A Guide to NFTs, and How They Are About to Revolutionize Pretty Much Everything | Hacker News Reader

A Guide to NFTs, and How They Are About to Revolutionize Pretty Much Everything

one37pm.com

17 pointsmooreds39 comments

Maybe someone more knowledgeable than me can help me understand but from the time I spent to take a look at NFTs they don't really make sense?

If I want to buy a NFT currently there are many different marketplaces where I can buy it from. What's stopping a creator from just creating on multiple marketplaces?

Also it seems like only some marketplaces have verification for creators so wouldn't it be easy to create a fake account and upload/ sell someone else's work. (Doesn't it seems wrong for this to be a onchain application if it's just a chain reflection of what a centralised entity has verified in meatspace?)

Furthermore it seems like all NFTs don't actually store the data onchain but rather just store a pointer to IPFS or to some bucketstore. Doesn't this mean that the actual content could change/ be removed underneath your contract and your NFT would be worthless?

I'm really excited about all this new tech and innovation in the cryptosphere but NFTs seem to be highly exploitable and don't get much of an advantage by being on chain.

EDIT: Forgot to mention but I've also been wondering about duplicate marketplaces on different chains.

With the Bianance Smart Chain taking off a bit it seems like we now have the potential for marketplaces (and all NFTs in them) to be duplicated and run on different chains. In this case it would seem that the NFTs you own are only worth as much as that chain has popularity. If BSC became the most popular chain your ETH based NFTs would be worth less and so forth with other chains.

It also seems like this would have the same issue that duplicate content be created and sold on multiple chains.

I'm not completely sold on the Mona Lisa comparison. Making an exact copy is tough. Sure, you can take a picture, you can even make a painted version that's pretty close. But only one was actually hand-painted by Leonardo da Vinci.

But in the case of the digital art, you can have an exact copy. Indistinguishable from the original in all ways. Sure, the NFT says someone has to own the 'real' original, but what extra value does that have over a literal copy?

Same values that original hand painted Monalisa has over any other hand painted Mona Lisa. It's the one.

How so? Unless the disk to which the file was originally written physically changes hands, they're all exactly identical copies.

Baseball cards are a better example. It's rare because a limited quantity were printed, not because the capacity to make more was lacking.

Maybe what NFTs lack is the ability for people to arbitrarily destroy them. Maybe some kind of dice roll that deletes some every blue moon. Or a "light mine on fire button." Some kind of rot that degrades it over time.

https://sorare.com/ was on https://techmeme.com today

Baseball cards are rare because they're scarce. Digital assets are plentiful; you can reproduce them infinitely, and there's no such thing as being "out of print".

Given that NFTs assert ownership over normal files, I don't see how it would be possible to arbitrarily destroy them.

Did you look at https://sorare.com/

They are creating scarcity. Only one card for a player created that season. It's less a digital picture and more "this is limited because we can verify the date it was created and how many we made." It even has an element of fantasy sports or pokemon, in that the cards are useful in a game and you can play with them. An element of scarcity is not only necessary to give the digital assets value, but also to make the competition function.

Yes, but I don’t understand it. It sounds like these cards are only available in an app? In which case, sure, they can create scarcity because they control consumption, but they don’t need NFTs to do that.

On the other hand — if these cards are just like, JPG files, (which seems to be what most other commenters on here are talking about) then they can’t verify how many exist. It’s infinite and unknowable. Any time someone downloads the file, saves it to a flash drive, whatever, they’re making a copy.

What am I missing here?

It's about the psychology of it all. People now have a way to verify actual ownership of artwork. Whatever added value the work has is just a construction of our minds and is no different to adding value to physical artwork for arbitrary reasons, but it's true that the upper limit for value will always be less than physical artwork because you can just copy it more easily.

There are two parts of NFTs, a really cool development and what most people will see. The first reason to buy an NFT is to support the artist in a way that may have value down the line if the artist's work gets more popular. There are a lot of digital artists who I would throw $50 to get some digital print with that in mind, or multiples of that to own something unique of theirs. The second reason to buy an NFT is as part of an insane crypto-ponzi-pump-and-dump scheme. The latter will overshadow NFTs until things settle down / crypto implodes.

The concept of exclusivity is one of the rights of ownership, generally. There's none of that when you "purchase" an NFT that represents a "digital print", and, while it does support the artist (just like a direct payment would), there is precisely zero to indicate that such an NFT would increase in value with an artist's popularity. It's not like if you pay 10x for it as the second owner you get to hang it on your wall and the first owner doesn't. Also, precisely zero of that value increase would go to "support the artist" - all of the profit would go to the original speculator.

