NFTs just happen to be the token du jour, and it's a bit sad that a16z is peddling them. There's nothing of value here, and no one will care in 4 years. Remember Crypto Kitties[1]? Don't worry, no one else does either. The idea of "proof of ownership" makes no sense in a digital context, anyway, and the best way forward (if actually trying to solve this problem) isn't with some pump-and-dump token, but rather with DRM-style certificates.
But no one's really trying to solve the problem of digital ownership, provenance, chain of custody, or original verifiability, they're just trying to get rich.
VCs are geared to take big swings and bets. Makes total sense that they would buy into anything that has the potential to be a billion dollar idea, even if the likelihood of success is 1-5%.
What's interesting about NFTs to me is that an org like the NBA is one of the most successful - but I guess that makes sense because, as others have posted, they generate all the NFTs and can validate them. So it seems to me that it can be successful in the case where you have a single, centralized owner. Where it breaks down for me is when that ownership is some random person on the interwebs.
NBA Top Shot is also interesting because the number of buyers/sellers seems fair stable/flat - that would indicate to me that it is a relatively small number of people trading with each other because I think the number of buyers/sellers would increase if the overall market was growing - but I could be wrong about that.
Don't confuse VC's position to have more capital, closer to action, so even if their bet is shit, they'll be able to exit with profit because they entered on lows and pumped it to everyone else.
Oh I don't think they'll necessarily profit - I'm saying that they are incentivized to take a lot of risk. But I don't think that makes them either any smarter or that they'll have a guarantee of being able to get out before the walls collapse.
I don't think NFTs are a good fit even for something like NBA Top Shot. You can already buy custom emotes or skins or whatever in video games. No NFTs necessary, just use the game's database for record keeping, not an NFT.
Well, they are pushing them because in general traditional VC's completely missed out on the initial crypto boom.
NFT's are their manufactured attempt to build a Crypto V2 market they think they can control. 90% of the stories you read about in the press about NFT's are placed there by these same VC investors. They are desperately trying to viral market fomo response for their useless tokens....sorry their authentic original JPG's....
CryptoKitties are a quite bad reference example to argue against NFTs - because they have been and still are highly successful and valuable, trading for thousands (some tens of tbousands) of dollars. Similar to the CryptoPunks.
> CryptoKitties are a quite bad reference example to argue against NFTs - because they have been and still are highly successful and valuable
Their volume for the past 24 hours has consisted of 73 trades[1]. In what world is that successful?
> [...] trading for thousands (some tens of tbousands) of dollars.
This is extremely misleading, no one's putting in 10 grand from their paycheck to buy a kitty; it's all in-ecosystem crypto "money" that's being sloshed around.
You're misunderstanding how kitties work. They are bred, they were created as a game, not as a limited run collection, and so there's an infinite supply of Kitties. Although some, like early generation Kitties from December 2017 can go for high amounts, even today, they aren't expected to accrue value.
Some trading cards are extremely rare and valuable. Most are not. Vast majority of kitties fit in this category.
Unlike NFTs, money is fungible. If they weren't "sloshing around" that crypto money they could easily sell it on Coinbase, withdraw the $10K, and buy something else.
True, but if I've got a lot of ETH, is there anything stopping me from buying/minting a cheap NFT and then wash trading it between wallets I own for seemingly large sums of money -- all of which is actually staying within my possession, minus gas fees?
Unless there is some strong KYC on opensea that prevents this (I honestly don't know, having never used the platform), it seems almost inevitable. There's not really an objective way to value most of this stuff, so buyers are going to look at the price history to guesstimate what they might be able to resell an NFT for. But how much of that price history is bogus wash trades?
Of course we remember CryptoKitties. The makers of CryptoKitties went on to build NBA Top Shots, which is selling hundreds of millions of dollars worth of merchandise:
And even CryptoKitties is still around. Early generation CryptoKitties are still considered collectibles, but of course there's an infinite supply of Kitties, so the rarity is less than say, CryptoPunks (which pre-date Kitties) of which only 10K were minted:
There's actually an entire ecosystem of hundreds of thousands of creators, fans, developers, etc working on everything you dismiss. A16Z is investing in many of those projects. Some are happening organically. NFTs will change more than you know.
Same was true for Beanie Babies. eBay grew huge because of them.
Today, eBay is around, but not Beanie Babies, at least not in any significant sense.
I think NFT will be the same. Eventually we might put real estate on it and do something useful, just as eBay has become much more than a place to trade Beanie Babies.
