, but it's hard for them to maintain their rights (both for artist and customer).
Maybe NFT will be more prominent with some "data registry" between platforms to make it global to check your rights on items, and great artists can sell their art for a more reasonable price.
For now, IRL art is like a "club for friends," and digital artists are not taken as seriously as they, even when digital one draw some almost masterpieces and spent 3-6 months on every item.
But you don't own the art. You own the receipt for the purchase of a hash of the specific digital format the art is stored in.
Note that there are definitely currently ways for digital artists to make expensive art, and that's in the form of commissions. If you really want to support an artist, find one you really like, and pay for a commission from them. You may also be able to pay more for forms of copyright (like reproduction).
NFTs are the worst possible way for artists to make money from digital art.
Many artists do not want to do commissions. In fact, you could argue that people who want commissions are very selfish. Not only do they want to force artists to work on their thing, often driven by vanity, they even want to own the copyrights to the work!
NFT buyers are clearly more respectful of an artists craft: They buy the work the artist really wanted to create, and they respect the fact that they cannot be the owner of the work in a moral sense.
Not so; many (but not the majority) NFTs (like Board Ape Yacht Club) come with very liberal licenses that afford the owner of the NFT the ability to do a lot with them.
"There are an infinite number of potential NFTs. "
There are an infinite number of made up currencies as well.
Because neither of them function as a currency then they are the same thing, the difference being, with NFT's you own some 'art' or something like that, with Crypto you own a 'number'.
The 'potential usefulness' of Crypto makes it feel like it has more material merit, but in practice, they're not useful (not yet), so they might as well be NFTs.
There are no Crypto models today that make sense in any real systematic way, other than some governments reasonable attempts to be more digital, which comes wit a bunch of scary caveats as well.
Currency is a form of social credit that is fundamentally tied to the economy in which it is used as a means of transaction, there is no escaping that reality. We can't just magically make up some thing that is independent of that underlying reality.
If we could merely overcome the kludigness of banks, and the transnational cost of VISA - and make something a little more easily internationalized ... those things would help, but those probably are going to have to be a function of 'good governance'. Maybe the experiments in New Zealand and Sweden etc. will pay off if they can find something that works, that can be expanded upon.
There’s an infinite number of potential paintings too. I don’t see what that has to do with the value of any one particular painting. There’s not an infinite number of the one original Mona Lisa.
The NFT solves exactly this. There cannot be infinitely many copies of an NFT. The fact that there can be infinitely many other, different NFTs is irrelevant.
There are some aspects of the pfp trend that I also don’t like. On the other hand, it’s helping to onboard (wallet, security, metamask…) more people into crypto than any other use case before. Many ready to go beyond collectables.
This would have been more interesting if the author had traced where all the money being plowed into NFTs is coming from.
I suspect that most of it does not come from outside of the current ETH (or whatever) ecosystem. I'd bet that most of the volume comes from people who are either treating it as play money, or trying to pump the NFT scam for their own benefit (real or imagined).
> This would have been more interesting if the author had traced where all the money being plowed into NFTs is coming from.
Not possible to trace where the money is coming from.
In fact, someone can "sell" an NFT to themself in a wash trade between two wallets they control. The last trade price of the NFT is now recorded as the transaction price, but it's possible that money never actually changed hands.
Want to have an expensive NFT? Just trade it to yourself for as much money as you have in your crypto wallet. You keep the money, you keep the NFT, but now everyone can see that someone "paid" a certain amount for it.
> In fact, someone can "sell" an NFT to themself in a wash trade between two wallets they control. The last trade price of the NFT is now recorded as the transaction price, but it's possible that money never actually changed hands.
I heard rumors this is what happened with the Beeple nft
Yes, but the auction house takes a cut and the taxman might notice so it's not without risk. Usually a shill bidder doesn't want to win the actual bid.
However, an auction house is going to take significant fees as a percentage of the sale price and your shill bidder will want a cut as well. You’re also going to get a large tax bill because you technically had a realized capital gain and the auction house will report it.
With NFTs you can do a blockchain transaction for a relatively small fee by yourself from your computer. No taxes owed because you didn’t actually sell anything.
Isn't it basically a flat tax, not dependent on the value "claimed" by the transaction, that is easily drowned for any transaction that would make such a scam worthwhile anyway?
Yes, and it's rampant in all sorts of collectibles markets. There are some people doing it very publicly with vintage video game cartridges right now, and "pawn stars"-type game shows are largely marketing for the scam.
Art market started because people appreciate art. In fact rich people even commissioned art for hundreds, if not thousands of years.
It can be used for various scams and as an investment, but the whole premise is ridicolous: people pay for art since they like it and want to own it. (And in this NFT scam they dont own anything useful)
I disagree. Art was never expensive, and artists are known to make little money until their death. Price of selective art really went through the roof for no reason other than creating a market to make money.
patrons pay for art because they want the art to be made, owning it is a side effect (indeed much art is loaned right back out to galleries, the possession is not the point, the creation is)
Yes, if you trade it on a marketplace such as OpenSea. You could argue that the benefits and upside of wash trading outweigh the cost (about $10 per tx).
Youtube suggested a video to me about what's going on in the collectable video game market. The claim was that there's some collusion between a major auction site and a grader, and some of those players were running a pump and dump.
Unless you know who the buyers and sellers are or transaction fees are high (like an auction at Christie's), you have no idea if the sales are real, so it's pretty easy to make it look like the asset is appreciating when it's really just manufactured hype.
Yup, Karl Jobst's expose I bet. It was a really good piece of journalism, maybe not something you'd expect from a YouTuber who mostly vlogs about speedrunners.
"Ecosystem" is a word that I believe sprung to life in the 70s, referring to the entire collection of organisms inhabiting a 'place', along with the weather conditions etc. in that place. The term was coined because without it, you need (or rather, I needed) 16 words to express it.
So it bothers me when people use the term to refer to collections of stuff that's never been alive: the Java ecosystem, the cryptocurrency ecosystem. These are not "ecosystems" - they're called "systems".
See also "epicentre".
Upvoted - I appreciate the observation about where the NFT volume comes from.
"system" denotes something which was designed to work as a whole. Pieces are connected together by a manufacturer to build a system. The operating system is a kernel, UI, tools, etc taken by a creator and put together into a packaged tool that people can use on their computers.
"ecosystem" denotes an environment created by some kind of vessel e.g. Earth, the ocean, Ethereum, etc where independent entities can be created, develop, and compete for resources, attention, space, etc provided by that environment. The entities have no real connection to their environment besides just living within it and interacting with the other entities.
Ethereum is just as much of an environment as the Earth is. It provides the foundation which the entities live on top of (security), the resources the entity needs to exist (data availability), and the gathering point where complex interactions can happen (smart contracts and end users). Ethereum doesn't build any of the ecosystem, it simply provides the marketplace where life happens.
> "system" denotes something which was designed to work as a whole.
I don't agree that systems have to be designed.
I mean, it depends on what you mean by "system" - was The Capitalist System designed? Who designed it? The atmosphere is a system, by most standards; it wasn't designed (or if it was, I'll shoot the designer). The human brain has most of the properties I'd expect a "system" to have; but hopefully you share my view that it wasn't designed.
But I'm not really bothered what a "system" is. I was just having a rant about words that used to mean something specific, until they were borged by lazy opinion-formers and made into cliches, rendering them useless for their original specific denotation. C.f. "epicenter".
(This seems to be a thing I care about more than other people; discount my remarks accordingly)
eyeroll I won’t deny that there are tons of NFT projects that are nothing more than modern day tulip mania. On the other hand there is an entirely new world of opportunity that has never existed before for both common people, artists and corporations in the form of DeFi projects.
Basically any distributed form of ownership you can imagine is now possible through NFT and DAOs. There has never been a better time to learn about it either.
> there is an entirely new world of opportunity ... any distributed form of ownership
That is what people say, but what I don't understand is what ownership is actually conferred with NFTs. The only "ownership" is the ability to transfer the NFT to another person, which simply gives them the ability to transfer it to another person (which sounds a bit MLMy).
For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
If an application (videogame, social network, website, etc.) gives the holder of the NFT special rights, then that is the utility of the NFT. It does not matter about legal ownership of a graphic.
The application becomes the central authority for some arbitrary token. Yes, in theory they could use "an NFT" to represent a key to some in-application capability but at best the owner of the NFT has an exclusive right to that capability at the whim of the application owner. The NFT owner can't really claim to own any real "thing" in and of it's own right.
The application owner gains very little – they could just implement a Plan Old Database within their system.
The owner of the "NFT" gains very little – except the theoretical value of a token they could trade, and might have value, as long as it's backed with some capability provided by the application.
None of this applies to things like "a gif on the internet", for which the NFT means exactly nothing if you have no enforceable rights.
The point is that the application owner does not become a central authority of authenticity though, the blockchain does. The application owner is just one of many acknowledging authenticity.
Many different applications can build on top of this open authenticity verification. This decentralised layer for authenticity verification is much more powerful than a single application builder can achieve with their own database. The concept itself is very powerful for interoperability but some of the valuations of assets currently feel ludicrous.
If everyone agrees that, for example, a particular distributed ledger provides authenticity of some class of artwork, that is fine. But soon the real world happens eg. a court in one country orders the art to be seized and handed over to a third party , but they don't have the ability to force the NFT to be transferred because the former-owner is in a different country. Would the art world suddenly pretend that the artwork is not real because the current owner does not have the NFT? We are back to square one.
You don't think there's value to the application owner? They get a secondary market for the accounts in their application that they don't have to manage and they get royalties automatically paid to them for every resale. The scarcity of accounts drives up the value of those accounts, which also financially benefits the application holder because now they can sell the extra accounts they held on to for more money, and they get bigger royalties on every resale. And on the consumer side, someone is more willing to buy in to check it out because if they get tired of it or they don't like it or they beat the game and want to move on they know they can sell their account easily.
And on top of all that, assets from one application can be integrated into another application. If I build a game and I allow people to use the "sword of NFT" they have from another game in my game then I've created a big incentive for people who like that other game to also play mine.
The application owner gives up control to a secondary market for no gain. They'd do better to simply buy and sell directly, and maintain full pricing control. They already control scarcity, they don't need some other mechanism.
Meanwhile there is very little incentive for some other application to use those same tokens when their value is contingent on the whims of the original issuer. You're tightly coupling your business and liability to some other party who hasn't made any guarantees, promises or agreements to you. Its a can of legal problems.
Ultimately is like trading Apple gift cards, Pre-loaded debit cards, phone cards etc - its an abstraction in which then value of the token will only ever be less than the cash paid for it up-front, and most people trading them have some other reason for taking the hit (ie money laundering, fraud, etc)
Yep, several years ago it was trendy to shill the idea of "cadastre [land records] on the blockchain" to solve some imagined issue with the central authority of land registries, never mind that of any particular asset class, land title was the very last thing any sane individual would cede to a "zero trust database". If you're going to sell or buy land, that title better be backed by all the legal and otherwise mechanisms of force available to the state!
NFTs are just a further abstraction on that same failed idea – a cyptofinancial derivative to make something appear real that isn't real.
> For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
That's the part about NFTs that I keep getting hung up on, yes. I get the abstract notion of creating artificial scarcity for digital goods, and how that could have market value. But we've seen absurd things like "use this service to create an NFT for any individual tweet," with no verification that the NFT is being created by anyone who has any legally-recognized right to the tweet's content. If an artist tweets out an image of a new art piece of theirs and I mint an NFT from the tweet, what exactly do I have "ownership" of? I sure don't have any rights to the artwork. I don't even have any rights to the tweet text, which is implicitly copyrighted by its author.
