Hacker News Reader

Comment by capableweb | Hacker News Reader

A curious observation about NFTs that many on HN seems to have missed in other threads:

> Why is it that Elon Musk can sell an NFT of Elon Musk's tweet, but Jeff Bezos would have a much harder time doing the same? Elon and Jeff have the same level of ability to screenshot Elon's tweet and stick it into an NFT dapp, so what's the difference? To anyone who has even a basic intuitive understanding of human social psychology (or the fake art scene), the answer is obvious: Elon selling Elon's tweet is the real thing, and Jeff doing the same is not. Once again, millions of dollars of value are being controlled and allocated, not by individuals or cryptographic keys, but by social conceptions of legitimacy.

View on HN

I struggle to find legitimate use cases for NFTs - and I say this with confidence that it’ll age like warm milk.

That said, the one really obvious use case that jumps out at me is in-game loot. At least the inherent value of the NFT is tied back to something that people may want but otherwise can’t just copy-and-paste on their own.

The only problem with the above is that it doesn’t benefit publishers to allow third parties to freely buy-and-sell commercial content without a cut, so I can’t see why they’d ever go for it.

I think they're clearly useful for tracking ownership of genuinely-unique physical entities - I could sell farming rights to a bit of land or sell my car without the state DMV or a county government having to coordinate the transaction.

But I don't understand the application to digital art. I can watch a movie or read a book without owning the movie/book's NFT, just as I can what a movie or read a book for which there exists no NFT. So it seems clear that NFTs cannot function as a DRM mechanism.

Domain names are a perfect use case for NFTs. That what the Ethereum Name Service is doing. Doesn't have to tie back to real world anything. It's like a digital plot of land.

I can create a Ethereum fork and transfer ownership of the domain in that fork. What gives the first fork more legitimacy than my private fork that nobody other than me gets to control?

You can't transfer ownership of the domain in your fork without either changing the rules—in which case it won't be accepted as a valid Ethereum blockchain by any other Ethereum node—or else rewinding the blockchain back to a point before the domain was first claimed by anyone and starting over. In the end your private fork is pointless unless visitors to the domain actually refer to it as a source of information about the domain. Transferring the domain from the current owner in a way other nodes will accept requires private keys you don't have. Rewinding the blockchain means that your fork is much shorter than the first fork and has a lower cumulative proof of work, so other nodes following the consensus-based rules of the Ethereum blockchain will ignore it.

The smart contract could give a cut to the publisher. But ultimately if an NFT can only be used in one game why not just store it as a database entry on the game server?

Exactly this, but my thinking was that it might have some value to the publisher to build a marketplace around the content.

As an example - games like Fortnite, Warzone and Apex Legends rely on loot as the sole driver of revenue. Having in-game rare items freely tradable akin to the trading card concept that NFTs are constantly compared to could have value in itself.

If I’m a real fan of one of those games and I stumble upon a diamond-encrusted level 100 golden sniper rifle (sorry I’ve no idea what a good example of a rare item is in one of those games), then the money someone may pay for that is (e.g.) $1k.

Giving me the ability to sell that on to someone could not only drive publicity for the game (EVE online made world news years ago because of the real monetary value lost in their battles) but encourage me to play that game over rivals as there’s perceptible real-world value for my invested time and effort.

The downside I was thinking of above is that the publisher may not want to enable that for a bunch of reasons - the suggestion above sounds like a good way to resolve their revenue on the transactions, but the status quo of the items being non-transferable may be preferable as they’ll overall sell more loot directly to individual customers under the current system.

> But ultimately if an NFT can only be used in one game why not just store it as a database entry on the game server?

That's the nice thing. Once you've created something with the ERC721 interface, it can be used in multiple places. Let's say you attach a hash pointing to a .glTF 3D object as well, and now multiple games can share the same items between them.

Imagine buying a in-game hat in Counter-Strike and later bringing it to Fortnite. Silly? yes, but also useful in that world of sillyness and fun? Yes.

Isn't the whole NFT a piramide scheme where "Auction" platforms incentivize artist A and B to buy each other arts (while taking a cut) in the hope it will boost "fame" and have someone unadvised of the deal think it's worth anything?

I don’t want to inflame the wrath of anyone by expressing an opinion on that, but it’s probably worth seperating two things:

1) The concept of NFTs - essentially a tradeable hash that infers rights to digital content.