Right, but while you can knock on Beanie Babies, how long have other collectibles held up over decades or centuries? Art works from the 15th century are extremely valuable today. If the blockchain is still around in 500 years, is it conceivable that an early gen Crypto Kitty could have a lot of value by then? Of course it is. Video games were looked at as toys for kids, but now have evolved until a multi hundred billion dollar industry, and an early generation video game cartridge or console in good condition is quite valuable (depending on rarity).
Anyways, there will be hits and misses with regards to digital collectibles on the blockchain, but the value of the space as a whole will grow tremendously (multiple hundreds of billions).
> _proof of ownership makes no sense in digital context?_
Why?
> _There's nothing of value here_
Objectively there is, as people are spending money on it.
But I understand your meaning, which is to say "there will be no value to these given time". I'm interested to hear what you would consider to be failure conditions (and thus for this not to appear on r/agedlikemilk). Despite what you say Cryptokitties are still being actively traded despite the fact "no one remembers them" and they had recognition that was orders of magnitude less than NFTs now, but yet you consider it a failure.
Mattereum is doing something interesting. Each NFT references a physical item they keep in a vault, and if you want you can redeem it and take delivery. They have professional curators and legal contracts.
It's not all that different from what rich people do with vaulted art and registries. Just more available to regular people.
Why not use a database? If I hold an Matterum NFT, I'm trusting Matterum to make good on the deal, so it's not like the trustlessness of the blockchain actually comes into play. It seems like using a blockchain in this case just adds transaction costs.
I just glanced at their white paper and it refers to multiple registrars, so stuff might not be just at Mattereum.[1]
Besides that, I think an immutable public record of ownership is worthwhile. It's something you can use as evidence in court. If it were just their database and they changed it, what recourse would you have?
Meaning on good ole' paper, or in a government database somewhere that you have no visibility or access to. Is this preferable to an ownership record that you, the gov, or anyone else can verify from your phone?
So, how do you know when the NFT is invalid? Can Mattereum just freeze any token at any time? If I transfer my token back to them and they don’t give me my thing, how do we all know? What if the thing is damaged? What if my country holds it up at customs?
I don't know but since they spent a lot of time developing real-world legal contracts, I suspect there are decent answers.
Art vaults/registries have similar issues and work fine for much more valuable items, so Mattereum isn't breaking completely new ground here. They just have a more convenient way to transfer ownership.
Whatever you think about NFTs, there are plenty of earnest people in the space; they have been trading, building and podcasting for years without any mainstream attention, or in fact, without making money. And yes, people are still trading Cryptokitties.
It might be covered in one of the resources, but when people talk about NFTs, they just mean some token on Ethereum that the issuer of said coin say is "the" product. For instance, the NFT for "the first tweet" that sold is just someone created an Ethereum token and said "this one is the first tweet", presumably w/ some text in the token that states the tweet.
In that regard, its kind of centralized. There can be multiple NFTs that claim to be tweets. There's no naturally definitive "twitter" token, unless it's managed by Twitter itself. But you're relying on the issuer of the coin to say "I am the NFT coin" and everyone to agree.
Real world NFTs (e.g. art and collectibles) are unique in that there is no dispute about what the original is. The art was created by the artist or its a forgery. In that regard NFTs rely on some issuing entity that bestows upon itself an arbitrary form of ownership. I can make my own Twitter token and if I get someone to buy a coin for an absurd amount (insider dealing?), and convince reports to write about it, I can be "the twitter nft"
For those who are unfamiliar with the concept, a simulacrum is a copy of something that has itself become hyper-real and usurped the reality of the original. The canonical example is Disney World, which is a copy of Disneyland, which is itself a copy of many elements of Americana (Louisiana Bayou, the frontier West, Main Street USA, etc.) Disney World has eclipsed Disneyland in visitors, which itself has eclipsed visits to various small town main streets or the Louisiana bayous. You plan a family vacation to Disney World, you don't plan a trip to Bumfuck, Wyoming. Even though it's a copy of a copy (and a poor one at that), its reality has eclipsed that of the original, just because the original is hard to get to and kind of boring.
Similar with NFTs. Yes, you can make an NFT of the Mona Lisa and claim that you have the only one. Yes, you're a lying swindler and probably a bad person. But your copy is much easier to trade, move around, and store than the actual Mona Lisa. And just as there's only one original Mona Lisa, there's only one original NFT of the Mona Lisa, so your copy still has the same scarcity. As more capital comes onto the blockchain, your NFT is likely to acquire its own hyper-reality and become the Mona Lisa, and the original painting will be hidden away in a museum somewhere and disappear from trading.