And it's that sort of foofery, more than anything else, which makes me more inclined to be skeptical. Obviously there are NFTs created by legitimate copyright holders who can legally transfer ownership or other rights to you, but the legal recognition of the ownership doesn't seem to have anything to do with the inclusion of the NFT in the transaction -- the NFT itself can't verify that it was minted by someone who had the necessary legal rights to assign ownership of the thing the token represents.
A lot of people on here are aggressively expressing skepticism of NFTs while only giving simple easily refutable reasons. It seems like they're trying hard not to understand. That's what happens when people have cognitive dissonance. Perhaps they've spent their whole life building a slightly incorrect mental model of how society works and NFTs don't fit that model. It's easier to deny the value of NFTs than to change their mental model. The denial has to be aggressive because it's so emotionally dangerous to let yourself lose your grip on your existing beliefs. That kind of hysteresis or stickiness of beliefs is a good thing because it allows us to build elaborate consistent useful models of the world without upending it at every random new idea. But it also means old set-in-their-ways people aren't good at adopting cutting edge ideas.
I didn't vote you down, but I do think it would have been a better use of time to explain why NFTs are the future, rather than ad-hominem attacks on people who disagree with you.
Please tell me why NFT are valuable and useful, with very concrete examples of utility. If you use the word "ownership" please explain in context what this means.
You know, there are people in the space who talk a lot about adding utility to NFTs. This may well work for tickets or whatever, but the kind of NFTs we talk about here don't benefit from utility; art doesn't benefit from utility.
I agree with the OP that a lot of people here seem unwilling to take a moment and think about this more deeply, and how NFTs might compare to existing ways of valuing things. To be fair, it does take some time to wrap your head around, and maybe an open mind.
People complaining about a lack of "real" ownership often seem to mean ownership as in owning the copyright, but note that during the piracy debates of 00s the tech world spent a lot of effort trying to convince the world that a copyright claim is fundamentally different than physical ownership. And so it is.
There is physical ownership over a digital file; and that is having physical access to the bits that make of that file.
NFTs work because of the realization that a significant part of the value of physical artworks has nothing to do with there physical form.
Now there remain a lot of open questions; for example, it may well be that the physical form is still somehow essential, even if a small part of the value. Yves Kleins Immaterial Zones don't seem to be trading a lot at Sothebys, as interesting as a concept they may be. People may well feel the value of hanging your Rothko in a home is a very important part of the experience, even if 99.9% of the value is simply provenance (which an NFT artificially creates for digital goods).
It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
I think you have outlined the fundamental disagreement quite well.
> It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
I think when people see utility in physical artwork, to the point they would travel to the other side of the world to see it, they find it hard to credit that almost all the value comes from provenance.
Likewise I think people who see art as nothing more than the name of the person who painted it will wholly embrace NFTs as investments.
These two groups are probably not going to come to an agreement.
The frustration those of us who are skeptical of this use case of NFTs -- creating artificial digital scarcity -- has with responses like yours and Exporectomy's is that you're pretty much saying "you're clearly not thinking about this deeply enough, because anyone who thought about this correctly would surely agree with us." This is not only not a very convincing argument, it's a little bit of an insulting one.
The objection I mentioned in my previous comment was that the original copyright holder of a creative work is the only person who can transfer any ownership rights. But let me restate this without invoking copyright: if I have the legal right to transfer ownership of a digital file in any legally recognized sense to you -- whether that file is a piece of software that I bought on physical media I am conveying to you, or artwork I created that is being digitally transferred to you -- an NFT is only useful as a proof of ownership if we have contractually stipulated that it does. That contract exists independently of the NFT, incorporating the NFT only by reference, just like the NFT itself only incorporates the digital file it tokenizes by reference. The NFT itself has no legal authority -- it's just a transactional record. As I mentioned in my previous comment, it's possible to easily create "bogus" NFTs of digital files whose creators or rights holders haven't authorized it. Furthermore, since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain, so again there needs to be a framework outside the blockchain to truly establish ownership.
So the question has to arise: do you need the NFT in this transaction at all? Why can't the original contract incorporate the digital file directly by reference itself? The NFT doesn't really do much to support "proof of ownership," while instead clearly creating opportunities for scammers taking advantage of people who don't understand that just because you have an NFT for a digital file doesn't mean you necessarily have any legal authority to sell any kind of right whatsoever, copy or otherwise, in that file.
Maybe you don't see it that way -- clearly a lot of people don't -- but please do not imply I haven't taken a moment to think about this more deeply. I've thought about it a lot, in fact, and so far I haven't found a convincing response to the concerns I've expressed about this particular use case for NFTs.
> This is not only not a very convincing argument, it's a little bit of an insulting one.
My apologies if I came across as insulting, but I do feel a sense of frustration with some of the arguments provided in discussions like these, and I think we can agree that some of the language critiquing NFTs here does not scream "open minded".
First, let me correct a misconception that may give you a slightly different perspective. You write "since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain". It is worse than that! There is nothing that enforces uniqueness of an NFT within a single blockchain; not in a way that would make such a duplicate any different than a duplicate on a different chain. You couldn't prevent such duplicates, even if you wanted to. First, artists may on purpose create multiple copies; second, the only way such unique could be detected would be hashes, which can easily be fooled. Third, a scammer minting an NFT of an image belonging to an artist, would then block that artist from being able to mint the NFT themselves. It sounds bad, but it really doesn't matter for the concept to work. People scamming by pretending they are selling art pieces they did not create is a problem, but it is not a problem NFTs set out to solve (and indeed cannot).
The NFT does not confer any legal rights, correct. But what legal authorities would you want it to confer to the owner? There are a couple that are really useful: The right to download a copy of the art piece from a website. Yes. The right to use the art piece as a profile picture on Twitter. Sure! And artists do often provide license agreements along those lines. (If they don't provide any license information, I believe an owner could try to argue that there is an implied license, and may or may not succeed in that claim.) Some artists put their work even into the public domain.
I would agree that owning an NFT which you do not have the permission to copy to your hard-drive, or which you cannot see on OpenSea because the artist refuses to allow OpenSea to show that image, seems quite degraded. It will probably be not very popular. And yet, some people just might pay for it anyway, because the ownership of the token on a blockchain is what matters in the end. If a popular artist such as beeple were to publish an NFT, explicitly denying that the owner has any rights to even make a copy of the image, there is no doubt someone would buy it. Call it conceptual art. There is no legal system required, because like you say correctly, the NFT itself does not confer any legal rights. The blockchain is the definitive record of ownership, because legal modes of ownership are basically orthogonal.
Consider the example of Mitchell F. Chan's Digital Immaterial Zones (I recommend the blue paper: https://github.com/mitchellfchan/IKB/blob/master/Digital-Zon...), which explicitly is a token without any visual media attached; there is nothing that exists outside of the blockchain that you even could own. It is the pure distillation of this idea.
There is a difference between an artist saying "you have the right to download my file" and the artist saying "I consider you the owner of this immaterial piece that I created, I will only acknowledge 10 owners maximum, and also all of you have the right to download the file".
The latter kind of agreement can certainly be modeled with a conventional contract, and indeed that has been done in the art world, but it is just so much easier on a blockchain to track those 10 owners, verify that the person selling to you is an authentic owner and that they sell their claim only once, and so on.
I didn't attempt to answer your point directly because others have already done a better job of it. Excuse me for making it sound like "You're wrong but I can't explain why".
I don't believe they're the future, nor do I really understand them much at all. I'm just critical of the way people say "I don't understand them, therefore they're stupid". There may be valid reasons why NFTs are terrible but these people are not expressing those reasons. They're expressing reasons that a quick skim through any popular HN NFT comments page, such as this one, would answer.
The author literally says the following in the article:
>Note: It is important to note here that we think that NFTs as a technology hold incredible promise to help more evenly distribute financial outcomes to community users, not just community organizers. We are in the early days of exploring what digital ownership actually means and it is far too bearish to universally decry the technology. Our concern is with the following types of NFT applications.
You’re missing a big part of the picture. NFTs do provide real utility for anyone dealing with illegal goods or services. They are only selling NFTs publicly while the real goods or services are something else. It’s not a new hack but this is a much more efficient vehicle.
I think people who have been in bitcoin for 10 years are more skeptical of NFTs because suddenly they’re framed as the ultimate crypto use case. And Eth is ultra sound money. And while there’s some interesting generative art (eg deafbeef) most of the industry is hyping NFTs for videogames.
There are better and more transformative use cases than just the “metaverse”.
Everything is framed as the ultimate crypto use case, because crypto doesn't have a use case. No one needs money capped at 8 transactions per second world-wide, which costs ever-increasing amounts of electricity to trade.
All of these things end up being an exercise in cryptocurrency people in a round-about way proclaiming to the world that they don't know what a thing is.
For example: NFTs are a great idea to people who have never read an undergrad definition of what art is.
You do realize there are blockchains that don't suffer from just... not working? like PoS fixes the electricity issue, and there are many solutions to making transactions much cheaper, quicker, and having more bandwidth.
Sure but a large portion of the current crypto market cap is in currencies that do have these issues, and I'm not sure how to explain that other than by assuming that that value is probably mostly speculation and not actual usefulness.
Why do people want Picassos? Show them off, appear sophisticated, an investment, etc. Crypto Punks are something a wealthy segment of society likes and because they are graphical and fit neatly into an avatar, they become like an expensive watch except for the digital set. This phenomenon is not hard to understand.
A Picasso actually has cultural and historical significance. And we probably had to think about it hard after the work was done. And collections even of the super rich are not necessarily random pieces. They may have hired a curator.
An NFT can be some shitty gif hardly worth mentioning let alone displaying.
I agree, they are profoundly historically significant, they are the prototype for the ERC-721 token standard, and are event cited in the whitepaper proposal.
NFTs are a platform. I don't think this analogy applies.
NFTs are standards for digital ownership. If you think digital ownership will not stand the test of time, I don't know what to say. It's a critical technology for the future of the web and metaverse.
I'm sure that within the NFT ecosystem, some trends will fade with time. Maybe it's animal profile pics, or AI generated art collections or maybe it's autobattler gaming that falls out of favor, but as long as humans like gaming, music, art, and entertainment, I suspect NFTs will thrive.
As soon as I see or hear the words "bitcoin", "blockchain" or any DeFi project for that matter, my brain automatically assigns the label "moron" to the person. It's like when I see a girl I like smoking. 10 to 0 in a milisecond. It's high-stakes gambling at least, total fraud at most.
It's not surprising that a lot of known MLM scammers in my country moved into DeFi.
I wouldn't say NFTs are money laundering - there are some interesting use cases. But the setup of NFT makes it easy for say a drug dealer to conduct business on the blockchain and launder earnings by selling "digital art" to his customers.
sorry to be pedantic, but it's literally not multi-level-marketing? Specifically, it's missing the multi-level part. Your upline isn't getting $$$ when you sell a NFT. I suppose you can make the argument that if you then take the money and buy more stuff, then your upline gets paid, but that describes most distributor arrangements. Come to think of it, there isn't really even an upline. It's just a network of artists and traders with no set hierarchy.
> I think you could argue that the 'upline' acrues value even if they aren't paid directly. Greater interest in an NFT drives the value up.
right, but uplines getting paid in a necessary but not sufficient condition for MLM. In a MLM it's usually derived through their downlines. The mechanism described is a general benefit to all participants in the system which isn't very MLM-like. platforms (eg. youtube) tend to have the same "general interest drives the value of the ecosystem up" (ie. creators convincing other creators to join your youtube clone increases your site's catalog, which boosts the quality of recommended content you can show to your user to get them to stay on longer, making it easier for creators to get views), but you wouldn't call that a MLM.
