Cryptography experts trash NFTs on first day of RSA Conference
mashable.com
mashable.com
Instead, they just attacked the contents of the NFTs, akin to my mom telling me my pokemon cards are a waste of money all those years ago. Value is only whatever someone is willing to pay.
https://en.wikipedia.org/wiki/Dual_EC_DRBG
I'm of the belief now that those associated with the RSA conference are more interested in the publicity/reach of the conference than anything technical. They've pretty firmly positioned themselves outside of technology and far up the orifice of "industry" now. Maybe it's worth watching for policy wonks, but I skip the whole thing.
And the theme "crypto means cryptography" is a losing battle, I think.
https://en.wikipedia.org/wiki/RSA_Security
κρυπτός means hidden or concealed, and I intend to die on this hill.
Try that at the CCC conference . Never going to happen.
It's super gross.
…I guess NFTs are awesome after all. Where’s my credit card at…
Exactly. If someone makes some purposeless set of objects and others buy and sell them and money is lost and gained by informed adults in the process then.. nothing?
If one thinks that NFTs are inherently a BAD THING then it may be more accurate to say that it is a bad thing that humans are easily persuaded to acquire shiny things and things they think will rise in value.
If so, the problem lies in human nature.
Energy expense of NFTs is not covered in the article.
acquire Ethereum with dirty money -> buy NFT's -> sell NFTs for Ethereum -> sell Ethereum for USD -> deposit USD in bank account
acquire Ethereum with dirty money -> sell Ethereum for USD -> deposit USD in bank account
In both cases, one must acquire Ethereum in the beginning with dirty money. This can be done on a foreign exchange, transfer in the Ethereum to a domestic exchange and sell it for USD.
In both cases, large deposits in bank accounts will be flagged by banks for review by the authorities. It's not a very good idea.
Arguably, USD stablecoin is a much more efficient method. Just buy them, and sell them off slowly and deposit the USD in ways to avoid scrutiny. This can't be done with Ethereum because of the volatility: you can't wait because your money might lose a ton of value.
My 2 cents. I am not a lawyer.
theres also the uncaptured exchanging of hands between bidders overpaying to build an asset bubble.
I think its better researched replacing NFT with "Fine Art" and seeing how money laundering in the art world happens [1]
[1] https://www.artandobject.com/news/how-money-laundering-works...
Essentially criminal A buys a restaurant. Some sales are legit and other sales are just criminal A filling the register and making sales. Police are relatively good at investigating this because ratios between income and expenses are always dramatically off.
What if instead of pizza you just mint and buy tokens?
> informed adults
I believe there are many that don't understand that NFTs don't represent ownership in anything yet they are billed as such. From NBA Top Shot: "you get to own and show off the highlights that matter". Except, the NBA owns all the footage and the rights. Do you get to sue the NBA if they bin Top Shot? If so, what would you get? Nobody was angry with Crypto Kitties. It was clear what exactly you had. But NFTs are simply a means for people to strip the token of anything of value and yet get to market it behind a veil of complexity to prey on those who don't understand.
However, this is a problem to be addressed by the FTC and it isn't something unique to NFTs. False advertising applies.
That being said, unfortunately it may be the case that many consumers are just ignorant of what they're buying in general (not including NFTs).
But also isn't it a little crazy to think about how many unestablished / small-time artists are dropping $50~$150 on minting NFTs that might never even sell. And how their participation just drives the hype engine and makes the whole thing look like even more of a thing?
If that's not hard coding wealth inequality and a new class of asset owners, I don't know what is. This is disturbing, along with the whole thing itself anyway.
Imagine if cryptocurrency started doing that?
First, in the real world, creators stop getting royalties after the item expires and goes into the public domain, and there's a pretty strong view that the time for that is already too long and the beneficiaries of that long period tend to be companies instead of creators. I would say that there is in fact a widespread belief that the heirs of Walt Disney are too wealthy, despite the fact that Walt himself was a creator.