> And just as there's only one original Mona Lisa, there's only one original NFT of the Mona Lisa
I apologize if I'm misunderstanding, but can't you create as many NFTs of the Mona Lisa as you want? What's to stop someone from just creating a second one, even the original owner of the Mona Lisa? You can't copy the Mona Lisa (at least not in such a way as to call it the original), but you can make another NFT of the real Mona Lisa and...as far as I can tell it's just as good.
I realize you can't copy the chain that's already descended from the first NFT, but why does that matter? You can still say this is a genuine NFT for the real Mona Lisa, and the problem is you can make as many of those as you want. Or at least that's how I understand it.
Copying something digital is very different from copying something molecular. A digital copy is as good as the original. A molecular copy is almost certainly possible to distinguish, and if you can't you may as well not have an original.
My understanding is that the NFT also contains a hash of the work that it represents, so there really is only one of a given digital work. You can create another NFT of a different digitization, but there's still distinguishing factors between them that would make one "better" than the other (higher resolution, maybe, or more ubiquitous file format). Also over time a particular digitizations' status of being the first gives it its own legitimacy, unless the environment changes in a way that makes competing ones significantly more convenient.
It's sort of like the forking problem for cryptocurrencies in general. Anyone can fork the Bitcoin code and say they made a new cryptocurrency, and many people have done exactly that (Bitcoin Cash, Bitcoin SV, Bitcoin ABC). In practice, the fork tends to die out, because much of a cryptocurrency's value is in who agrees that it's valuable, and there's a big first-mover advantage there.
An NFT is basically a number in a smart contract. Through the ERC721 (there are others) interface, you can ask the smart contract which address owns that particular number. So, "contract 0xdeadbeef... , who owns 123456 ? It's owned by 0xabcdef..."
This is totally fine, but keep in mind someone could deploy an identical contract to a different address, which also has a 123456 in it, which is also owned by 0xabcdef. You'd have to be careful when you're checking the ownership that you're checking everything. I could imagine an unscrupulous person saying "Look, I sent you 123456, it's in your address, see?" and then absconding.
My understanding is that John can take a picture/jpg of the Mona Lisa, mint an ERC-20 token and sell his picture/jpg on a NFT marketplace. Jane can also take a picture/jpg of the Mona Lisa, mint an ERC-20 token and sell her picture/jpg on a NFT marketplace. I think the difference shows up when Jack Dorsey mints a screenshot of his first tweet and sells it, it's worth $2m because it's sold by Jack. Whereas I could screenshot Jack's first tweet, mint it and sell it for $0.01 because it's sold by me.
"Sod going to an art gallery to look the actual paint committed to canvas by the legendary artist over 500 years ago, we can queue up to look at this PNG copy and admire the uniqueness of the cryptographic token some anonymous programmer attached to it recently" said literally nobody ever.
Rollercoasters and Mickey Mouse make pastiches of common things more interesting; creating an inferior copy of a famous thing and trying to compensate for its inferiority and inauthenticity with a cryptographic string has the opposite effect.
What if you had a human model (or robot) who looked liked Mona Lisa, dressed like Mona Lisa and was certified as the only recognized copy of Mona Lisa and by purchasing the NFT you were the only one who could have s.e.x with her?
Yep, another way to put it is that any NFT is worthless unless it is tied to some network effect.
This can be merely social convention, e.g. an artist announcing that this is his Ethereum address, or an auction house acting as an intermediary. But it could also be a network effect based on software, e.g., a game, or something in between like the original CryptoKitties.
Yeah, that's what I figured. I get the idea of it being tied to a game, but you don't really get the benefit of block chain, except for making the token sellable without having to go through the proper market channels.
Overall I'm very bullish on crypto as digital gold, less so on Ethereum style apps and even less so on NFTs. It's an interesting litmus test. I see a lot of crypto enthusiasts speak highly about NFTs which I find odd. They generally have very well thought out and reasoned arguments for Bitcoin as a digital store of wealth, but then they go into NFTs and talk about scarcity. But the scarcity of Bitcoin is only valuable because it is the defacto digital currency, due to it's survival up to this point. It has dealt with governance issues, was built of strong cryptographic principals and most importantly stood the test of time (lindy effect). Then they speak about NFTs in a vague way as though they're naturally authoritative without pointing out the obvious: you don't actually own the digital asset you're buying. If it actually had some real concept of ownership (e.g. owning a tweet allows me to delete the tweet), then it would be a different story. But as it stands now I don't see the value.