2) What that digital content is and what its being used for currently.

I can easily believe (1) has some very real use cases. Off the top of my head - game publishers could sell seat licenses direct to consumers - essentially digital games that you can trade-in when finished. Not sure if they’d want to as the status quo involves them getting a majority of the revenue for every player currently.

As for (2) and what’s being traded currently being worth what’s being paid for it? It certainly seems like Euphoria to my eyes, but that’s one person’s opinion that could well be wrong. It’s 2021, nothing should surprise anyone at this point.

To me it seems that NFTs could include some part of the bundle of IP rights that typically go along with an artistic work.

For example, the artist could create a license that allows only the current owner of the NFT to make a physical copy, or a right to be credited whenever a physical copy is exhibited or something like that.

I suppose I'm thinking in terms of what an ultra rich person gets from owning a famous artwork, if they then lend it to a public gallery and allow everyone to see it - I presume it's the right to have a little card next to it that says 'on loan from the collection of X'. I think NFTs could provide something of the same experience for 'owners' of digital assets.

To me it seems that NFTs could include some part of the bundle of IP rights that typically go along with an artistic work.

One might think that. One would usually be wrong. Read the terms for Top Shot or Mintable.

I meant it more as a suggestion than a description of how things are currently. But i did look up top shot. It's interesting that they do mainly operate through the use of special licenses to make use of the artwork.

Do NFT's really only have value upon their first sale? Wouldn't that be basically a donation to Elon with no expectation of value on the secondary market?

Otherwise known as the reason large art sales exist: Money laundering et al.

It is very convenient when you get to call your money transfer "A Sale". If the thing you're buying has a publicly verifiable (albeit dubious/preposterous) market value, you aren't even committing fraud!

Resale of an NFT is different; since you can look up previous owners of the NFT there's a way to validate "yes this NFT is the one originally sold by Elon".

The NFT has value Because it was the one Elon sold and signified as legit, versus the NFT some random person sold

Yeah but it's still "Elon's 2nd hand NFT"

I think if Jeff Bezos decided to sell an NFT of Elon's first tweet, there would be more value there compared to if some random person sold an NFT representing the same thing

Correct, but maybe you're missing the point if that's your first thought. It now becomes "The NFT that Jeff Bezos made of Elon's first tweet", not the "Elon Musk NFT of Elon Musk", both obviously much more "interesting" (for human reasons? I don't know, don't care) than the "John Smith NFT of Elon Musk"

If Elon can sell his own tweet NFTs better than anybody else can, that's a pretty good argument that they are gonna be a novelty and not some new form of art exchange.

Because what are the buyers of the Elon-tweet NFTs gonna do when they decide they want something else for their 'value'? They are gonna try and sell the Elon-tweet NFT and find out that they lack legitimacy!

You're misunderstanding the argument. Elon can create the NFT due to his legitimacy, but subsequent trading of those NFTs doesn't require legitimacy because ownership is tracked on the blockchain.

No, I'm mocking the whole idea, I understand the difference between origination and selling.

I do legitimately think that novelty is a big factor, and buying an Elon-tweet NFT from some random guy is gonna have way less novelty value than buying it from Elon.

I agree. Overpaying for NFTs is like performance art; the value isn't in owning the NFT itself.

I'm not sure it's an interesting kind of performance art. Pure waste is like the stereotypical form of a potlatch. That's not expressive of any new idea. The concept was fresh in mid-century Paris (https://monoskop.org/Potlatch) but they didn't do it.

The NFT business is more like this: http://www.yvesklein.com/en/oeuvres/view/6/immaterial/640/tr...

In that case the transferred ownership is considered part of the work. Without the "paperwork" the performance wouldn't have had the same appeal to the artist.

"Legitimacy" is one word for what it takes to successfully issue an NFT for an item. "Authority" is another. If NFTs were integrated into the system of physical property, we would surely be talking about which parties had authority to issue NFTs of which assets.

Doesn’t “overpaying” imply that there’s an inherent value that’s non-zero?

I’m not saying there is or there isn’t, but I’m not sure how that would be discerned. There’s a marketplace for artwork - is there a marketplace for tweets?

Also, doesn’t Twitter inherently hold the rights to the content on it’s platform? (Or at the very least a license to reproduce the content indefinitely?).

Maybe Twitter is the legitimate party here, if such a thing even exists.

Reply on news.ycombinator.com