Somehow I don't think you'll read those and decide it's not a pump and dump anymore, are you saying that it's not actually a condition for beliving it's something other than a pump and dump, but rather a mechanism that might reduce the desire to participate in a pump & dump?
> The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.
But at least the solid tech companies had revenue in 2001. There's a long history of useless assets becoming a part of a bubble that pops. And this even worse than Beanie Babies. At least with those, if someone still enjoys them in 2021, they can put them on a shelf. Are you going to frame printed QR code of a NFT and tell your friends to scan it with their phones to verify what virtual asset you own?
Cryptocurrency has been through -80% draw downs multiple times in it's history. The question is, is the entire history a story of a pump and dump or are you saying we are currently in a smaller bubble & bitcoin should be ~5k instead of ~40k?
Why has it been able to withstand a draw down of 50% 4 times in 13 years?
I was referring more to NFTs than cryptocurrencies. They went from nothing to huge too quickly. NTFs are closer to Beanie Babies, Bitcoin to baseball cards. The big gotcha with NTFs, and why they're worse than Beanies, is they're incredibly hard to price because they're non-fungible, and unlike art (also non-fungible), it's not clear which tokens are desirable or why.
Who convinces people to buy Herbalife? People who have spent a bunch of money on Herbalife.
Who convinces people that NFTs aren't just a fad, they're really innovative and you should consider adding them to your portfolio? Not people who don't own any.
Ok, let's call it a pump and dump scheme then. The end result is the same: high profit for those in control (early adopters) and latecomers get the bill.
NFTs are most likely pump and dump. Established cryptocurrencies aren't following that pattern though. They get bigger and bigger until they are no longer sustainable. That's much closer to a pyramid scheme than pump and dump.
I agree. I kinda dislike when people throw around terms like pyramid scheme and MLM. And specifically calling crypto a ponzi. Yes there has been ponzi schemes done with crypto. But speculative bubble itself is not a ponzi scheme.
Pyramid and MLM are related concepts, and usually MLM is pyramid. That doesn't mean all pyramids are MLMs though. Same applies for other types of scams or structures.
I know I'm a hopelessly naive hippy, but isn't there some option where we make our case by saying things that are true, rather than saying things that are untrue but alarming in the right direction? I feel like I personally would find online discourse much more helpful if we could do that.
When an NFT project proposes a value share and airdrops amongst token owners, and also has a royalty fee paid on every transfer [1], I think the “up line” and MLM aspect come more into play. There is value for you to inflate the price of the NFT as it benefits you and the other owners directly as sale prices get higher.
Car/bag/cloth/jewelry/art - these type of things are sometime considered status symbol. It help people convey certain “message” to other.
NFT might could be the same in the ever more virtual world.
I might not be be the target audience; but it does not meant that it hold no value to other.
People spent lots of money on game skins, rare weapon.
So there is a market.
When one goes to a physical conference: flair/badges serves similar purpose. NFT could be that in zoom/team/slack.
My naive way of looking at NFT: Maybe it can be used to help fund open source free software. Instead piece of art; a flair/pin/badge for showing your support for your favor projects.
When it comes to luxury cars and clothes, you force others to see that you’ve spent for status. That doesn’t exist for NFTs. There’s no public forum I can go to where others are forced to observe my status signals.
High end art is more about investing, money laundering, and tax havens then status.
How? Your Twitter profile picture is an image. What stops me from saving your profile and setting mine to the same thing?
Are you suggesting Twitter validates that a Twitter account owns an NFT and shows a check/badge/whatever? I also don't think that works. Whatever rare NFT you have I can go make a visually identical NFT for <minimum cost of an NFT> and confirm that I own that NFT.
I often think that I must be missing something about NFTs because they seem breathtakingly stupid. But, I've yet to find out what I don't understand about them.
The Twitter verification is for status, if the status also requires the person seeing the profile has to find the contract existing with the profile NFT and then exhaustively find out if there is an “original” then the whole verification process isn’t fit for purpose.
Twitter is building exactly that apparently, you would get an ethereum checkmark next to your profile pic if that image is verified.
There is definitely discussion happening on exactly your point, but i imagine there are options to combat the fake NFTs given that you can't fake a signature from a known public key.
Given that there are so many NFT projects I speculate that the twitter verification will only happen for a small subset though.
Similarly all the crypto metaverse projects although they're not as mainstream suffer this problem. There's a reason Will Wright's new "NFT" game runs its own chain.
You can see which collection an NFT belongs to, their contract addresses, and transaction history. This is a non-problem. I'm sure it will be visible in Twitter's implementation too
Yes, you can sign it with your own private key because you are now the "creator".
That's the point of digital assets, they are fungible by definition because it's a bunch of 1s and 0s, doesn't matter which system you run it on you will get an indistinguishable output.
Of course for that to work you need an easy way to check who owns a particular wallet so you can verify they did actually stamp their name on it. And quite a lot of NFTs exist without this level of proof hence rampant fraud.
Huh? You would have to authenticate with Twitter using your crypto wallet to prove you own the wallet associated with the NFT. Twitter would know the contract addresses of the original NFT so even if you created your own smart contract with identical images it wouldn't be the original...
I just don't see a single positive side of this.
Cool, now more people can flaunt their wealth in a brand new way. It's like Fortnite skins, but more extreme and for adults. Just one more way to rope people into wasting money on mostly useless shit.
[...] What do NFTs do that DRM doesn’t do? Not much. To me, the only interesting thing is that NFT schemes make public the identities of people who paid money for the NFTs that point to digital objects, so that those people have help from the NFT platform in exercising bragging rights. DRM technologies generally don’t do this, though they certainly could.”
NFTs make me think our society has gone completely insane. People sometimes ask me to explain them because I, like, "understand technology", and I have no explanation for what they want explained.
This whole rant assumes that people just buy NFTs to sell them to the next guy, but that's not the case. Some people buy NFTs to support artists (like Patreon) - others are gamified to represent something in a dapp, for example metaverse parcels are like domain names. And of course some just collect them for the flex. It's not really an MLM anyway you slice it.
Why wouldn't you just support an artist on Patreon? Or by actually buying something from them? What's the point of buying NFT instead? It's to sell to the next sucker before the bubble bursts. That's the only thing it does that other platforms don't already do better without having a blockchain involved.
For me nfts provide an easier way for me to support digital artists I love that I've been following for a while.
I don't really like the collectable scarcity kind of thing, but I like building a collection and having an easy way to explore and find art and artists. Also a lot of these websites are providing this art at higher resolutions and quality than social media would allow for (IPFS) and without direct hosting.
I think it's here to stay in some form but it'll definitely undergo some change.
Not everything exists for function, let's enjoy our time.
Massive speculation scam to take advantage of the uninformed. Let them enjoy their time without making digital beanie babies and pretending they have value.
Indeed, and I'm much less skeptical, if it's seen as akin to buying tickets to a concert. The value is in enjoying the music in the present moment, and knowing that the musicians are receiving some income. A concert ticket is an NFT of sorts. Nobody will ever be able to attend that concert again.
I've missed concerts that I had tickets for. Fortunately I'm mostly into classical, jazz, fiddling, etc., where Ticketmaster doesn't have much of a presence.
Most of the comments assume that with NFTs you are buying just a piece of digital image with no utility whatsoever. And yes, it is the case with most of the things we see on https://opensea.io/.
But on the other hand, there are a bunch of interesting projects out there where you can do some cool things with your NFTs, like the "card game" Axie Infinity and other ripoff projects - with a very few original ones - inspired by it.
NFTs for collectible card games is promising and maybe this can lead to some other interesting use cases in the future.
Anyway, I recommend searching for "utility nft projects". Most of them seem just like something to steal money from other people, but again... there are some interesting things coming out from it.
But online collectible card games have existed for well over a decade without any need for NFTs, including the ability to trade and sell your rare cards. What does having an NFT add?
It's a new implementation of the same thing, but now with no team, no servers, no company, just some code that runs on the blockchain (which is a ton of servers lol)
> In short, the minute you connect your blockchain to an app frontend you now have a degraded blockchain, one that cannot even in principle guarantee immutability, trustlessness, and decentralization – at least not for assets that the app's customers actually care about.
Scratch the surface on almost any NFT ecosystem or blockchain application and I find I'm still relying on trust, or a centralized service, or a service that's more mutable than it advertises. So if I don't get the purported benefits of blockchain anyways, what was the point of getting a blockchain involved?
EDIT: Getting a lot of responses that I don’t have time to reply to. My more involved thoughts on the entire space are here:
Complete sidenote, but I loved your "So You Want to Compete With Roblox" article a while back, it was a pleasant surprise to click on this link and end up back at your blog.
This isn't true - sure there are projects that use IPFS to host token assets too big to store on-chain (3d assets, photos, etc.), but those assets can be assured to be perfectly correlated with their hashes. Not to mention many projects are fully on-chain, like CryptoPunks and AutoGlyphs.
Yeah this is one of the reasons I love hicetnunc and am suspicious of most of the NFTs hyped on Ethereum, so many that I checked are hosted on some random host, I even saw a very $$$ one hosted on heroku...
Ah, so in some cases you’re able to stuff an entire JPEG into the blockchain itself, I’ll grant that. In which case we move on to all the other problems. But For NFTs that are meant to be used in applications, I think my argument still holds.
For fully disembodied NFTs where you just stuff a jpeg or it’s hash into a blockchain, my other complaint is that you’re just creating a speculative instrument that doesn’t really do anything except hope someone else will pay more for it. And I still have to rely on trust outside the blockchain that the artist approved these NFTs in the first place (there are many done with unauthorized art)
"my other complaint is that you’re just creating a speculative instrument that doesn’t really do anything except hope someone else will pay more for it."
So like bitcoin? - The value is in what someone believes it is worth to be provably in control of a given asset. It also provides a great deal of social currency...certain NFT owners have identity wrapped up in them such that owning it extends social latitudes, as the reputational harm which could be done for being a ingeniousness actor far outweighs making a quick buck.
Yes I think Bitcoin is bad as well. Speculation is not productive, and this particular form of it has negative externalities - costs the rest of society is forced to pay, which is both bad and unfair.
Proof of work is far too expensive and wasteful, and the necessary private key discipline to not lose all your coins puts it out of reach of normies (immutability is a bug not a feature for normies), and it’s deflationary which discourages circulation, and it’s got high transaction costs and slow speed, and just massively inefficient. So it fails as a currency, which it was originally pitched as.
Lightning network papers over this (an admission of failure in many ways) but just trades off with new vulnerabilities and further degradation of the original promises.
Make whatever digital assets you want and attach value however you like but own up to the limitations and costs. And pay for your own negative externalities, don’t force them on others.
In most of these projects I feel like it’s the aura of blockchain that’s being sold and not the substance because the actual promises of blockchain (immutability, trustees, decentralization) are always undermined in some way. I wish people would just be more honest about that.
I agree PoW is bad, and I'm hopeful for the future of Proof of Stake. Just like using coal and oil to fuel our industries is bad, and we are moving more and more towards renewable energy it is a path of progression. You have to start somewhere and grow, but I think it is somewhat disingenuous to discuss them as if they are static states which are not seeking and progressing to more ethical models.
I suppose I see is like noticing that a house is being built, and then criticizing it because no one can live in it, and the builder's tools are loud, and pieces of building material are strewn around. If you don't like houses at all, then it's certainly fair to be critical of them at any state of their development, but if you admit they are useful to exist, albeit in a more developed state than not, it seems like a conflict. - I do appreciate your discussion here, and I hope I'm not coming across as antagonistic by saying your position is disingenuous, I just see it as a process of growth, some of which is not so tenable...like a screaming child vs an adult who creates something that contributes something that is a boon for society in their life. I also admit it remains to be seen, but there is meaningful evidence which supports a net positive outcome.