The cheer leading from the crypto community is odd and makes me question their principals. I'd be happy to be proven wrong and have someone steelman the argument for NFTs without relying on "its a scarce asset and people want to own scarce assets". It's also very early days in NFTs, so ten years from now if the Twitter tokens are still selling for millions, I'd be more willing to agree as it would have Lindy effect by that point.
> I see a lot of crypto enthusiasts speak highly about NFTs which I find odd. They generally have very well thought out and reasoned arguments for Bitcoin as a digital store of wealth, but then they go into NFTs and talk about scarcity.
I've seen the opposite - most crypto enthusiasts I have spoken to don't seem to understand NFTs at all / why they are considered valuable by other people. I fit into that camp.
> Overall I'm very bullish on crypto as digital gold, less so on Ethereum style apps and even less so on NFTs.
I'm quite bullish on Ethereum style "defi" apps - once we finally have decent layer 2 options and software deployed on layer 2, I think interest rates on stablecoins will be a large incentive for folks to start onboarding. The big remaining piece then is convincing people to spend their stable coins at stores - I would expect some level of "rewards" paid by the store would be sufficient. Essentially, an app that you can deposit funds into, earn interest that is well above what your bank account pays, and earns rewards that are competitive (or ideally beat) with credit cards.
> Essentially, an app that you can deposit funds into, earn interest that is well above what your bank account pays, and earns rewards that are competitive (or ideally beat) with credit cards.
That would be fantastic! Give me 10% interest on my wallet, and 10% "cashback" for my purchases with crypto, and I'll switch my whole financial life to crypto.
10% cashback is probably pushing it unless the wallet is giving away "platform tokens" as a growth hack at the beginning. 2 to 3% is probably more realistic given what merchants pay credit card providers.
Long term, if merchants were smart, they'd make their own reward systems on top of this to encourage usage.
You earn interest by "lending" your digital asset. People want to speculate against the asset (i.e. bet the price will go down). The only way to do that is borrow someone else's crypto (pay them an interest rate for the trouble), sell it, and eventually buy it back later at a lower price.
The interest rate is determined by the market, and since its pretty early on in defi world, the owners of the crypto demand a higher interest rate to make it worth their while. Also, the more volatile the asset the more valuable it is in terms of derivatives.
I'm not 100% sure of all of the reasons - I imagine some of it is defi being harder to access, some of it is the increased risk (uncertainty / it's reasonably new), some of it is removal of middlemen, and some of it is incentivized behavior as a growth hack (similar to Uber subsidizing rides). Curious for other peoples' thoughts on what drives the higher interest rates.
The confusion comes from how NFTs that represent images have become so popular right now (I believe it’s because it’s the easiest use case of an NFT and people want to make a quick buck).
NFTs themselves are just a cryptographic representation of something unique. It can be a token that says “you own this image”, but it can also be an in-game virtual item, a software license, a digital trading card, etc...
There is some level of centralization in many cases. For example, a trading card game will likely own the contract that can mint cards and own the art for the cards. Other services can read that contract to see what cards you own and use that data inside their own game logic (though probably not the images due to legal reasons).
This would already be useful for something like Magic the Gathering where unofficial online services exist to play by whatever rules you want. The last time I used one, you just put your deck list in so everyone used the rarest cards. They may have evolved now to check your Magic Online account, but you can’t do that as easily in Magic Arena.
Assuming the creators don’t limit your freedom in their smart contract, you can also buy, sell, or trade the NFT to whoever and for whatever you want unlike a centralized service which wouldn’t enable access to an open market outside of the game’s ecosystem.
Here’s the thing - if it relies on a central authority to say “this is the genuine article” why do you even need a blockchain? A PGP certificate or X.509 is arguably “a cryptographic representation of something unique”
EDIT even something like a domain name - which is arguably a better example as only one of such a thing can actually exist in that only one owner can derive the value from it.
An NFT on the blockchain can be verifired crytographically that it is the "original", it can't be duplicated, and you can transfer it to anyone if you have the private key and the gas.
A token off the blockchain controlled by a centralized group could transfer ownership without a key at all. They could issue the same one to more than one party and duplicate it. Someone else could claim to own the record and they could decide you don't anymore, they get to decide who it is sold to. Or prohibit you from transferring it at all.
I don't like NFTs, but the point of putting it on the blockchain is that it's globally available, verifiable, and immutable. Many versions of a PGP-signed message could exist and be passed around.
Because then it’s not on the blockchain. Yes, I could sell you a txt record, saying you own this hash, which represents a jpg, but then it’s not blockchain.
