[ahelwer]

I think I can explain. I understand why others value them, although I don't agree with the valuation (as a litmus test, I also think shelling out $30k for a genuine Rolex is very stupid). My lack of agreement also does not prevent me from participating and profiting off the people who think they do have value, although I have not done so.

There are basically two theories of their value: the collectible theory and the ownership theory. These overlap but are best explained separately.

In the collectible theory, NFTs are like an autograph you get on merch from a famous person. Think an autographed photo of Will Shatner you might get at a con. Usually the (cryptographic) autographer is the original artist of the work being autographed. Of course the autographer can release multiple autographed versions of the same work, but this decreases their value (and the value of any further work they might autograph).

Collectibles have long had value to humans, but they also suffer from three annoying problems: storage, fakes, and transaction costs. NFTs solve all three - they never degrade on the blockchain, their authenticity is cryptographically verifiable (assuming one can associate the signing address with the famous person, which is comparatively simple), and they are easily transferred online.

The second theory is the ownership theory. Here NFTs are used to track ownership of the underlying digital asset. In our current internet this is absurd, as the torrent is designed to demonstrate - everything is a copy, and even the NFT holder can never get access to the "original" bits. The ownership theory requires adoption of NFTs as an ownership mechanism in the metaverse, along with associated digital rights management technology. It's an early land-grab for the VR overworld.

Now, personally I don't find either of these theories very compelling. But I also didn't find cryptocurrencies generally very compelling, so I don't have a great track record. Cryptocurrency really tends to turn us all into Frank Grimes -like characters who miss out. I believe the more widely-used term is "midwit".

[jensensbutton]

> storage, fakes, and transaction costs. NFTs solve all three

NFTs solve none of these problems. The underlying asset is not stored on the blockchain and can be deleted at any time. Fakes are unaddressed since you can only validate you are the owner of a specific url and there's no guarantee that what you own is the original version (bytes are easy to copy). Any validation of authenticity must happen OFF of the blockchain in which case why are we doing this again? Transaction costs are a function of the market (even on the blockchain) and are not at all connected to NFTs.

[barnabee]

> The underlying asset is not stored on the blockchain and can be deleted at any time.

If the asset is stored on IPFS, as many are, this is simply not true. Even if the asset falls off the network (which the creator, owner, NFT holder, and anyone else can prevent by pinning it themselves) then as long as you have the file(a) and the IPFS software you can put it back at any time, and it’ll have the same URL thanks to content addressability.

I’d certainly agree that any NFT that links to a digital asset in a mutable / non-content addressable way is worthless.

[ahelwer]

You can argue against this all you want but these arguments sound eerily similar to the "it's just a slow database" type arguments of yesteryear.

Bubbles can eventually have value, weirdly - their irrational nature can sort of act as a forcing function taking us out of a local maxima, facilitating the creation of entirely new unforeseeable and previously-impossible things that actually have value of some sort. With cryptocurrencies you could argue they facilitated (through smart contracts and then distributed exchanges) the creation of massively-multiplayer online gambling games with no barriers to entry for publication & interface with the financial system where people win through patience and steely nerve. You may think more-advanced open-source casinos are not good for society, but they certainly hold economic value.

If I wanted I could write a smart contract for a MMO gambling game like POWH3D and publish it tomorrow. That isn't a capability I used to have - quite a few hoops to jump through to get a game onto a casino floor, or start up an online gambling website.

[ARandumGuy]

> If I wanted I could write a smart contract for a MMO gambling game like POWH3D and publish it tomorrow. That isn't a capability I used to have - quite a few hoops to jump through to get a game onto a casino floor, or start up an online gambling website.

The previous restrictions on starting your own online casino have never been technological. It's really not that hard to set up your own online casino using non-blockchain technology. The main hurdles are entirely legal. Gambling has a ton of regulations and restrictions in virtually every jurisdiction, and many governments are more then happy to aggressively punish those who break the rules. Regulators aren't going to look kindly on your MMO gambling game just because "it uses the blockchain."

And sure, maybe you can more easily evade regulators by making a blockchain casino, over a traditional online casino. But to me, "creating illegal casinos more easily then before" isn't a particularly compelling use case.

[jensensbutton]

Not sure what you _thought_ I was saying, but I was only saying parent's statement about NFTs is wrong. This was not a statement about the impact of cryptocurrencies on society.

You seem defensive. Find a comment that requires the above defense.

[ohgodplsno]

>they never degrade on the blockchain

That's entirely wrong. None of the NFTs are stored on the blockchain, merely a bit of JSON that contains a link to your image. If you're lucky, it's hosted on IPFS (and it'll disappear whenever everyone stops seeding it). Otherwise, it's just a link to your image host of choice, and the author is free to replace it with the image of a dick in three months, deleting all your resale value.

>their authenticity is cryptographically verifiable

No, it authenticates the seller. I can sell you an NFT of a Botticelli, that doesn't make me Botticelli or a member of his estate. Since every one on the market doesn't care for copyright, it doesn't matter.

>they are easily transferred online

So is the JPEG that I just right clicked

The collectible theory is a load of crap. NFTs are for laundering money and finding suckers.

[ahelwer]

> No, it authenticates the seller

Reminds me of that tweet about how programmers are like compilers that read things until they find the first concept they disagree with, then post it like an error message. Read the directly-following parenthetical.

[ohgodplsno]

Now now, I'm a smart compiler: I read an entire paragraph of bullshit before calling it out, with detailed error messages.

[NoGravitas]

I mean, the collectible theory can be right, and NFTs can still be for laundering money and finding suckers. I can see how they could function as the equivalent of the signature on a signed and numbered print. But no one is paying thousands of dollars for ugly monke or lion picrew pfps based on the art.

