Hacker News Reader

> That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it.

This statement is nonsensical - the IRS has no enforcement mandate for theft/fraud, nor does it have any authority to return stolen property. All the IRS would do is say "Hey, I heard you got an extra $NN last year - please pay your taxes on it".

It could even be argued that by reporting people the the IRS, the founder is implicitly admitting that the current possessors actually do own said crypto, otherwise they wouldn't owe any tax on it.

Re: your last sentence, I think it’s more likely the implication is that lots of them have crypto gains that they haven’t paid taxes on.

No, because you have to pay taxes on income you receive from illegal activities.

https://www.irs.gov/publications/p17

Illegal activities. Income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Schedule 1 (Form 1040), line 8, or on Schedule C (Form 1040) if from your self-employment activity.

>Stolen property. If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year.

:)

> This is also why NFTs are kinds stupid, because you totally can sell someone a NFT which "claims ownership rights" without selling them any ownership rights legally seen.

It seems that the only thing you own when you purchase an NFT is the NFT itself. Not a little jpeg that it points to; just the bit of code on the blockchain.

It's kind of tautologically stupid. You buy a receipt that states you own that very receipt.

NFTs could be used for the sale of various kinds of intellectual property, I’m not aware of any that actually are doing so.

It’s more like a deed. Even if you possess the deed, someone can still take you to court because they actually own the property. But a deed can still be a useful tool if most of the time whoever possesses a deed owns the house.

But if people buy deeds instead of the house itself (i.e. most NFTs) then the link becomes broken and the signifier of “ownership” is less useful.

Deeds are legally binding, NFTs are nothing at all. You can make as many or as few as you want, and they come with anywhere from 0 to full rights to the underlying. Also the "underlying" is literally just a URL with no restrictions. What it points to could just disappear one day and SFYL. Should have checked the JSON blob you were buying to make sure it pointed at IPFS or something.

I believe even a lot of the IPFS NFTs have gone missing already

Possession of a deed is not legally binding — if someone robbed your house and took your deed, clearly they don’t own your house.

The deed is only a signifier of ownership, nothing more. If you can prove in court that the possession of the deed itself was improperly transferred, the state will return the deed to the rightful owner. Or annul the old deed and create a new one. (At least in the US.)

Sorry for the delay, what I meant is that the concept of NFT has no protection under law whatsoever. It means literally nothing. It's a bearer instrument for nothing.

As you say, a deed is not a bearer instrument but the concept of home ownership which it symbolizes has legal protection.

> But if people buy deeds instead of the house itself (i.e. most NFTs) then the link becomes broken and the signifier of “ownership” is less useful.

And as it is used for digital goods, the signifier of “ownership” is already broken, as multiple people can have a copy of the item without their being any ownership conflict, unlike a house.

A deed only has value because there is a government that enforces what it represents.

That is true of all property, so I don’t understand the relevance.

You seem like a smart guy, so you'll probably recognize a bargain when you see one. I've got a deed available for disney.com, for today only.

NFTs likely make sense in a context like a metaverse where the bit of code is the law, and owning a digital item is the equivalent of owning a physical item within the metaverse.

> That's why the founder can threaten them with the IRS, because they (likely(1)) do not rightfully (as defined per law) own it.

This seems wrong. Here's the quote from the founder:

> Otherwise, it's being reported as income to the IRS, and most of you are doxxed.

It seems to be "return it or else it will count as your income," which seems... weird. Do most crypto people just not pay taxes on crypto? How is this a threat?

Of course most people don't pay taxes on crypto lol, they're libertarian ancaps who don't believe in the role of the state. It's a cesspool of crime.

[edit] there's even a cottage industry supporting folks who refuse to pay taxes in getting second passports and abandoning their US citizenship. [1]

[1] https://www.cnbc.com/2021/07/11/plan-b-passport-tax-break-bi...

Most of the people I know that make any serious money on crypto definitely do report it, which made the founder's IRS thread confusing to me as well. If anything, I'd be more likely to keep it after hearing him say that (go ahead, report me to the IRS, I was already planning on paying taxes on it).

In fact, that threat almost makes returning it the riskier move. Are they going to report all of these transfers to the IRS? Will the IRS consider it income, and then a gift back to compound if I return it?

This puts to words the uneasy feeling I've had towards NFTs.

The thought experiment that made this concrete was a sort of reductio ad absurdem:

Let's say for a moment that NFTs win worldwide support and begin to be used as proof of ownership for everything. As part of this movement, the Louvre registers an NFT signature for each item in their collection.

Now, let's say a nefarious actor manages to use social engineering and convince a naive Louvre curator to transfer the NFT ownership of the Mona Lisa.

This bad actor promptly goes to Sotheby's and asks them to list "his" Mona Lisa for sale.

---

Of course, the Mona Lisa would not go anywhere. The French government would never allow it. This is an extreme example but can be walked back to less and less valuable items: would this work for an NFT of a house, a car, a computer, etc?

Unless the state decided to universally and with no exceptions enforce ownership of NFTs, they are ultimately worthless.

This isn't completely unlike a deed to a house. People have conned folks out of their deeds to properties, and sometimes the transaction is upheld and the bad actor gets to move into a house, and sometimes the transaction is recognized as invalid, and nobody gets kicked out of a house they've paid for.

You got any more detail on this?

Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.

Also, back when we did use physical deeds, there generally was owner’s copy and land office’s copy, and on the back of the deed would be the transfer history.

So to con someone out of their deed, you would not only need to get the owner’s deed, but you would also have to get your name added to the land office’s copy.

> Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.

Not the US*. I mean I guess they are digitized in the sense that records are typically published online electronically, but it is all still based off these bits of paper going back and forth, there is not like a database of ownership.

*Except for Iowa https://archive.curbed.com/2018/2/26/17017142/title-insuranc...

> Most developed contries have digitized their deed system, so I am not sure how you can con someone out of their deed.f

"Digitizing" something doesn't make it invincible to con artists - there's really no difference between me conning you into signing over a deed if it's paper or digital.

Thats not different than other forms of proof of ownership on paper or in some database. If somebody steals or defrauds you, you can go to the authorities and they might act on it. That does not make those instruments useless.

Nobody on Alpha Centuari cares how much Jeff Bezos owns either. All ownership is contextual, it only looks like we have universal rights enforcement because of the powerful state acting as middleman.

Therefore I have to conclude that NFT usage is an extremely radical act against state power, because what it says is that the state doesn't matter, this blockchain(the one you are using at that moment) does. And you are accepting that your rights end where it does, too, so you had better trust the community.

Compound protocol is not a legal person thus has no rights. The VC governance voters (Polychain Capital) should be responsible for pulling the trigger and sending the tokens to random people around the world. More here, plus the actual bug post mortem

https://mobile.twitter.com/moo9000/status/144389383001774899...

That's why the community is talked about so much with regards to NFTs, because if you get the right community leaders, like Snowfro from Artblocks, you know you're in good hands with an ethical player. But to buy stuff from some random creators no one's heard of, can get you into sticky situations. And photo NFT's are even more troublesome.

...and this is supposed to be the better alternative to something like central banks with leadership appointed by elected governments! Because you can never trust any institution!