People Don't Understand NFTs

https://robert-chung.medium.com/people-dont-understand-nfts-3b83ff0dc629

by altrum • 5 years ago

8 35 5 years ago

robert-chung.medium.com

woodruffw5• 5 years ago

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

Why not?

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

bejelentkezni2• 5 years ago

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

woodruffw5• 5 years ago

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

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

grupthink• 5 years ago

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

ggm• 5 years ago

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

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

sgent• 5 years ago

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

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

Vanit• 5 years ago

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

woodruffw5• 5 years ago

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

RattleyCooper2• 5 years ago

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

bejelentkezni2• 5 years ago

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

RattleyCooper2• 5 years ago

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

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

oceanghost• 5 years ago

That's a bit of nonsense there.

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

TearsInTheRain• 5 years ago

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

mjevans• 5 years ago

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

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

altrum5• 5 years ago

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

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

dragonwriter• 5 years ago

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

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

tdeck5• 5 years ago

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

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

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

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

Zaskoda2• 5 years ago

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

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

gus_massa• 5 years ago

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

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

tdeck5• 5 years ago

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

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

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

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

robjan• 5 years ago

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

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

Zaskoda2• 5 years ago

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

tdeck5• 5 years ago

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

seoulmetro• 5 years ago

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

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

xsmasher• 5 years ago

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

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

emerged• 5 years ago

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

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

People Don't Understand NFTs

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