It's not a joke, the prices are insane in large part because this meshes very well with the idea of compsability & permissionlessness that the Ethereum community is very excited about right now.
This has to be elephant in in room right? There is so much cryptographic potential and none it is realized by most NFTs currently sold. Signing an http link to an existing .jpeg has to be the least imaginative way to implement this concept.
How about: Sign the image and generate a MAC. Then use steganography to include that information in the file. For the NFT sign create a certificate with the same key and include the MAC information. Publish that together with an IPFS link to a blockchain.
Then we can have discussions about IP law, art and what art ownership means.
The benefits of the blockchain are simple. To drive the pyramid scheme to profitability. It helps obfuscate the scam from people who don't know any better.
I watched the link below to try to understand what is going on with NFTs. This helped a bit but I don't quite understand how to apply the token to a physical or digital thing. Does it make sense that for a digital item (like a jpg) it would be a hash of the file, the entire file or something else? Also, how would one use an NFT with a physical item (if that is in fact possible)?
Trying to parse your question, for the digital answer first.
An NFT is verifiable metadata that can link to any other arbitrary data, such as a PNG, JPG, MP4, or whatever. Following the standards set forth by ERC721, you can add an image, external URLs, names, and various attributes that define the item's traits in relation to a broader collection that it belongs to.
It is very common to use IPFS for hashing the contents of both the metadata and the image (or other linked media), since it's an easy standard to adopt to back up in multiple places. You can even back up IPFS files permanently using a storage solution like Arweave.
NFTs have been linked to physical items. Typically the way it's handled is the NFTs are sold, but are redeemable for the physical item by the creator. So you can either hold the NFT or redeem it for the physical item. At which point the creator will need your shipping info to get it to you.
NFTs could also be used to represent things like real estate titles and mortgages, but at some point there would need to be a centralized connection or oracle connected with a centralized entity for that use case.
They're also used to represent liquidity positions in decentralized exchanges such as Uniswap v3.
Thanks, this is helpful. I had a look at this link (https://eips.ethereum.org/EIPS/eip-721#simple-summary) based on your response (specifically the json schema). Is it correct that the actual NFT is three strings: name, description and image? It seems that "image" contains URL that you mention. Is there any limit to the size of the NFT (i.e. could you save the entire jpg base64 encoded in the image field for example)?
At first I was a little confused by the fact that it seems that the purchaser essentially owns a URL and they would have no control over the information that the URL is pointing to. However, the concept of permanent/decentralized storage (Arweave as you mention) starts to clarify things a bit. If you have a digital asset located at a URL that can never be altered and is permanently accessible then it does start to make some sense - though I will have do some reading to understand how this is actually possible.
Technically yes you could use base64 as your url in the image field, however, I wouldn't recommend it unless it's an SVG or something small (a few KBs) since the metadata cannot be cached or asynchronously fetched by browsers on page load. So a massive metadata file could cause issues viewing your NFT in most marketplaces or galleries.
If you buy an NFT for a piece of art, you can't even sell prints of the piece of art. You can't take a pic of it and sell a t-shirt of the art. You own nothing associated with that piece of art, except for the NFT itself.
It's such a strange, strange concept to want to invest in.
What if they create a new NFT blockchain standard. Does the previous NFT become invalid? Is there anything contractual saying you can't have multiple types of NFTs on a single piece of art? I kind of doubt it.
It gets worse: if someone hard-forks the blockchain the NFT is on, it's possible for there to be two entirely different claimants to the NFT.
And then there's all the times people's artwork has been straight up ripped off and minted into NFT's without their permission. The only provenance record a blockchain can authoritatively track is its own internal transactions -- it can't even prove that the original artist was involved at all; you're still relying on trust for that.
NFT license are dependent on the project. That's up to you to research. NFT license from crypto kitties allow you up to 100k. BAYC has full commercial rights.
You wrap the token into the new standard if there is a new one when there is a new standard. Look at cryptopunks, they are wrapped into ERC-721.
If you buy a Babe Ruth baseball card you aren't buying the rights to Babe Ruth. It's the card itself which is valuable, as a product of the context it was issued in. I don't know why that part, as it translates to NFTs, is so difficult for people to understand.
They’re valuable to collectors as there is a finite supply of them. There is literally an infinite supply of NFTs, and the works they are a pointer to can be cloned digitally. There is no comparison.
There is a finite supply of a given NFT and infinite cards can be printed by someone else, you just only care for those minted by a particular authority in either case.
You have the right to copy of that Babe Ruth baseball card and place it on a t-shirt. If someone uses that exact card's image to do this, you can sue them for copyright infringement.
What? Surely not. Someone else still owns the copyright of baseball cards, don't they? Or are baseball cards special in that they come with a kind of copyright ownership when they're sold? I doubt that.
If you bought let's say a signed physical print of the piece of art you can't do that either. Even if you own an original painting you can't do that unless you explicitly got granted permission. So why expect it from NFTs?
Because when I buy a piece of art, I can hang it on my wall and look at it.
If I buy an NFT, it doesn't give me the right to print a picture of the art and hang it on the wall. I have no rights to display the picture of which I own the NFT. All I can say is that I own the NFT of that piece of art.
So, I can hang the hex code of the NFT on my wall and look at that I suppose. But the actual piece of artwork that is associated with that NFT? I can't even display it on a digital display in my house, because that's copyright violation.
Many NFT platforms attach legal terms that explicitly allow you to print or otherwise display the media for NFTs you own, artists generally grant permission for it or consider it a social convention that it is allowed.
This isn't true, it depends entirely on the project and the rights assigned. Meebits and Bored Apes give commercial rights up to 100k USD/yr (a formal agreement is required if exceeded), and Cryptoadz grant fully open CC0 rights to the owners to use in any purpose. - Also, when in the past few decades have you ever bought a piece of art from a creator and assumed that would give you commercial rights to their creation?
The real reason NFTs exist is simple. ICOs were shut down by the SEC. The SEC prosecuted a few of the total scam ICOs (the one supposedly backed by diamonds and real estate was the first). Then they sent letters to every ICO issuer in sight: "Please explain why your product is not a security offering which requires SEC registration". Most of the ICOs shut down immediately. Operating from outside the US doesn't help. If you sell into the US (or the EU, or China, or most of the developed world) some regulatory authority wants to have a word with you.
Now, part of the idea behind NFTs was to escape SEC and CFTC regulation. Because each one is different, it's not a commodity, by definition. Is it a security? The Howey test applies, as usual. An NFT which represents something that already exists is probably not a security. That's a collectable. However, there are people selling NFTs that represent land in virtual worlds that haven't been built yet. That's a security; you're funding a startup. Also, "fractional NFTs" are almost certainly a security.
So the legit use of NFTs is to monetize fame. Which is why basketball team owners and musicians are into this. If you're famous enough to sell merch, you may be able to add an NFT to your product line. People will buy, hold, and cherish your thing.
Initial offers of unknown NFTs intended to be resold at a profit are doomed to failure, for the usual pyramid-scheme reasons.
As I point out occasionally, go look at Beanie Babies on eBay. Offering prices around $5000, no bids. Then search for completed sales. Prices around $10-$50. NFT prices are like that. Mostly, you're looking at asking prices and wash sales. NFT markets, like Beanie Babies, don't crash. They stall. There's no liquidity. No market. You may have to advertise to find a buyer. Just like the leggings suckers.
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[ 3.4 ms ] story [ 372 ms ] threadNonsense. I'm pro-crypto but think NFTs are absolutely idiotic.
Scarcity is fundamental to any store of value. There are an infinite number of potential NFTs.
That doesn't mean there is an infinite number of any given collection.
You're making a future prediction about an entire category invoking a specific instance from physical collectibles. Have all physical collectibles been subject to the fate of beanie babies?
For digital collections, there are an infinite number. The only finite thing, in this case, is the NFT.
NFTs are not digital representations of art. They don't create scarcity. They're digital trading cards: their scarcity is only relevant and verifiable in and of themselves.
Limited to how many we can sell.
It's ok though, because at least the original will definitely be the one to be valuable, and not the 42nd, 69th, or 420th. Right? Right??
This is a difficult concept for people to get their heads around because of the obvious but incorrect parallel between original art and reproductions. It would be slightly closer to say that an NFT is a photo of a Vermeer. Anyone can make more originals at any time and there's nothing you or anyone can do about it.
Can I have the title to your car? After all, it's just a piece of paper.
NFTs are access tokens to social communities, where owning a particular token grants you access to a community that shares ownership. Collab.Land is a tool communities use for NFT ownership based roles, revoked upon sale. NFTs are a distributed system of title. I'd be shocked if every concert ticket isn't a form of NFT in ten years--you can transfer them verifiably on the secondary market while giving a royalty to the issuer, use them to access a concert, and keep them as a souvenir like a traditional ticket stub. And yes, some people make profile pics, and generative art projects. You don't have to like or participate in those. But dismissing all NFTs as idiotic is not a position that is going to age well.
Granted, I really can't be bothered to care about all the stuff going on out there with nft's but i'm not going to let it sour me on those trying to build decentralized alternatives for systems people like to engage in now while cutting out the centralized platform rentiers/censors.
[0] https://cdn.discordapp.com/attachments/785611286100049941/88...
[1] https://cdn.discordapp.com/attachments/785611286100049941/88...
> without having to solely trust the company issuing the nft ticket
For the transaction yes, but what about the thing you are buying? Perhaps I am not thinking creatively enough, but I can't think of a use case where there isn't ultimately some trust required other than solely digital assets.
Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
You are not cutting out the middle man of some SaaS provider, you are substituting them.
Perhaps, but its ok either way, it's not really limiting the DAO or the places leveraging the DAO to pursue this stuff.
> Using your hotel example, you will end up at the hotel where they can choose to honor your ticket in the same way as their traditional booking system. There was no need for this to be on a distributed ledger as the asset (a hotel stay) was between you and the hotel.
Its not just about honoring the ticket for the duration of any particular booking, but also mitigating the risk between multiple parties and being able to easily integrate such information with as many decentralized protocols are needed for the parties involved without extra dev overhead to connect them.
For some places, you need to have a card on file in case of damages (this is where the decentralized escrow/dispute and resolution protocol come in) and rely soley on visa/mastercard and the hotel unilaterally being able to say that you were the cause of an issue that may come up or being able to decided whether or not you are on the hook.
Incentivized actors (these need not be people, it could be automated, but since everything has an address, no one can tell the difference) of those other protocols on chain need visibility with the address that held the nft. So yes, its trust the protocols and incentives associated with them around handling dispute and resolution and non custodial locking of collateral in escrow (or allowing another protocol to time lock collateral on ones behalf).
And this assumes that the place someone buys an nft stay has the in house capability to do all that without using a particualr nft stay protocol (which alot of places dont esp for random bnb) or ok with giving a large cut to airbnb/booking.com/visa etc if they don't.
> You are not cutting out the middle man of some SaaS provider, you are substituting them.
Yes, for code that can take a lot less of the cut than existing SaaS providers (if any at all). A protocol != SaaS provider, even though a SaaS provider could manage a protocol[0], or a protocol can just be an set of immutable contracts deployed on chain, or anything in between.
[0] https://aws1.discourse-cdn.com/standard21/uploads/shinedao/o...
Do I print a piece of paper? Do I show them a picture on my phone or something? Can't the previous owners of the NFT show the same picture? Can't anyone show the same picture on their own phone?
Your NFT could have an associated QR code read at the door. In case of conflict there’s only one owner with access to the associated wallet and will be able to proof ownership via app / website…
I suppose your right that it usually wouldn't matter, but in case of conflict you better be prepared to sign something with your private key. If NFTs make most of society familiar with public and private keys, message signing, etc, it will be a win.