Second, there's no reason to believe this won't lead to the exact sort of mechanisms that plague existing royalties - e.g., a young singer makes a (smart) contract with a recording studio to have the studio count as the "creator" of the work as far as the contract cares, and the singer is just performing work for hire, in exchange for marketing, promotion, initial funding, and connections. A singer who has absolutely no resources but their talent is probably going to say yes to that, because it's better for them in the short term than going it alone, and the odds are against them (not every talented young singer can become famous). But the profits continue to flow to the recording studio for all time.
Also, in many cases, the local government does not get a royalty on every sale - certain sales, such as to non-profits, do not get taxed.
Income taxes and capital gains taxes are on your profit, not on the sale itself, so they're less analogous. If you as a taxable entity don't net make any money, you don't owe any income taxes (more or less); if you as a taxable entity don't make any profit on an asset you bought some time ago, you don't owe any capital gains taxes (more or less). So both of those are much more reasonable than a royalty on every sale - they don't follow the asset around forever, and you only have to pay a percentage of the money you made if you're in fact making money. It seems like, if I buy an NFT at $10000 and then sell it a month later for $9000, some of that $9000 goes to the creator of the NFT and not to me.
Yes that's correct. That makes it very appealing for creators like artists. I can see how that might be off putting for you though, but I think over time this will become "priced in". Also, only ver few creators will have an active aftermarket for their work. Most will not have a single aftermarket sale.
I'm not seeing the "evil" here. Just a way for creators to cut out the middle men. Or, just a different way of structuring a contract.
There's a lot of moralistic FUD against crypto on HN right now. Feels very much like a coordinated propaganda campaign.
Transaction fees for the Topps MLB cards on WAX, for example, are only taken during the sale when the sale occurs on a secondary Atomic Asset marketplace. There are no royalties to trade or transfer between accounts.
The good thing, compared to traditional markets, is that this is something that can be (loosely) enforced with smart contracts, the % rate is flexible, and the current NFT royalties are typically far better for the artists (eg: 10% NFT platform fee instead of 50% gallery fee).
But with galleries in the real world (where artists are “represented” - and the model that NFT marketplaces are emulating), the artist will receive royalties on sales.[1]
[1] - https://www.dacs.org.uk/for-artists/artists-resale-right/in-...
There's nothing weird or misleading about it, and it's got zero to do with renting.
It's simply like a real estate broker commission, gallery commission, or whatever.
The concept of a commission has existed for a long, long, long time.
Except that its not at all like that. You pay a commission to someone who helped you sell something - they did work to help you sell it and you compensate them. Paying an automatic comission fee to the artist upon sale makes no sense. What are they doing to earn that commission? You already paid for their art. It makes no sense to pay again. What this is cannot be called a "comission".
I can see a situation where the artist is paid in total a very small fraction of the total price the art was sold for. Eg in the situation someone brought up where an artist sells a painting for $10,000 and then a few years later its sold for $1 million, I can see the artist maybe getting 10% of the margin between those sales (eg 0.1*(1 million - 10,000)). But even that is dubious to me, since a sale already took place. It just seems really weird to me and I think it has to be justified further than just "this is good for artists" or "artists need more money". Certainly calling it a commission is not at all accurate.
That still doesn't make it weird or misleading or "renting". It's straightforward and clear and ownership.
You're correct in that it's not exactly the same as previous models. It's a somewhat new innovation. And isn't it great to try new things?
Perhaps you'd prefer to think of it as more like a transaction tax, which exists in many localities when you sell real estate. E.g. NYC has a 1% transaction tax on sales over $1MM. But here the tax goes to the creator rather than the government.
This is just factually incorrect. I don't know why there's so much confusion here... it's the creator of the NFT that controls where the money goes, not the creator of the artwork. I don't know why people think that it's the artist that gets the money--that doesn't make any logical sense--how would a system like that even work?
If you wanted to support the artist, wouldn't it be faster, easier, cheaper, and more reliable to support them directly, through Patreon or something similar?
I personally think NFT's are silly, but there's zero argument to be made that they aren't supporting the artist. The artist minted them in the first place.
That's completely false. Anyone can mint an NFT. Artists have minted some of them, and other NFTs are created without the artists' permission.
I don't get why people are saying this when it's so obviously false, like, it does not pass the smell test for basic credibility.
Counterfeits isn't relevant to the discussion here. It's like complaining that tipping a server doesn't work because the cash might be counterfeit. It has nothing to do with the main point.