I'm a big blockchain advocate and I can't see any point to NFTs either, other than for perhaps tracking ownership of specific physical objects. For digital files of any kind, there's no exclusivity that "ownership" confers.

> is precisely zero to indicate that such an NFT would increase in value with an artist's popularity.

That's definitely how art works in the real world, I don't know why it would change here.

> Also, precisely zero of that value increase would go to "support the artist" - all of the profit would go to the original speculator.

Hold up, this is exactly why NFTs are interesting. They're contracts. When minting ones, you can specify that you get N% of the purchase price when its sold again.

> That's definitely how art works in the real world, I don't know why it would change here.

There’s no scarcity. In the physical world, any copies are simply approximations. In the digital world, they’re exactly identical.

How is this different from Colored Coins? Or CryptoKitties?

I'm pretty bullish on cryptos in general, but I just don't 'get' this. Maybe it will take some time to sink in with me, but at the moment it just seems like the latest crypto pump-and-dump. Especially with the number of people on Clubhouse shilling them.

NFT is to artwork what Bitcoin is to gold. That's the way I see it anyway.

CryptoKitties are NFTs. A NFT on the Ethereum network is an ERC-721 token which makes a what cryptokitties is built on.

Colored coins was a proposal to add tokenized asset capability to the Bitcoin blockchain but I don’t think that went anywhere. Ethereum was originally going to be built on bitcoin but Vitalik was not welcomed by the bitcoin devs so he started his own thing.

The important thing I see in the NFT space is the potential for "speculation all the way down" to occur. You can make tokens for the research paper you just wrote, own one and sell the others. The owners who bought the token have a strong incentive to increase the value of their investment so they create derivative work - new research, inventions, etc. They, too, issue NFTs. On and on this process goes until you reach the finished good or service, at which point the speculative value of everything that went into it is realized. Wouldn't you like to own the ideas of an Einstein? If the original author was a crackpot, of course, the value chain breaks down somewhere in the middle and the token is forgotten. But on the whole, this would be a way of measuring credit that wasn't previously feasible.

In contrast our existing system is an "exploitation" economy instead of a "speculation" economy; the momentary value has high correspondence to enforcement of your property rights through the state and industrial apparatus(laws, marketing, distribution, etc.), and if you cannot afford enforcement you may well never see a dime, while the process of enforcement itself constricts efficient usage. Not everything makes sense as an NFT, but many things could.

The article lists several art marketplaces. Do the respect the unique identity of a peice across them or could two competing marketplaces both sell “the one and only Mona Lisa”?

They respect the unique identity.

It's not clear how this could be enforced. Most sharply in the case of a hard-fork, and less sharply, but more commonly in the case of competing alt-coins striving to be the NFT of record.

I remember hearing that it's common practice to patent inventions in multiple different legal jurisdictions, to protect yourself in multiple localities. Otherwise, you would find your patents being exploited in a different country, where the registry of ownership that the government enforces is different.

In the world of NFTs, there is no enforcement of the registry. Competing registries are cheap to create. What's the value in that world?

If you reduce NFT art down it is basically just a way to make digital art work like physical art. It didn't work that way before because you can copy anything digital, but the use of crypto + proof that you own the work adds that uniqueness present in the real world but not the digital world.

This is all done so the value of the art can be increased and solidified.

I don't understand how NFTs change anything, though? Like, why do I care that Bob technically "owns" the file that I have a bit-for-bit identical version of?

You? You don't care. The people who pay do. It makes them feel special and gives them something show off.

I think of it like having your name in the credits of a movie. Nobody should care about that, but they do.

It's a social game. Being able to say that you own a meme (a "rare pepe" for example) can win you some popularity. I think popularity translates to influence and that influence has value. The market is trying to figure out what that value is.

The 3 ways to look at this are from a literal perspective, a legal perspective, and an 'artistic' perspective.

Literally, this changes nothing. A copy is the same artwork as any other.

Legally, having ownership (or partial) of artwork can be enforceable.

Artistically speaking, this seems to mean a lot to a lot of people's sense of value. I guess that's important. It's less important to me but I definitely see where they're coming from.

Legally, I don't think this changes anything either. Unless I'm mistaken, all of this can already be accomplished within the copyright system (albeit with a lot more red tape).