Yep, if someone else tries to access with your ticket you can always sign with your wallet somewhere to resolve the conflict.
We will probably see crypto wallets integrated in our phones and associated OSs pretty soon to make everything smooth.
Or just have your phone broadcast the public keys via radio to a turnstile.
Thus, anyone can make QR codes that show the 2 public keys. It's trivial. This is the "showing a picture" scenerio I mentioned above. Anyone can show the right picture, especially since the picture that needs to be shown is public information.
Which of these can you not do on TicketMaster today?
[1]: https://wiki.c2.com/?TheyLaughedAtEinstein
It's much more impressive to those people to have paid to support the original rather than having a knockoff... This has been true as long as goods have been produced.
This is a funny way of saying "to enter a speculative market with foolish money."
Most paintings don't have (much) value. Behold my latest work, the brown ring of quality... do I hear... 5 cents?
A few paintings have value, primarily due to the fame of the artist or the history of the piece (It hung <place>). Supply is frequently capped by the fact the artist is dead...
I'm a pretty big crypto-skeptic, and I'm especially an NFT skeptic, but this is a weird argument. It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much? Even more, it's possible to create extremely high quality reproductions of famous Picasso paintings, but they would have just a teeny amount of value of the original.
Reason being, with very expensive art, and other things like a signed book or baseball card, what you're really paying for is the provenance of the item, not so much the thing itself. While I'm skeptical that the NFT form of "digitally assigned provenance" will be valued similarly, I can understand the argument for why a piece of digital artwork with an associated NFT isn't that different from a piece of physical art with the artist's signature.
On the other hand, minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.
Most art in the art market is pretty worthless (at least monetarily) - just go to one of a bajillion garage sales to see why. But a few pieces of art will be worth a lot because something about them is desirable.
It's the same with NFTs. There will be a bajillion "beanie-baby-NFTs" that will be close to worthless. And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".
"I control some arbitrary bits on an arbitrary blockchain" will never have the same cachet.
Not necessarily. The original creator that issued that "Charlie Bit My Finger" NFT could also create 1,000 more of them tomorrow. And all of those NFTs would be exactly as valid as the original, it wouldn't be equivalent to making a print of the Mona Lisa. It wouldn't be downstream of the original NFT, the original NFT is just a link to a publicly hosted asset.
You're trusting the creator that they won't do that, but you have no real guarantee that they won't. That's doubly true when you start looking at corporate-backed NFTs like what the NBA is doing. They control the entire supply of the NFTs they issue, you have no way to guarantee that they won't re-issue all of their NFTs that you own.
Right. But also nobody acts like limited print runs are mathematically non-fungible.
If the best argument for NFTs is that they're scarce in the exact same way that existing systems produce scarcity, and that this scarcity is enforced using the same systems we already have, that's not a good argument for the existence of NFTs. You might as well just do normal token issuance using existing technology.
You misunderstand the word non-fungible here. They are non-fungible because 2 copies are recorded like this:
- token 1, owned by Alice - token 2, owned by Bob
Bob and Alice may are may not be willing to make this trade, that is up to them. The two tokens are distinct. After they trade, it is still clear who the owner of each token is.
A fungible token is recorded like this:
- Alice owns 1 unit of token CHARLIE - Bob owns 1.3 units token CHARLIE
If Alice sends their one unit to Bob, he now owns 2.3 units. No one knows which one these 2.3 units was Alices. It's just a counter
Note that no one acts like this is any different than I explained it just now. NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".
What NFT people do is argue that the uniqueness of individual tokens matters. It doesn't. They try to have their cake and eat it too, they try to argue that the NFT's link to the individual artwork doesn't matter when evaluating the technology, but that it does matter when trying to determine whether or not NFTs have value.
There are two ideas being conflated here about fungibility. If you want to argue that NFTs actually represent an artwork in some way, and that owning an NFT is somewhat similar to owning a piece of art or that it carries some meaningful connection to that artwork, then for all practical purposes NFTs are fungible resources. The attributes of an NFT that link it to an artwork are not guaranteed to be unique.
If you want to argue that the part of an NFT that matters is the individual token itself, then sure, they're non-fungible. But if that's all we care about then they're also worthless, because nobody cares about owning serial numbers, they care about owning a token that meaningfully points towards a socially or personally valuable item. They care about the thing that the token represents.
The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.
I brought this up elsewhere, but if I pull a $20 bill out of my pocket, it will have a unique serial number on it that corresponds to only that bill, and no other bill. So technically, by your criteria, a $20 bill is just as non-fungible as an NFT. It's technically unique in the same way that an NFT is.
But what I'm getting at with that comparison is that it's not enough to have each NFT be technically unique. They have to be unique in a way that matters, they have to be unique in a way that somebody would care about. Otherwise you might as well just collect $20 bills. Back to my original point, if the only thing that NFTs are providing is that the token itself is unique, that's not an improvement over any of our existing systems. You can already issue unique tokens without bringing NFTs into the equation, issuing a unique token is easy.
I don't really understand your concerns to be honest. It is exactly as you say. The connection to the artist and art matters.
Yes if an artist releases 10-editions for their JPEG image (which happens frequently), then those 10-editions may be semi-fungible, in the same way that say "floor-price cryptopunks" are, where many people are sort of happy to put them in a basket and trade the floor without caring too much about whether they have token 1 or 3. But someone might well decide to care, because token 1 is the one their grandfather used to own many years ago.
Some people may value the edition number 1 more than the remaining 9, but maybe edition 8 was previously owned by Elon Musk and carries a premium.
beeple can decide to release 10 thousand more tokens representing the artwork sold at Christies for $69m, equivalent in every way except the serial number It's anyone's guess what would happen, but presumably it would cost him in reputation, and the original would still be able to command a large premium.
Artists releasing physical prints also on occasion release another series some years after the first; Damien Hirst is releasing more dot paintings, and they are all so fucking similar they may well be considered fungible.
It sounds like the current system is working, that the social system for determining value based on context is working. NFTs aren't making that better or worse, we're using the same social process that we used before.
And I mention elsewhere, NFTs aren't even really helping that much with the distributed ledger either, they still have to hook into the existing systems for determining seller trust and authenticating that the NFT you're buying is "real". There's little benefit in decentralizing the ledger when sellers have to coordinate with each other to ban bad actors anyway.
So we have two systems that already work, that have worked for ages, and now they're linked to the blockchain because... why? All of the use-cases people talk about with NFTs are stuff that you could always have been doing, you don't need a blockchain for any of this. And it's not clear that the blockchain makes any of it easier to do.
I'll add onto this that the core technology has no way of verifying which beanie baby NFT is "valid" outside of traditional centralized mechanisms like IP law and large validators. You can duplicate NFTs that point to the same beanie-baby-NFT link, are totally indistinguishable, that don't have any artwork that you own, and nobody can stop you outside of centralized mechanisms. As soon as you try to build a market on top of NFTs, you're right back inside the current system of ownership enforced by legal contracts and centralized validators.
At least with Bitcoin, you don't have to tie your wallet to a Twitter verification system to figure out whether or not your funds are real or just a low-effort scam.
People can disagree with whether Bitcoin has value (I think it's a bad system), but at least it doesn't completely fall apart as soon as you leave Coinbase. NFTs really don't work at all unless they're tied to centralized services, because anybody can make an NFT for anything, regardless of whether they have any real relationship to the asset they're issuing. Even official accounts that are validated: you can mint 5,000 NFTs of the same beanie baby, nobody can stop that from happening. Any scarcity in the system is only self-imposed by the actors within that system.
> But, there's no religious law that NFTs must be a pure blockchain thing.
Every time someone tells me that verification and enforcement are inherently social/legal processes and not processes that the blockchain is designed to solve, I feel like they're just one step away from finally understanding why people don't like NFTs. The only value of adding all of this math and environmental impact and complication and fragility to the system of buying digital assets is if doing so decreases the social/legal burden of verification. And NFTs don't do that, they don't do anything. They don't even make the secondary market safe.
There are of course systems you could build on top of NFTs that would help solve some of these problems. But you could also build these systems without using NFTs. None of the proposals I've heard about enabling decentralized verification on the secondary market, or making it easier to pay artists, or building a web of trust for issuers -- none of those proposals need NFTs to exist before they can be built. The vast majority of these proposals don't require anything other than basic federation, and many don't even need that.
The blockchain part isn't adding anything, it's useless. We could have the exact same conversation we're having right now, and come up with all of the same solutions for verifying and distributing digital assets without ever needing to talk about or consider a blockchain. It's not adding anything, it's just kind of there.
And you're right, there's no strict law that everything must happen on the chain. So we could also just drop the chain entirely, use the same token issuance systems that have existed for ages, and focus only on solving the problems that actually need to be solved.
NFTs, in addition to being collectibles, can be used to unlock access to features, like an exclusive chat room or give the holder access to bonus content only available to those X number of NFTs which were minted. Furthermore, secondary markets could easily exist for transferring access, something that is not really doable these days with accounts.
I’m with you that the current art/collectible NFT craze seems a bit much, but I actually think the future utility of this “access” property is where things will get interesting.
Secondary markets - why would vendors want or put up with that?! This is explicitly disallowed in most contracts for a reason.
There is no utility here, the use value of nfts for tracking ownership and of bitcoin as a currency are both close to zero.
To fix the supply of digital artworks, there has to be at least a loose consensus on what the accepted "canon" of those works consists of. For now, that's an unknown.
Art prices are also driven in part by a partial record of sales, so at least we know what some paintings sold for in the past.
What we don't know about the digital art world is what conventions will emerge, that define the "supply" of works of particular value.
We could mint an infinite number of Picasso NFTs, though. None of them are the actual piece of art.
You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting, but it’s still just a fancy hyperlink to a page that says “This is a Picasso NFT”.
NFTs are basically fancy blockchain transactions with a memo field that can say “This represents a Picasso painting” and we’re all supposed to believe that it means something.
The closest equivalent would be something like baseball cards. There is a market for baseball trading cards, but everyone is fully aware that they’re still just arbitrary prices of printed cardboard.
Just smells like laundering to me
I’m pretty sure the analogy would be that Picasso himself actually issued the NFT. Anyone can “argue” that Picasso issued an NFT, but that’s just like arguing that your extremely skillful forgery is a Picasso original. What’s important is if it actually is an original.
So, a more apt analogy would be Picasso donating a painting to a museum, but trying to sell you a certificate saying that you own the artwork, but you're unable to move it to your private collection or gain any additional access than the general public.
That seems like a pretty raw deal to me.
So with NFTs, its the same, anyone can write a document that says "this certifies ownership of a picasso painting" and it doesn't mean much of anything. However if Picasso writes up a document broadcasts somehow he has done so and the document says you own x painting, then its easy enough to certify to anyone that you own a Picasso from the man himself. The story is not arbitrary, this is precisely why it has value. The arbitrary easily copied stuff is cheap and meaningless and known as such. The "rare" NFTs and stuff selling for massive prices is expensive because it is genuinely so. You can write a comment here about how easily you can create a counterfeit NFT, but how easily can you actually convince someone to buy it from you? You can observe that baseball cards are just pieces of cardboard but how easily can you acquire a card printed when batter X was a rookie?
I'm not saying this sort of value is easily quantifiable, but it is easily observable, identifiable that its reflective of a real element of reality and not (entirely) arbitrarily imagined.
In the film, an artist forges works of art by famous artists and fraudulently sells them to museums. It's implied that the museums don't know they are forgeries or don't care. So why is a Picasso more valuable than a perfect reproduction of it?
I think the point is, it's all just perception, and greed.
Cryptography is a highly significant technology, but cryptocurrency and now NFT too often just smacks of a money making scheme, promoted by self-serving people who happen to own a lot of it.