If it's minted by an agency that helps creators do marketing, and the agency gets the creator to say "Yes, this is a legitimate NFT created on my behalf by this agency, which has been very helpful to me in understanding NFTs, I don't understand these fancy computer things," why would the value be zero?
(This exact scenario plays out all the time in the real world. People bought "Taylor Swift's" album Fearless, which was authorized by her and contained her actual voice and songwriting and paid profits to her and was in all senses legitimate, and paid well over zero dollars for it. And then over a decade later she tells her fans that she doesn't control it and she's recording her own version of the album actually owned by her.)
See https://www.billboard.com/articles/news/cover-story/7348551/... for more.
An NFT has no more value than a JPG.
I'll longbets anyone that says otherwise.
Is this because you don't have interest in it, or do you have a true justification of this?
I'm willing to take this bet. Just like art, 99% can be bought for $1 at a garage sale, but there will be the 1% that has value to someone.
You are betting against the generation who spends massive amounts on video games costumes, and puts more value into their online image (instagram) than real life image, not finding value in a form of digital scarcity & status. I find that hard to believe.
The question is how you prove that provenance if a niche artist has created an NFT on a niche piece of art. (And, honestly, most of the people who would want to create NFTs are going to be in this category.)
Now imagine an agency whose job was simply to create a digital signature on a work that indicated what they had done to prove a particular piece of art really was produced by the artist who then goes on to sign the NFT. If the agency has an established reputation, then that signed NFT has much more solidly established provenance than an unsigned NFT. Of course that agency has non-zero costs to establish provenance. And adds a non-zero amount to the value of the NFT.
What then, can said agency reasonably charge the artist for this service?
And yet plenty of middlemen exist for podcasts, too - Earwolf, Stitcher, yadda yadda. Sure, barriers to entry trend toward zero, but that doesn't mean everyone's going to see what you're selling. Many people will need to partner with someone who can help get their shit in front of people who want it, and those partners are going to want a cut.
Record labels, Instagrams and Etsys will show up to the NFT party in spades.
All you have to do is "wrap" the NFT in a smart contract, then move the smart contract around. The NFT itself is not moving (its owner is the smart contract) so it won't trigger the fee.
But Bob can sell the original painting to Charlie for $200 and pocket the entire $200 from Charlie. Alice has nothing to do with that sale, and does not profit from any subsequent sale.
But if Alice sold Bob and NFT instead, when Bob sold it to Charlie, perhaps $180 of Charlie's money would go to Bob and $20 would also go to Alice.
And this would hold true for every future sale, so when Alice died and became a famous dead artist and her works sell for $200K, her estate gets $20K, etc.
To me, this is the sole redeeming value of NFTs, but only if artists can actually keep those rights and revenue streams. The usual path of such things is that middlemen insert themselves to engage in their usual rent-seeking behaviors.
It happened, that's SafeMoon. Sounds like a Ponzi scheme? That's their selling point!
Isn't this essentially what proof of steak is? A tax on all transactions proportional to how much you already own, but disproportionately applied to smaller users.
That last bit is key. Speaking of Ethereum for a second - the largest asset owners will be institutions which can transact off-chain, which means that fees are being payed more often by folks that don't have that kind of scale.
Ideally we would recognize that issuing money is a collective problem and attempt to fix our public money system, which is based on real estate mortgages.
We can fix it by recognizing that when a home has a fixed capital replacement cost of $150,000 and broker has written the comparable sales price up to $400,000 that it is not necessary to publicly guarantee the mortgages at the comparable sales price of $400,000 only the $150,000. Or to at least cap the public mortgage guarantees at double the replacement cost ($300,000) whenever the comparable sales price ($400,000) is greater.
It perhaps goes against libertarian sensibilities to claim that if the labor and material cost of the replacing all of the structures, fixtures, equipment, appliances conveyed with an estate is $150,000 and the comparable sales prices of $400,000 that the estate has 'intrinsic value' of $150,000 rather than just subjective value of $400,000. But with federally backed mortgages the $400,000 is not a long run competitive market value, it is a number which a specific set of brokers and banks have fixed upon which the central bank then commits to backing regardless of how they pick it.