[djyaz1200]

This is a good explanation of why some people perceive NFT's to have value, setting aside if they do or not. The people who believe they have value I think expect at some point a business model will emerge to provide them with income for access to the "art" they "own".

The way to make a business model is to associate copyright ownership with the NFT ownership and then assert those rights by filing DMCA takedowns (and/or lawsuits) everyday to anyone who displays the "art" without paying for the privilege and using the NFT owners original work as the source file.

This would create digital scarcity because copies couldn't be used without legal exposure, so any real business or serious person who wanted to use it would pay for the rights to. It's like the Getty Images business model scaled way way up. I don't necessarily think this business model is good for society or will actually happen but it's the way to monetize NFTs.

[Macha]

> The way to make a business model is to associate copyright ownership with the NFT ownership and then assert those rights by filing DMCA takedowns (and/or lawsuits) everyday to anyone who displays the "art" without paying for the privilege and using the NFT owners original work as the source file.

The issue is you need the legal process to tie ownership of the NFT to ownership/transferrable license/whatever of the work. And once you're setting up that legal process, what then do you need the NFT for?

[djyaz1200]

I presume those who support NFT's (I'm not among them) would suggest that owners would use the legal process in some cases to set a precedent for enforcing rights so that people end up respecting those rights. Like parking tickets for private parking lots, the incentive would be just pay to avoid the hassle if you want to use the asset legitimately. I think the odds of this "pay to display" business model coming together are low but if they did it could be a big financial opportunity for those who hold the rights to valuable content.

[barnabee]

Contracts are a PITA! If you can write one, once, probably based on a completely standard template and then never talk to a lawyer, sign a transfer of ownership, worry about where that ownership info is stored and updating the information when it changes, etc. because the initial contract deferred all that to the owner of the NFT which can be bought and sold with a couple of clicks, I’d call that a massive improvement! Even if a contract is still needed somewhere, the friction is gone.

[Macha]

You can't escape the contracts though.

What happens in that initial sale? The owner declares that whoever possesses the NFT owns the good? Under laws like the first sale doctrine, they can't prevent the subsequent owner passing the legal ownership seperate to the NFT so ownership of the NFT still means nothing legally.

Well how about they take a leaf out of the software industry book, and instead of selling you ownership of the thing the NFT represents, they sell you a transferrable non-revocable exclusive license that requires in its terms that transfers of the license and transfers of the NFT happen in tandem. Well now the future buyers _are_ dealing with contracts.

[djyaz1200]

I agree you can't escape having some contracts but I think the NFT supporters would say that the NFT functions like the deed to a property.

A problem NFT appears to be an attempt to solve is all the parasitic people, organizations and rules that govern the transfer of assets. These lawyers, title clerks, law firms, title companies, auction houses and governments extract significant rent from asset transfer marketplaces. This rent is a cost to market participants but the larger cost is limiting the liquidity and size of the overall market.

Like imagine if the title to a car was an NFT instead of a piece of paper. I think NFT might just be a complete scam but it might have utility in disintermediating markets.

[jsmith45]

Right. If the issue is that you don't trust a government enough to allow them to track ownership via updating the copyright registration, then relying on them to help enforce your digital scarcity.

In reality the only digital scarcity that NFTs directly create is the scaricty of the token itself. Which is fine, and could potentially be used for interesting purposes. One problem is that they pretty much always require off-blockchain knowledge of which contract is the correct one for the purpose.

The other problem is that most plausible useful purposes I've seen discussed (like tracking "ownership" of digital items in a video game) could work just fine as a centralized database.

I've yet to see a proposed practical use (not "art") of NFTs where all participants are sufficently mutually distrustful that a central database cannot be used. There may well exist such uses, and those might be worth getting excited about.

As for the "art", well digital money laundering schemes just don't cut it for me. Like literally: selling some shitty tokens and buying it using other accounts you own, is a great way to provide an explanation for crypto you acquired from some illegal trade or whatever. If anybody asks where you got the crypto from, you can point to your NFTs, and explain that you are just as shocked as everybody else at how much people are willing to buy this stuff for.

[ahelwer]

Ease of entry, transferability, etc.

[jcranmer]

> The way to make a business model is to associate copyright ownership with the NFT ownership

Except I believe most NFT contracts don't actually grant copyright ownership, only the kind of standard copyright license-to-use grant you see in most terms of service.

[rory]

> they never degrade on the blockchain

I don't think this part is generally true, since the image itself isn't hosted on the blockchain.

...which brings me to: as someone who knows very little about this technology, why aren't the images themselves stored on the blockchain? Are they simply too big for that to be feasible?

[ohgodplsno]

Yep. Hosting any reasonably sized image will absolutely ruin you in gas costs.

[serverholic]

They are put on IPFS which can exist forever.

[npteljes]

URLs can also exist forever. The real point is that they are digital assets that don't exist on the blockchain itself.

[barnabee]

The content at a URL can be changed at any time, NFTs that don’t prove that the content that serve hasn’t changed make for worthless NFTs.

IPFS is ideal for this use case because the URL contains a hash of the content meaning that either the original asset is served or nothing (which you can fix if you have the asset).

[neilalexander]

"can" being the operative word but is very very far from guaranteed. If you wake up one day to find that no IPFS nodes are pinning the content anymore, it is as good as gone.

[barnabee]

Unless you or anyone else has a copy of the file, then they can put it back and the URL will be the same. If you own an NFT that points to something on IPFS you probably want to keep a copy of the file lying around to do this if necessary.

There are projects trying to create permanent decentralised, content addressable storage (in some case as layers on top of IPFS), so maybe even that problem will go away.

[serverholic]

Filecoin attempts to solve that by adding an incentive layer on top of ipfs.