Consider this statement: Scarcity is fundamental to any store of value. There are an infinite number of potential cryptocurrencies.
Which is why alt coins are our generation's version of penny stocks. But specific coins have scarcity built in.
Right, the "limited edition" sales ploy (limited to how many they can sell).
Because they can also mint a "new collection".
By definition, every non-fungible token is its own unique snowflake. There are new snowflakes made every day. Few ever trade, and the ones that do are probably wash trades.
I'd say most of the value of Bitcoin comes from the ability to do payments that are not possible in the current legal system. Some of them may be illegal. Some of them might be genuinely useful like in El Salvador.
But the reverse is not necessarily true. NFTs are just fundamentally a lot worse than cryptocurrencies. They have every problem that cryptocurrencies have, except they're also not scarce, require centralized verification mechanisms, have bad incentive structures around hoarding, are prone to link rot, etc, etc, etc...
NFTs are much harder to justify than cryptocurrencies are. They're all of the drawbacks with virtually none of the upsides. I don't know anyone who likes NFTs but dislikes cryptocurrency.
Sure, technically you're making a new NFT when the same creator mints an NFT that points to the same work as before. But also technically you're making a new dollar with a new serial label when the government prints money, and we don't call paper money "non-fungible". It's not a kind of uniqueness that matters to anyone.
That's metadata, to display or use it in dapps, this is not how you uniquely identify an NFT. The metadata is optional.
For the vast majority of people hyping NFTs, the metadata is the only part they care about. The metadata is the part that links the NFT to an actual piece of artwork -- the issuer and the work that it's linked to are the only reasons why some tokens are worth more to collectors than others.
Without the context of the person who issued it and the work that the token is being paired with, you're just trading numbers around and assigning completely arbitrary values to them.
Which to be fair is a common criticism of NFTs. It's just weird to hear an advocate lean into that argument themselves, normally advocates are trying to convince me that NFTs mean something.
Note that the argument that NFTs are useless if you need to rely on social consensus to link token and asset is not valid - the use case is in having a common ledger to track ownership of the token.
You voice your objection to this point below, and I'll get to that, but I just want to be clear: the NFTs are adding nothing to the existing social systems we use to determine value. We could have a collective memory/agreement without NFTs.
We're going to get to having a shared ledger below, but I just want to be clear about where we're starting -- NFTs do not add any value to the link between a token and an asset, we use the same social contracts that could always have been enforced before.
> the use case is in having a common ledger to track ownership of the token.
Now, a common ledger is a nice thing, but it also doesn't require NFTs, you could set up the exact same system with a little bit of federation.
Of course, federation would require some degree of trust and moderation, but here's the problem: NFTs require all that too. The only way that the NFT community has figured out to deal with copycat NFTs is to introduce secondary off-chain validation of which NFTs are "real" and which ones aren't. You end up recreating the exact same ecosystem of services that validate which NFTs are safe to buy, and the end result is that the secondary market isn't safe to use unless you run it through one of those services. Those off-chain validators will log fraud NFTs and refuse to validate them. As the ecosystem grows, they'll eventually shift to only validating NFTs that come from sources they trust. It's the same systems of moderation that already exist.
It's really hard to claim that NFTs add any value in the form of a trustless distributed ledger when one of the biggest recent events inside the space is Twitter verification. How much more centralized than that can you possibly get?
I bring this point up in a previous comment, but for all the criticism I have of Bitcoin (and I have a lot), Bitcoin at least doesn't suffer from this problem quite as much as NFTs do. The entire ecosystem for Bitcoin doesn't fall apart as soon as somebody stops trading on Coinbase. The NFT ecosystem has no idea how to keep the secondary market safe from copycat NFTs for normal buyers without cloning the same centralized systems for "genuine product" guarantees that we already have today.
And since NFTs aren't changing anything about our social consensus of value, and since NFTs aren't changing anything about how we verify goods on the secondary market, what on earth are they doing that's of any value? It's just an over-complicated system trying to reinvent federation. If the secondary market for NFTs was safe to use without hooking into a 3rd-party validator, or if the distributed ledger was safe to trust in its entirety without filtering out a socially determined list of bad actors, then you might have a point. But it isn't safe, NFTs have done nothing to make it safe.
Except no, not easier to trade/verify if you have to hook into off-chain validators to verify that the token is legitimate. The part of transaction security that matters for most people are the trust parts that NFTs explicitly don't try to solve.
The big problem with trust in any token system (and really any art market) is figuring out which tokens are being issued by whom and whether the token/work you're looking at is "real" and actually issued by the artist.
Which NFTs don't even try to help with; they leave that to off-chain validators.
- Paper certificates of ownership of ideas/ingantible works, which have been used for art in the past going back some decades, and maybe somewhat more common now with certain conceptual / digital art pieces.
- A centralized leger, as the folks from Blain|Southern tried to do with seditionart.com.
- Or, maybe you can do something with federation, as you suggest?
That is just a tech argument of whether a blockchain (say Proof of Stake-based to avoid the energy argument) or something else is better, but note: It changes nothing about what the NFT is (and we can still call it that for simplicity). It would seem to do nothing to alleviate the concerns of people who don't understand paying for a pointer to a media file; since that is still what the federated ledger tracks, right?
If people feel a federated system works better for this, they can certainly build it. But Twitter is just Instagram from a purely technical perspective. There is more to product-market fit than the underlying database.
The whole thing came together with blockchains, maybe because you need an easy way to buy that stuff too, because there was a bunch of rich crypto people actually willing to spend money (when no one before was much interested in paying digital artists for their work), maybe cause the tech was there.
In general, I don't see what the argument is about; the ledger works quite well on a blockchain, and would work less well in a federated system from a trust perspective. I.e. your analysis about the trust vectors involved making the chain useless is wrong. Sure, platforms can choose not to show certain NFTs, and OpenSea has some dominance in the space, but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
There is really nothing centralized at the center of it in the end. Artists publish work on their own websites and their own contracts all the time, and if deafbeef posts on Twitter about his new NFT on this website, I will trust the existing social verification system (my friend telling me about it, his Twitter account being a known-entity).
This is distinct from Twitter avatar verification, which I predict a) will not happen and b) is indeed useless unless Twitter wants to be in the business of deciding which Punk-derivative project is looking too much like the real thing, which I doubt it wants to do.
A) the technology
B) the average consumer's understanding of the technology
I think we need art-tokens to be on a blockchain, and in a lot of ways the blockchain might even make this kind of stuff even harder. It's often desirable when working with non-fungible tokens to be able to easily update their metadata, block them, or link them together. NFTs are slowly making movement in this direction, but they're moving very slowly, and it's not clear how the blockchain is helping with any of those features.
I also think it's worth asking why this scene exploded specifically with NFTs even though the systems to make it work existed long before NFTs were on the scene. Frankly, I don't believe you that the average NFT investor understands that the ledger is just a ledger. I've talked to people who are involved in casual NFT collection, and they think the technology is magic. They think that the blockchain magically makes their tokens valuable.
> but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
It's not really the blockchain that makes this happen though; federated systems can split from each other and route around each other just as easily. If a federated ledger tries to remove tokens, communities can still choose to recognize those tokens and either fork the ledger or run in parallel alongside it.
What you're seeing with OpenSea and clone projects is the social side of this, not the blockchain part.
They are both vehicles for gambling with no real world application or value.
Well unless you count ransomware as value.
Right now, there are no mechanism for extraordinary digital artists to make their art expensive like IRL art. The best thing is you can do commissions for people, but it's hard for them to maintain their rights (both for artist and customer).
Maybe NFT will be more prominent with some "data registry" between platforms to make it global to check your rights on items, and great artists can sell their art for a more reasonable price. For now, IRL art is like a "club for friends," and digital artists are not taken as seriously as they, even when digital one draw some almost masterpieces and spent 3-6 months on every item.
Note that there are definitely currently ways for digital artists to make expensive art, and that's in the form of commissions. If you really want to support an artist, find one you really like, and pay for a commission from them. You may also be able to pay more for forms of copyright (like reproduction).
NFTs are the worst possible way for artists to make money from digital art.
NFT buyers are clearly more respectful of an artists craft: They buy the work the artist really wanted to create, and they respect the fact that they cannot be the owner of the work in a moral sense.
There are an infinite number of made up currencies as well.
Because neither of them function as a currency then they are the same thing, the difference being, with NFT's you own some 'art' or something like that, with Crypto you own a 'number'.
The 'potential usefulness' of Crypto makes it feel like it has more material merit, but in practice, they're not useful (not yet), so they might as well be NFTs.
There are no Crypto models today that make sense in any real systematic way, other than some governments reasonable attempts to be more digital, which comes wit a bunch of scary caveats as well.
Currency is a form of social credit that is fundamentally tied to the economy in which it is used as a means of transaction, there is no escaping that reality. We can't just magically make up some thing that is independent of that underlying reality.
If we could merely overcome the kludigness of banks, and the transnational cost of VISA - and make something a little more easily internationalized ... those things would help, but those probably are going to have to be a function of 'good governance'. Maybe the experiments in New Zealand and Sweden etc. will pay off if they can find something that works, that can be expanded upon.
I'm sure we'll see much more interesting use cases for NFTs emerge over time, and I'm excited about that.
I suspect that most of it does not come from outside of the current ETH (or whatever) ecosystem. I'd bet that most of the volume comes from people who are either treating it as play money, or trying to pump the NFT scam for their own benefit (real or imagined).
Not possible to trace where the money is coming from.
In fact, someone can "sell" an NFT to themself in a wash trade between two wallets they control. The last trade price of the NFT is now recorded as the transaction price, but it's possible that money never actually changed hands.
Want to have an expensive NFT? Just trade it to yourself for as much money as you have in your crypto wallet. You keep the money, you keep the NFT, but now everyone can see that someone "paid" a certain amount for it.
I heard rumors this is what happened with the Beeple nft
E: I looked around a bit and can't find any source for this, so I guess it's just a rumor?
However, an auction house is going to take significant fees as a percentage of the sale price and your shill bidder will want a cut as well. You’re also going to get a large tax bill because you technically had a realized capital gain and the auction house will report it.
With NFTs you can do a blockchain transaction for a relatively small fee by yourself from your computer. No taxes owed because you didn’t actually sell anything.
It can be used for various scams and as an investment, but the whole premise is ridicolous: people pay for art since they like it and want to own it. (And in this NFT scam they dont own anything useful)
Chain analysis is certainly something you can do.
You can use TornadoCash on Ethereum & this was used in a recent scandal involving NFTs by the ex-head of product of openseas.
Unless you know who the buyers and sellers are or transaction fees are high (like an auction at Christie's), you have no idea if the sales are real, so it's pretty easy to make it look like the asset is appreciating when it's really just manufactured hype.
"Ecosystem" is a word that I believe sprung to life in the 70s, referring to the entire collection of organisms inhabiting a 'place', along with the weather conditions etc. in that place. The term was coined because without it, you need (or rather, I needed) 16 words to express it.
So it bothers me when people use the term to refer to collections of stuff that's never been alive: the Java ecosystem, the cryptocurrency ecosystem. These are not "ecosystems" - they're called "systems".
See also "epicentre".
Upvoted - I appreciate the observation about where the NFT volume comes from.
"ecosystem" denotes an environment created by some kind of vessel e.g. Earth, the ocean, Ethereum, etc where independent entities can be created, develop, and compete for resources, attention, space, etc provided by that environment. The entities have no real connection to their environment besides just living within it and interacting with the other entities.
Ethereum is just as much of an environment as the Earth is. It provides the foundation which the entities live on top of (security), the resources the entity needs to exist (data availability), and the gathering point where complex interactions can happen (smart contracts and end users). Ethereum doesn't build any of the ecosystem, it simply provides the marketplace where life happens.