Requiring loans which expand legal tender to be issued on at least half security of the replacement cost of non-obsolete fixed capital would be a reasonable short term reform to stabilize the public money system in case private crypto money doesn't work out.
Also, the royalty is just artists getting commission on their work. Most NFT minting platforms worth anything allow the artist to mint from their wallet.
Also, I suppose there can be a way to cancel the royalties by making a meta-NFT (of sorts) that "owns" the NFT which stays in one place forever so that the meta-NFT can be traded instead.
EIP-2981 is the draft protocol-level NFT royalty implementation, but you will note that it's opt-in and NFT marketplaces do not need to respect it (although theoretically they could be blacklisted/sued). It explicitly outlines why a non opt-in implementation wouldn't work:
> It is impossible to know which NFT transfers are the result of sales, and which are merely wallets moving or consolidating their NFTs. Therefore, we cannot force every transferFrom() call to involve a royalty payment, as not every transfer is a sale that would require such payment. We believe the NFT marketplace ecosystem will voluntarily implement this royalty payment standard to provide ongoing funding for artists and other creators, and NFT buyers will assess the royalty payment as a factor when making NFT purchasing decisions. [0]
The only non opt-in royalty percentage implementation I know of is Euler Beats, but that royalty percentage only applies to printing new NFTs through their bonding curve. If you bought an Euler Beat print through a third party, you could simply use the safeTransferFrom function and avoid royalties entirely.
As someone pointed out in this thread, this arrangement is very common for high end art already, since it helps keep incentives aligned between collectors and the artists.
[0] https://eips.ethereum.org/EIPS/eip-2981#universal-royalty-pa...
First off, the facts are a bit off, NFTs cannot currently contain hardcoded royalties (or whatever you call it). Right now it is voluntarily paid by the marketplaces that sell NFTs. But I think at some point it will evolve to be guaranteed. Sort of.
But either way, if it's all transparent, then why is it evil? Maybe it acts as a deterrent of sales in the future, but I like that it can be controlled by the creator. It's everyone else's choice on whether to buy it, or whether that constitutes ownership. If you don't like it, don't buy it.
Evil? Really? I don't get it at all. Not one single iota. But, willing to hear your argument for that. "Hardcoding wealth inequality" is hardly an argument. It's not like there are a ton of people creating a new superclass of rich artists. There are a few, but that isn't the way it will shake out long term. At least, any more than traditional art.
Is all wealth inherently evil to you? Maybe that's your argument? I guess that's it?
On your "imagine if cryptocurrency started doing that", I am sure there are cases where this happens. ZCash is one where 10% of mined blocks go back to the original investors and founding team. Not sure how I feel about that, I do think it's high, but I certainly don't think it's evil. If people don't like it, they won't use it, and something will take its place. No biggie.
This is not accurate.
I've been following this because I'm interested in virtual worlds. There are at least four virtual worlds that use some kind of NFT thing to register land ownership. Nobody does much in those worlds, and the graphics aren't all that good. It's all about trading land and speculating in some minor cryptocurrency.
The newest entrant - Zero Space.[1] The actual 3D world is promised for 2024. They already have five cryptocurrencies of their own, plus an NFT system. Their "3D world" is a simple un-shared Unreal Engine demo. They claim they will have a high-resolution metaverse, but show no indication that they have any idea how to build one.
The first four didn't create the speculative frenzy they were hoping for, huh?
Just kidding(?)
Pretty clear what their priority is. It's not building a good game, it's making money off of suckers.
Yes, I get that feeling. They have a long, detailed story, but it gets vague around how things actually work.
There are useful metaverse design problems cryptosystems might address. You'd like to be able to move your avatar/furniture/vehicles/house from Roblox to Minecraft to Second Life to Facebook Horizon to Dual Universe or whatever comes next. Since much of that stuff is bought, the creators don't want you to be able to duplicate and resell it. Some kind of cryptosystem might be able to make virtual asset portability work.
You'd like to have a virtual world system that has multiple servers run by different organizations, yet can talk to each other. Like the Web. The walled gardens need portals to other walled gardens. Many of the problems doing that require permission and asset storage with no central authority.