Honestly, I don’t know.
Maybe it’s because the blockchain is immutable? Like, I could change that txt record because I’m evil or something. That makes sense to me, in terms of technology.
The problem is that these signatures cannot be traded anymore, since no one is tracking who owns which editions. I can sell my signature to you, and then sell it to someone else tomorrow. The artist intended to mint 100 "prints", but suddenly 1000 people claim to own one.
No but the point is, when you’re talking about physical artefacts you can in theory issue as many tokens as you like ... it’s still down to a central authority to certify.
Not really. Access to the content referred to by the NFT happens at the whim of the platform. That gives them the ultimate leverage. In this case, transfer doesn't amount to much if the "object" is rendered useless.
Still no worse than some hash key that can be invalidated in the next version with a blacklist. At least a DRM key is something that NFTs are somewhat suited for.
> Real world NFTs (e.g. art and collectibles) are unique in that there is no dispute about what the original is. The art was created by the artist or its a forgery. In that regard NFTs rely on some issuing entity that bestows upon itself an arbitrary form of ownership. I can make my own Twitter token and if I get someone to buy a coin for an absurd amount (insider dealing?), and convince reports to write about it, I can be "the twitter nft"
I think of NFTs as a fancy system of determining provenance: X bought hash Y from seller Z. Whether other people assign meaning/value to that transaction is subject to the usual whims of human nature.
You've got it, more or less. The "surely I must be missing something" reaction is actually indicative of the correct understanding: the emperor has no clothes.
Still though, the value of collectible goes up if you have extensive documentation proving it is the original, vs it just merely being the original, or worse, it being the original and someone else having extensive documentation convincingly making the case that their counterfeit is actually the original.
In reality, I think a lot of art these days isn't created by the artist, at least not mostly - it's created by their technicians or students or other people they employ and then just given their blessing, maybe with a few last finishing touches. The thing that makes it not a forgery is literally the artist's blessing; in principle you could even have a "forgery" that was created by the same person as the genuine article. This isn't widely advertised for obvious reasons but it isn't exactly a secret either, and it's not really a new thing - the actual creation of some of the classic, famous fine art paintings was a lot like this too and it makes verifying authenticity very interesting.
Uhhh this isn’t a canon so much as a cannon for a VC to inject their own financial incentives into your thinking. Even if they’re wrong about what they cite, any conversation or discussion just draws more attention to them versus the competition. If you want to learn about NFTs, do you own research. Don’t lend your critical thinking resources to an investor unless they’re paying handsomely.
The only way that NFTs make sense to me is in some sort of impossible to implement DRM-like system where ONLY the current owners of the media can display it or utilize it. If buying an NFT of a piece of art meant that I could digitally display the file in full resolution, or if it otherwise afforded me some tangible benefit during the period of ownership, I could see it making sense.
As of right now NFTs are basically donations to the artist with more steps and about 1000x the carbon footprint.
The utility of art or collectibles is a very small portion of the value. A game worn Michael Jordan jersey you paid $100k for has essentially the same utility as a <$100 jersey. It is valuable because it is scarce, and the provenance
But suppose you ripped that jersey into a thousand pieces, and sold each separately. People might still buy it, because those pieces as a whole were in fact a Michael Jordan jersey at some point. A piece of that history is cheaper to own than the entire thing.
Now suppose you rip it into 100 million pieces and create non-fungible tokens where each tiny piece could be scanned with a phone, identified, and associated with an arbitrary blob of data.
Now it's a race of a savvy PR team against the public's hazy and soon-to-be waning interest in what-- if anything-- is the value of one of those microscopic jersey specs. "Something something Michael Jordan," got you to distract a captive audience from Candy Crush for five seconds. What happens next has absolutely nothing to do with Michael Jordan, and everything to do with P.T. Barnum.
I don't think I would have ever have predicted that having control over a line of data in a shared database running on just 8,000 computers would be so valuable.
"See this database entry? It's yours. In order to change it, you need this little JSON file and a password. Got it? Great. That will be $69 million please."
“A man who is rich but ignorant he called a sheep with golden fleece.” —Diogenes the Cynic: Sayings and Anecdotes, with Other Popular Moralists by Robin Hard, §326.
My English is probably lacking (not a native speaker), but I can't parse that sentence for the life of me, let alone understand what it means. Curiously enough, googling it brings up exactly two results: the book you cite and this HN thread.
But no one's really trying to solve the problem of digital ownership, provenance, chain of custody, or original verifiability, they're just trying to get rich.
[1] https://www.reddit.com/r/CryptoKitties/