I don't agree that systems have to be designed.
I mean, it depends on what you mean by "system" - was The Capitalist System designed? Who designed it? The atmosphere is a system, by most standards; it wasn't designed (or if it was, I'll shoot the designer). The human brain has most of the properties I'd expect a "system" to have; but hopefully you share my view that it wasn't designed.
But I'm not really bothered what a "system" is. I was just having a rant about words that used to mean something specific, until they were borged by lazy opinion-formers and made into cliches, rendering them useless for their original specific denotation. C.f. "epicenter".
(This seems to be a thing I care about more than other people; discount my remarks accordingly)
Probably 1/2 money laundering and 1/2 rich people that have too much cash and ran out of ideas.
That is what people say, but what I don't understand is what ownership is actually conferred with NFTs. The only "ownership" is the ability to transfer the NFT to another person, which simply gives them the ability to transfer it to another person (which sounds a bit MLMy).
For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
The application becomes the central authority for some arbitrary token. Yes, in theory they could use "an NFT" to represent a key to some in-application capability but at best the owner of the NFT has an exclusive right to that capability at the whim of the application owner. The NFT owner can't really claim to own any real "thing" in and of it's own right.
The application owner gains very little – they could just implement a Plan Old Database within their system.
The owner of the "NFT" gains very little – except the theoretical value of a token they could trade, and might have value, as long as it's backed with some capability provided by the application.
None of this applies to things like "a gif on the internet", for which the NFT means exactly nothing if you have no enforceable rights.
Many different applications can build on top of this open authenticity verification. This decentralised layer for authenticity verification is much more powerful than a single application builder can achieve with their own database. The concept itself is very powerful for interoperability but some of the valuations of assets currently feel ludicrous.
But authenticity of what exactly?
If everyone agrees that, for example, a particular distributed ledger provides authenticity of some class of artwork, that is fine. But soon the real world happens eg. a court in one country orders the art to be seized and handed over to a third party , but they don't have the ability to force the NFT to be transferred because the former-owner is in a different country. Would the art world suddenly pretend that the artwork is not real because the current owner does not have the NFT? We are back to square one.
And on top of all that, assets from one application can be integrated into another application. If I build a game and I allow people to use the "sword of NFT" they have from another game in my game then I've created a big incentive for people who like that other game to also play mine.
Meanwhile there is very little incentive for some other application to use those same tokens when their value is contingent on the whims of the original issuer. You're tightly coupling your business and liability to some other party who hasn't made any guarantees, promises or agreements to you. Its a can of legal problems.
Ultimately is like trading Apple gift cards, Pre-loaded debit cards, phone cards etc - its an abstraction in which then value of the token will only ever be less than the cash paid for it up-front, and most people trading them have some other reason for taking the hit (ie money laundering, fraud, etc)
NFTs are just a further abstraction on that same failed idea – a cyptofinancial derivative to make something appear real that isn't real.
That's the part about NFTs that I keep getting hung up on, yes. I get the abstract notion of creating artificial scarcity for digital goods, and how that could have market value. But we've seen absurd things like "use this service to create an NFT for any individual tweet," with no verification that the NFT is being created by anyone who has any legally-recognized right to the tweet's content. If an artist tweets out an image of a new art piece of theirs and I mint an NFT from the tweet, what exactly do I have "ownership" of? I sure don't have any rights to the artwork. I don't even have any rights to the tweet text, which is implicitly copyrighted by its author.
And it's that sort of foofery, more than anything else, which makes me more inclined to be skeptical. Obviously there are NFTs created by legitimate copyright holders who can legally transfer ownership or other rights to you, but the legal recognition of the ownership doesn't seem to have anything to do with the inclusion of the NFT in the transaction -- the NFT itself can't verify that it was minted by someone who had the necessary legal rights to assign ownership of the thing the token represents.
I didn't vote you down, but I do think it would have been a better use of time to explain why NFTs are the future, rather than ad-hominem attacks on people who disagree with you.
Please tell me why NFT are valuable and useful, with very concrete examples of utility. If you use the word "ownership" please explain in context what this means.
I agree with the OP that a lot of people here seem unwilling to take a moment and think about this more deeply, and how NFTs might compare to existing ways of valuing things. To be fair, it does take some time to wrap your head around, and maybe an open mind.
People complaining about a lack of "real" ownership often seem to mean ownership as in owning the copyright, but note that during the piracy debates of 00s the tech world spent a lot of effort trying to convince the world that a copyright claim is fundamentally different than physical ownership. And so it is.
There is physical ownership over a digital file; and that is having physical access to the bits that make of that file.
NFTs work because of the realization that a significant part of the value of physical artworks has nothing to do with there physical form.
Now there remain a lot of open questions; for example, it may well be that the physical form is still somehow essential, even if a small part of the value. Yves Kleins Immaterial Zones don't seem to be trading a lot at Sothebys, as interesting as a concept they may be. People may well feel the value of hanging your Rothko in a home is a very important part of the experience, even if 99.9% of the value is simply provenance (which an NFT artificially creates for digital goods).
It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
> It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
I think when people see utility in physical artwork, to the point they would travel to the other side of the world to see it, they find it hard to credit that almost all the value comes from provenance.
Likewise I think people who see art as nothing more than the name of the person who painted it will wholly embrace NFTs as investments.
These two groups are probably not going to come to an agreement.
The objection I mentioned in my previous comment was that the original copyright holder of a creative work is the only person who can transfer any ownership rights. But let me restate this without invoking copyright: if I have the legal right to transfer ownership of a digital file in any legally recognized sense to you -- whether that file is a piece of software that I bought on physical media I am conveying to you, or artwork I created that is being digitally transferred to you -- an NFT is only useful as a proof of ownership if we have contractually stipulated that it does. That contract exists independently of the NFT, incorporating the NFT only by reference, just like the NFT itself only incorporates the digital file it tokenizes by reference. The NFT itself has no legal authority -- it's just a transactional record. As I mentioned in my previous comment, it's possible to easily create "bogus" NFTs of digital files whose creators or rights holders haven't authorized it. Furthermore, since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain, so again there needs to be a framework outside the blockchain to truly establish ownership.
So the question has to arise: do you need the NFT in this transaction at all? Why can't the original contract incorporate the digital file directly by reference itself? The NFT doesn't really do much to support "proof of ownership," while instead clearly creating opportunities for scammers taking advantage of people who don't understand that just because you have an NFT for a digital file doesn't mean you necessarily have any legal authority to sell any kind of right whatsoever, copy or otherwise, in that file.
Maybe you don't see it that way -- clearly a lot of people don't -- but please do not imply I haven't taken a moment to think about this more deeply. I've thought about it a lot, in fact, and so far I haven't found a convincing response to the concerns I've expressed about this particular use case for NFTs.
My apologies if I came across as insulting, but I do feel a sense of frustration with some of the arguments provided in discussions like these, and I think we can agree that some of the language critiquing NFTs here does not scream "open minded".
First, let me correct a misconception that may give you a slightly different perspective. You write "since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain". It is worse than that! There is nothing that enforces uniqueness of an NFT within a single blockchain; not in a way that would make such a duplicate any different than a duplicate on a different chain. You couldn't prevent such duplicates, even if you wanted to. First, artists may on purpose create multiple copies; second, the only way such unique could be detected would be hashes, which can easily be fooled. Third, a scammer minting an NFT of an image belonging to an artist, would then block that artist from being able to mint the NFT themselves. It sounds bad, but it really doesn't matter for the concept to work. People scamming by pretending they are selling art pieces they did not create is a problem, but it is not a problem NFTs set out to solve (and indeed cannot).
The NFT does not confer any legal rights, correct. But what legal authorities would you want it to confer to the owner? There are a couple that are really useful: The right to download a copy of the art piece from a website. Yes. The right to use the art piece as a profile picture on Twitter. Sure! And artists do often provide license agreements along those lines. (If they don't provide any license information, I believe an owner could try to argue that there is an implied license, and may or may not succeed in that claim.) Some artists put their work even into the public domain.
I would agree that owning an NFT which you do not have the permission to copy to your hard-drive, or which you cannot see on OpenSea because the artist refuses to allow OpenSea to show that image, seems quite degraded. It will probably be not very popular. And yet, some people just might pay for it anyway, because the ownership of the token on a blockchain is what matters in the end. If a popular artist such as beeple were to publish an NFT, explicitly denying that the owner has any rights to even make a copy of the image, there is no doubt someone would buy it. Call it conceptual art. There is no legal system required, because like you say correctly, the NFT itself does not confer any legal rights. The blockchain is the definitive record of ownership, because legal modes of ownership are basically orthogonal.
Consider the example of Mitchell F. Chan's Digital Immaterial Zones (I recommend the blue paper: https://github.com/mitchellfchan/IKB/blob/master/Digital-Zon...), which explicitly is a token without any visual media attached; there is nothing that exists outside of the blockchain that you even could own. It is the pure distillation of this idea.
There is a difference between an artist saying "you have the right to download my file" and the artist saying "I consider you the owner of this immaterial piece that I created, I will only acknowledge 10 owners maximum, and also all of you have the right to download the file".
The latter kind of agreement can certainly be modeled with a conventional contract, and indeed that has been done in the art world, but it is just so much easier on a blockchain to track those 10 owners, verify that the person selling to you is an authentic owner and that they sell their claim only once, and so on.
>Note: It is important to note here that we think that NFTs as a technology hold incredible promise to help more evenly distribute financial outcomes to community users, not just community organizers. We are in the early days of exploring what digital ownership actually means and it is far too bearish to universally decry the technology. Our concern is with the following types of NFT applications.
https://imgur.com/a/UJpFjzx
I think people who have been in bitcoin for 10 years are more skeptical of NFTs because suddenly they’re framed as the ultimate crypto use case. And Eth is ultra sound money. And while there’s some interesting generative art (eg deafbeef) most of the industry is hyping NFTs for videogames.
There are better and more transformative use cases than just the “metaverse”.
All of these things end up being an exercise in cryptocurrency people in a round-about way proclaiming to the world that they don't know what a thing is.
For example: NFTs are a great idea to people who have never read an undergrad definition of what art is.
It's prescient. Twenty years ahead of implementation.
Absolutely wild.
It's discussing collector cards that celebrate different methods of cryptography on the actual card. That is not even close to an NFT.
An NFT can be some shitty gif hardly worth mentioning let alone displaying.
NFTs could be boy bands. It was fun and a few things came out of it, but largely most people don’t know or care who was in Take That and we moved on.
Unlike Mozart or the Beatles which manage to have relevance beyond their times and lives.
NFTs will always be a thing, but current popularity or references in white papers doesn’t mean much in a broader context.
NFTs are standards for digital ownership. If you think digital ownership will not stand the test of time, I don't know what to say. It's a critical technology for the future of the web and metaverse.
I'm sure that within the NFT ecosystem, some trends will fade with time. Maybe it's animal profile pics, or AI generated art collections or maybe it's autobattler gaming that falls out of favor, but as long as humans like gaming, music, art, and entertainment, I suspect NFTs will thrive.
It's not surprising that a lot of known MLM scammers in my country moved into DeFi.
As with everything NFT crypto, the value is all probabilistic anyways /s
right, but uplines getting paid in a necessary but not sufficient condition for MLM. In a MLM it's usually derived through their downlines. The mechanism described is a general benefit to all participants in the system which isn't very MLM-like. platforms (eg. youtube) tend to have the same "general interest drives the value of the ecosystem up" (ie. creators convincing other creators to join your youtube clone increases your site's catalog, which boosts the quality of recommended content you can show to your user to get them to stay on longer, making it easier for creators to get views), but you wouldn't call that a MLM.