After reading the responses here, I think I'm just gonna have to file this under "I don't care, but if it makes people happy then more power to them." ¯\_(ツ)_/¯

I think this can help to verify ownership across national borders, yet I think it might require global governance to overlook the enforcement of these property rights, which I haven't heard too many people discuss.

Copyrights, patents, and trademarks in the US, AFAIK, are basically just the right to sue someone if they infringe on your ownership rights. Even deeds and property ownership require some legal or physical enforcement.

Anyways, I'm curious about this space and hoping I start to hear more conversations in crypto talking about which systems of human governance we want to work hand-in-hand with these blockchains.

> I don't understand how NFTs change anything, though? Like, why do I care that Bob technically "owns" the file that I have a bit-for-bit identical version of?

Yeah. And Bob just has some blockchain token that signifies nothing, except maybe to enthusiasts of this NFT technology. There's no actual ownership of the file there, not even "technically."

I suppose you could create a Torrens title system that uses NFTs, but all the force will come from the law not the NFT technology.

It still won't. If you look at history we have been always shifting towards information storage that is easier and thus less energy intensive to copy.

Art by definition has done the opposite. Unique pieces that are HARD to copy (IIRC art only gains value once the artist is dead) and thus can gain value.

This feels to me like a weird version of DRM which has no real world use case.

Tokens themselves are worthless, they reperesent valuable stuff. To represent valueable stuff, the token and the valuable thing must be strongly connected. Which means the thing must contain the token. Which means if I transact with the thing, I also hand over the token. Basically, the entire hoo-ha is about us being able to print UUIDs on things?

NFTs fascinate me as a technical/political concept, in terms of creating new digital certificates of ownership (I don't think it's that new, as CryptoKitties and offshoots have been around for a while).

What confuses me is how this ownership will be enforced, as it seems like one of the main purposes of governments is to enforce property rights. I think it's simpler to enforce these ownership rights with bitcoin because 1) the token has to be on the bitcoin blockchain and 2) each bitcoin is equal to the others.

Questions I have:

1) If one person registers a thing (can be digital but also analog, as I see the NFT as just the certificate of ownership), what stops that person from registering it on another blockchain? Is there only one blockchain for these proofs of ownership?

2) Assuming there is more than one blockchain and they exist independently, what stops another person from registering that same thing on another blockchain?

3) What stops a person from registering a very slight deviation of a thing (e.g., in the link, tweaking the green color in eyes of the smiley face)?

4) What stops someone from registering something that others have created but haven't yet registered, i.e., me scouring the internet to find un-registered art?

5) What rights do the people who own these NFTs have over the item they own? E.g., some people talked on CH about how if one buys an NFT of a digital art piece, some NFTs will say the person cannot print that art piece on t-shirts and sell them.

6) Most importantly, who will resolve the myriad of disputes that will result from the above?

As I ask these questions, I realize that maybe many of these issues get reduced/eliminated by having verified identities of the person registering the thing. I'm not sure, I'm open to hearing answers that help reduce my skepticism :-)

There are so many more uses for this besides digital art. Digital art is probably the worst application for the reason cited in the article. The marginal cost to make a perfect copy of digital art is zero.

Linking an NFT to a real world asset I think is more interesting. Or at the very least a digital asset for which there is some benefit of ownership. Ticket to an event, rights to the royalty stream from a song or art piece, domain names, etc...

Unisocks is an example of an NFT linked to a real world item.

This digital art thing just feels like the easiest possible construct for pure speculation.

> Yes, NFTs are “non-fungible tokens”. And sure, understanding what fungibility means is helpful (and we’ll get to that shortly). But it doesn’t quite get to the meat of the thing.

> A better answer?

> NFTs are a type of token that are going to completely revolutionize entire industries by changing the way we share and consume pretty much everything.

That's not a better answer. That's not even a good answer. That's at best puffery.

This is like a namecoin for digitally produced content. This doesn't seem like anything new.

The bag the people promoting it would like to hand you is a new bag.

The new feature is that, being non-fungible, it is by definition not a commodity. It's thus exempt from CFTC regulation. This opens up a whole new area of make-money-fast schemes.

Ah, financial innovation.

I think the biggest promise of NFTs is proof of patronage/bragging rights for supporting an artist. Displaying an nft piece is like a painting being on loan from a private gallery to a museum. Owner and creator are clearly designated.

Sooo... DRM with blockchain?

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