Asset storage separate from virtual world operators could work. Arweave could potentially help with that. Arweave is a scheme where you pay about $10/GB to have a file supposedly stored forever. It's paid for by a speculation in declining storage prices. But the terms and conditions are highly inconsistent with the hype. And there seems to be a central point of failure in the way files are looked up.
Nothing I've seen from the NFT crowd seems to be addressing those hard problems. It's all Make Money Fast.
Pretending like a technical solution requiring no central authority is the way forward will never fly because no walled-garden owner will adopt such a scheme that cedes so much control; that doesn't let them enforce tariffs, community restrictions, bans, etc. on its own customer base.
It's the digital world and tools it comes with, and a creative player base, that draws people to the walled garden. Not technical capabilities or experiments in federation or an ICO. That's all promises with no substance. People get attracted and want to experience ... stuff. Stuff they can play with and tweak and build. But it can't be all up to them, there has to be something already there to experience and as a point of reference.
I.e. ... Little Big Planet. It's why it was successful. Powerful creative tool and community technology, but it's also an engaging all-ages experience made in said tools.
https://github.com/skepticoin/explorer/blob/master/00038cce6...
'To own the SKEPTI from this transaction or any derived transaction is to "own" 1600 Pennsylvania Avenue NW, Washington, DC 20500. (AKA the White House). #metaverse'
It's more like trading cards. If you own some rare rookie card, you don't actually own that baseball player, just a sort of paper token that references the baseball player. But, since people see value in the reference itself, the value of the token ends up deriving from both the player's celebrity and the rarity of the baseball card.
NFTs riff on this concept by being digital, and having it be common for there to be limited runs of only 1.
(I may be dumb and dont get what NFTs really are)
edit: I'm not arguing every single point here because a lot of them aren't even relevant anymore, and frankly I just don't care enough to go through them with you. I'm not trying to win an argument. The information is freely available for all to see and people can do their own due diligence
Edit reply: you actually don't have any argument, I guess then why post? Ad hominem isn't very useful nor informative, especially without any citations
But I may be missing something
There's nothing stopping you, but your print is worthless and the original is valuable.
The fact that the NFTs use the ETH blockchain makes it decentralized. A single authority issuing NFTs would be centralized.
I'm not an expert, but I can see the value on cryptocurrencies and ETH and all the smart contract tech. But I can't see the same value on NFTs, as more than speculation.
Awesome!
1. for things that live in digital world (easy), or
2. weaker but probably acceptable in some cases - if physical good would be painted/printed on/made out of material containing ie. fingerprinted nanoparticles that match nft or has some unique chip that cannot be detached/duplicated – is as difficult to forge and as easy to verify as paper money
3. all ownership transfers would be verified by centralised (or whatever) system ie. government official confirming that digital and physical transfer happened correctly or ie. amazon/ebay would hold temporary custody of both digital/physical as intermediary in ownership transfer
…otherwise pairing with reality looks like “lets have this cryptographically secure thing and pretend that it means X” – if this “pretend” part can be removed or minimised to be close to zero, then it starts making more sense, without it it’s just nothing more than cargo cult like “let’s pretend” arrangement.
That's an NFT. You now have a signed piece of paper that refers to a piece of art that you don't actually own. You're free to go to the museum (in NFT this is IPFS, or the regular web) and see it. But so is everyone else.
Now imagine instead of Picasso signing your piece of paper, an autopen is signing it. Pumping out however many copies of that signature it wants to in a day. And instead of a notary it's the blockchain recording the transaction.
That's an NFT.
The concept of NFT is fine, the problem is the implementation plus resources/energy costs, right?
Tulips was the first thing that came to my mind as well.
However as a technology NFT has it place, especially when crypto ecosystem evolves beyond ETH limitations
At least the current crop.
We get it! You're experts!
Art is only a small subset of what it's going to be used as.
NFT's is a protocol for distributed exchange of digital assets whether it's a sword you spent 10 hours in a game to acquire or a skin you designed and want to sell or a piece of generative art that you are the only person in the world who can show on your digital frame via a wallet.
You can't be an expert in this as little as you can be an expert in a startup. You either have conviction in this or you don't.