* value is accrued by getting new people involved who buy something
* that they are buying in part because they believe they can make more value by selling it to someone new they recruit
* non-salaried workforce
* built on relationships and word of mouth
In the end, its an analogy not a proof of work...
Honest question though: how long does it have to go on until it stops being a pump and dump in your mind?
Then there's a potential to stop the pump's.
https://www.reuters.com/technology/us-sec-sues-bitconnect-fo...
https://www.courthousenews.com/class-claims-securities-backe...
https://markets.businessinsider.com/news/currencies/coinseed...
https://www.paulweiss.com/practices/litigation/white-collar-...
https://www.cbsnews.com/news/youtube-twitter-bitcoin-scam-pr...
Somehow I don't think you'll read those and decide it's not a pump and dump anymore, are you saying that it's not actually a condition for beliving it's something other than a pump and dump, but rather a mechanism that might reduce the desire to participate in a pump & dump?
But at least the solid tech companies had revenue in 2001. There's a long history of useless assets becoming a part of a bubble that pops. And this even worse than Beanie Babies. At least with those, if someone still enjoys them in 2021, they can put them on a shelf. Are you going to frame printed QR code of a NFT and tell your friends to scan it with their phones to verify what virtual asset you own?
Why has it been able to withstand a draw down of 50% 4 times in 13 years?
Who convinces people that NFTs aren't just a fad, they're really innovative and you should consider adding them to your portfolio? Not people who don't own any.
Pyramid and MLM are related concepts, and usually MLM is pyramid. That doesn't mean all pyramids are MLMs though. Same applies for other types of scams or structures.
[1] https://support.opensea.io/hc/en-us/articles/1500009575482-H...
People spent lots of money on game skins, rare weapon. So there is a market.
When one goes to a physical conference: flair/badges serves similar purpose. NFT could be that in zoom/team/slack.
My naive way of looking at NFT: Maybe it can be used to help fund open source free software. Instead piece of art; a flair/pin/badge for showing your support for your favor projects.
do not underestimate people's vanity.
High end art is more about investing, money laundering, and tax havens then status.
https://twitter.com/af_mada/status/1443243702156206089?s=20
Are you suggesting Twitter validates that a Twitter account owns an NFT and shows a check/badge/whatever? I also don't think that works. Whatever rare NFT you have I can go make a visually identical NFT for <minimum cost of an NFT> and confirm that I own that NFT.
I often think that I must be missing something about NFTs because they seem breathtakingly stupid. But, I've yet to find out what I don't understand about them.
Yes but your NFT would be deployed on a copycat (ie. replica, inauthentic) smart contract.
Basically everyone ends up ill informed.
There is definitely discussion happening on exactly your point, but i imagine there are options to combat the fake NFTs given that you can't fake a signature from a known public key.
Given that there are so many NFT projects I speculate that the twitter verification will only happen for a small subset though.
Can you sign that NFT with the creator's private key?
That's the point of digital assets, they are fungible by definition because it's a bunch of 1s and 0s, doesn't matter which system you run it on you will get an indistinguishable output.
That's exactly how you know you've got it. The difference is that you didn't feel the heat of FOMO convincing you to dive in without an understanding.
[0] https://en.wikipedia.org/wiki/Veblen_good
I will literally crawl on the floor to laugh at that stupidity.
https://central.ppsspp.org/whygold
Similar angle:
”Are NFTs DRM by Another Name?
[...] What do NFTs do that DRM doesn’t do? Not much. To me, the only interesting thing is that NFT schemes make public the identities of people who paid money for the NFTs that point to digital objects, so that those people have help from the NFT platform in exercising bragging rights. DRM technologies generally don’t do this, though they certainly could.”
https://copyrightandtechnology.com/2021/03/15/are-nfts-drm-b...
NFTs make me think our society has gone completely insane. People sometimes ask me to explain them because I, like, "understand technology", and I have no explanation for what they want explained.
EDIT: Good video that summarizes it well that I just found: https://www.youtube.com/watch?v=zU5JsP6pUpc
I don't really like the collectable scarcity kind of thing, but I like building a collection and having an easy way to explore and find art and artists. Also a lot of these websites are providing this art at higher resolutions and quality than social media would allow for (IPFS) and without direct hosting.
I think it's here to stay in some form but it'll definitely undergo some change.
Not everything exists for function, let's enjoy our time.
I own plenty of concert tickets.
But on the other hand, there are a bunch of interesting projects out there where you can do some cool things with your NFTs, like the "card game" Axie Infinity and other ripoff projects - with a very few original ones - inspired by it.
NFTs for collectible card games is promising and maybe this can lead to some other interesting use cases in the future.
Anyway, I recommend searching for "utility nft projects". Most of them seem just like something to steal money from other people, but again... there are some interesting things coming out from it.
https://www.fortressofdoors.com/the-degraded-blockchain-prob...
> In short, the minute you connect your blockchain to an app frontend you now have a degraded blockchain, one that cannot even in principle guarantee immutability, trustlessness, and decentralization – at least not for assets that the app's customers actually care about.
Scratch the surface on almost any NFT ecosystem or blockchain application and I find I'm still relying on trust, or a centralized service, or a service that's more mutable than it advertises. So if I don't get the purported benefits of blockchain anyways, what was the point of getting a blockchain involved?
EDIT: Getting a lot of responses that I don’t have time to reply to. My more involved thoughts on the entire space are here:
https://m.youtube.com/watch?v=fZBIYjsXT_s
For fully disembodied NFTs where you just stuff a jpeg or it’s hash into a blockchain, my other complaint is that you’re just creating a speculative instrument that doesn’t really do anything except hope someone else will pay more for it. And I still have to rely on trust outside the blockchain that the artist approved these NFTs in the first place (there are many done with unauthorized art)
So like bitcoin? - The value is in what someone believes it is worth to be provably in control of a given asset. It also provides a great deal of social currency...certain NFT owners have identity wrapped up in them such that owning it extends social latitudes, as the reputational harm which could be done for being a ingeniousness actor far outweighs making a quick buck.
Proof of work is far too expensive and wasteful, and the necessary private key discipline to not lose all your coins puts it out of reach of normies (immutability is a bug not a feature for normies), and it’s deflationary which discourages circulation, and it’s got high transaction costs and slow speed, and just massively inefficient. So it fails as a currency, which it was originally pitched as.
Lightning network papers over this (an admission of failure in many ways) but just trades off with new vulnerabilities and further degradation of the original promises.
Make whatever digital assets you want and attach value however you like but own up to the limitations and costs. And pay for your own negative externalities, don’t force them on others.
In most of these projects I feel like it’s the aura of blockchain that’s being sold and not the substance because the actual promises of blockchain (immutability, trustees, decentralization) are always undermined in some way. I wish people would just be more honest about that.
Until then criticizing the status quo, which is doing harm right now, is absolutely valid and not disingenuous in the least.
But NFTs don't appear to have any practical utility whatsoever. They intentionally lack exactly the parts that make Bitcoin useful.
https://www.lootproject.com/
Otherwise it's literally just a text file
How about: Sign the image and generate a MAC. Then use steganography to include that information in the file. For the NFT sign create a certificate with the same key and include the MAC information. Publish that together with an IPFS link to a blockchain.
Then we can have discussions about IP law, art and what art ownership means.
https://www.youtube.com/watch?v=i86Nh-Srfsk
An NFT is verifiable metadata that can link to any other arbitrary data, such as a PNG, JPG, MP4, or whatever. Following the standards set forth by ERC721, you can add an image, external URLs, names, and various attributes that define the item's traits in relation to a broader collection that it belongs to.
It is very common to use IPFS for hashing the contents of both the metadata and the image (or other linked media), since it's an easy standard to adopt to back up in multiple places. You can even back up IPFS files permanently using a storage solution like Arweave.
NFTs have been linked to physical items. Typically the way it's handled is the NFTs are sold, but are redeemable for the physical item by the creator. So you can either hold the NFT or redeem it for the physical item. At which point the creator will need your shipping info to get it to you.
NFTs could also be used to represent things like real estate titles and mortgages, but at some point there would need to be a centralized connection or oracle connected with a centralized entity for that use case.
They're also used to represent liquidity positions in decentralized exchanges such as Uniswap v3.
At first I was a little confused by the fact that it seems that the purchaser essentially owns a URL and they would have no control over the information that the URL is pointing to. However, the concept of permanent/decentralized storage (Arweave as you mention) starts to clarify things a bit. If you have a digital asset located at a URL that can never be altered and is permanently accessible then it does start to make some sense - though I will have do some reading to understand how this is actually possible.
Thanks again!
There are other fields you can add to meet marketplace standards, such as OpenSea's: https://docs.opensea.io/docs/2-adding-metadata
To learn more about ERC721 highly recommend the auditing firm OpenZeppelin's implementation. It's one of the most used and battle tested: https://docs.openzeppelin.com/contracts/3.x/erc721
It's such a strange, strange concept to want to invest in.
What if they create a new NFT blockchain standard. Does the previous NFT become invalid? Is there anything contractual saying you can't have multiple types of NFTs on a single piece of art? I kind of doubt it.
And then there's all the times people's artwork has been straight up ripped off and minted into NFT's without their permission. The only provenance record a blockchain can authoritatively track is its own internal transactions -- it can't even prove that the original artist was involved at all; you're still relying on trust for that.
You wrap the token into the new standard if there is a new one when there is a new standard. Look at cryptopunks, they are wrapped into ERC-721.
If you want to print out an NFT display that, go ahead but it's pretty meaningless.
With NFT this cannot be done.
If I buy an NFT, it doesn't give me the right to print a picture of the art and hang it on the wall. I have no rights to display the picture of which I own the NFT. All I can say is that I own the NFT of that piece of art.
So, I can hang the hex code of the NFT on my wall and look at that I suppose. But the actual piece of artwork that is associated with that NFT? I can't even display it on a digital display in my house, because that's copyright violation.
Many NFT platforms attach legal terms that explicitly allow you to print or otherwise display the media for NFTs you own, artists generally grant permission for it or consider it a social convention that it is allowed.
The real reason NFTs exist is simple. ICOs were shut down by the SEC. The SEC prosecuted a few of the total scam ICOs (the one supposedly backed by diamonds and real estate was the first). Then they sent letters to every ICO issuer in sight: "Please explain why your product is not a security offering which requires SEC registration". Most of the ICOs shut down immediately. Operating from outside the US doesn't help. If you sell into the US (or the EU, or China, or most of the developed world) some regulatory authority wants to have a word with you.
Now, part of the idea behind NFTs was to escape SEC and CFTC regulation. Because each one is different, it's not a commodity, by definition. Is it a security? The Howey test applies, as usual. An NFT which represents something that already exists is probably not a security. That's a collectable. However, there are people selling NFTs that represent land in virtual worlds that haven't been built yet. That's a security; you're funding a startup. Also, "fractional NFTs" are almost certainly a security.
So the legit use of NFTs is to monetize fame. Which is why basketball team owners and musicians are into this. If you're famous enough to sell merch, you may be able to add an NFT to your product line. People will buy, hold, and cherish your thing.
Initial offers of unknown NFTs intended to be resold at a profit are doomed to failure, for the usual pyramid-scheme reasons.
As I point out occasionally, go look at Beanie Babies on eBay. Offering prices around $5000, no bids. Then search for completed sales. Prices around $10-$50. NFT prices are like that. Mostly, you're looking at asking prices and wash sales. NFT markets, like Beanie Babies, don't crash. They stall. There's no liquidity. No market. You may have to advertise to find a buyer. Just like the leggings suckers.
[1] https://cryptopotato.com/what-are-ether-rocks/