[SoldShort22]

> Digital self-custody of scarce assets is a new thing

But what really are the "scarce assets" that Web3 is enabling self-custody for? A token on a blockchain that has metadata pointing to a digital file that anyone can view and reproduce? By definition, every NFT is scarce in that each one is non-fungible. But this scarcity doesn't mean there's any meaningful value. An NFT alone doesn't inherently give you ownership of or rights to anything except the token itself.

The minute you want to attach some meaningful rights to an NFT, like legal ownership of the digital or physical asset the NFT points to, or the rights to an income stream produced by such, you have to enter the world of our traditional legal and financial systems.

[jimkleiber]

At least one way I've tried to see a lot of this stuff is that it's people exploring what governance of the internet looks like. Right now, governments (analog) don't seem to know how to regulate the internet (digital). From this perspective, I can see cryptocurrencies as digital currencies, NFTs as digital property deeds, and DAOs being digital corporations/cooperatives. Others are talking of digital nations, which may get more towards the actual governance systems of these digital spaces, including property rights, freedoms, etc.

So while these digital deeds don't seem to have much connection to the analog world, they may not need to, if digital governance comes about.

That being said, I wonder if the main challenge with digital governance is not so much the digital part but the cross-border part. In other words, governments have jurisdiction over physical land and digital interactions transcend those boundaries. I wonder if many of the things people are trying to solve with crypto would be solved if we had more global governance. Global property deeds (right now, typically at most nation-state level, but also can be very local to city level), global currency (de facto USD right now but no official one), global company registration (at most nation-state level, but also lower as well), and global governance (the UN is there and many other standards bodies, but governance of many things still at most at nation-state level).

So, it says to me there's a desire for more global (read: physical borderless) ways to interact, own, and regulate all of that and that much of crypto seems to be the skirting of nation-state laws and almost reinventing governance from scratch.

[jakupovic]

Do you need someone to repeat what's scarce? The digital anything can be written down in the blockchain notebook with your name/key and it's yours then. Same as when you would get a C from your teacher who would write it into one of those big notebooks with everyone's names. That combination of your name + class + grade is the asset uniquely assigned to you. Now when you asked your teacher to change that C to a B, to maintain your average, that wouldn't be possible as the teacher would have to write a new record and we would all know that you had a C actually. But all those grades are your only and thus scarce by definition.

[SoldShort22]

I would suggest that your argument doesn't pay enough attention to the second word in "scarce asset" -- asset.

These unique tokens almost always point to digital files that are accessible to everyone and anyone, and that can be viewed, downloaded and reproduced by everyone and anyone.

To the extent that a person might consider these files are "assets" at all, the bigger issue is that ownership of a non-fungible token is still just ownership of a non-fungible token. It doesn't on its own convey any ownership of or economic interest in the "asset" it points to. If you want the token to convey ownership or economic rights, you're back to the traditional legal and financial worlds Web3 is supposed to be supplanting.

To the extent that a person might consider the NFT itself to be an "asset", the question is where the value is derived if the NFT is merely a pointer to a digital file that you don't have ownership of or an economic interest in.

[UncleMeat]

But why would you want your grade history to be public so that anybody can read it? And adjusting grades is a valuable feature, given that some teachers do really make legitimate grading mistakes that should be corrected.

[kortex]

The public aspect of the content is orthogonal to the public aspect of the data. E.g. let's say the grade record is encrypted. Anyone party to the key is able to verify that the record is (un)tampered, but the wide world cannot read your grade.

And that is orthogonal to whether the content is mutable or not. It just means that mutation is deliberate and obvious.

[UncleMeat]

But mutation is deliberate and obvious with existing systems, which keep logs.

[darawk]

Well, again, in principle, NFTs can be used to represent ownership of anything. The current crop of NFTs I find just as silly and worthless as you do. However, I will note that even the current stuff is no more worthless than, e.g. a piece of paper autographed by a celebrity. What NFTs are right now is the digital equivalent of an autograph. I think buying a hat autographed by LeBron James is stupid, but obviously a lot of people disagree.

However, theoretically, you could tokenize other assets, like real estate, or intellectual property, and then trade them in a more liquid, global manner than is currently possible. The NFT ecosystem is one of the least developed parts of crypto, though.

If you want an example of tokenized value, just look at stablecoins. Stablecoins are literally tokenized dollars. They allow you to self-custody large amounts of, what is effectively digital cash. That is something you couldn't do before. If you didn't trust banks, you either had to store physical dollars in your home, which is extremely dangerous for a number of reasons, or you had to suck it up and trust them anyway. Crypto gives you a third option.

[SoldShort22]

> Well, again, in principle, NFTs can be used to represent ownership of anything.

Possession of a token itself doesn't create legal ownership of a separate asset unless there is a legally-binding instrument that conveys ownership of that asset through possession of the token. To turn tokens into legally-binding instruments of ownership, you're back into the real world of laws, lawyers, financial regulations, etc.

> However, theoretically, you could tokenize other assets, like real estate, or intellectual property, and then trade them in a more liquid, global manner than is currently possible.

This simply isn't true though. Tons of real estate assets are securitized and traded in liquid, global markets. Even average investors can access these markets through REITs.

More esoteric assets, such as music royalty rights, have exchanges like Royalty Exchange[1].

You could of course use the blockchain for these types of things, but just using tokens doesn't absolve you from having to comply with securities regulations. Unfortunately, from what I see, a lot of the people trying to create crypto-based solutions seem to believe that the use of tokens is a "get out of regulation jail free" card.

> If you want an example of tokenized value, just look at stablecoins. Stablecoins are literally tokenized dollars. They allow you to self-custody large amounts of, what is effectively digital cash. That is something you couldn't do before. If you didn't trust banks, you either had to store physical dollars in your home, which is extremely dangerous for a number of reasons, or you had to suck it up and trust them anyway.

Stablecoins claim to allow self-custody of large amounts of basically digital cash. But there are a lot of red flags with stablecoins and I'd humbly suggest that anyone who doesn't trust banks but is willing to trust stablecoins is missing the plot.

Either way, your cash, in whatever form it takes, is at greatest risk because of central bank policy, not how and where your cash is stored. If the USD loses its reserve status, you're going to feel the effects whether you're holding physical dollars or Tether.

[1] https://en.wikipedia.org/wiki/Royalty_Exchange

[xondono]

This.

There’s a “mind-virus” doing the rounds on the crypto space, the idea that scarce = valuable.

[darawk]

Scarcity is a necessary, but not sufficient, condition for value. By establishing the necessary conditions we facilitate the discovery of sufficiency in particular applications. Whether or not any particular scarce digital asset is valuable is a subjective question. Whether or not the underlying infrastructure created the potential for it to be valuable is an objective question, and the answer is yes.