Hacker News Reader

Comment by tshaddox | Hacker News Reader

I imagine it’s no different than an artist selling a painting they claim is one of a kind but isn’t.

Well, a painting is of one a kind. It can't be replicated with exact fidelity, unlike an abstract sequence of 1s and 0s.

NFTs are technically one of a kind too since they have an exact timestamp ordering creation. A second copy would have a different timestamp.

> A second copy would have a different timestamp.

No, you can copy the timestamp as well.

NFTs are based around the idea that you create a new cryptocurrency for each object you want to sell on a chain, for example Ethereum. When you do this "creation of a non-fungible token", your token gets an address that is essentially an "ID" for the token you've created.

Every token you create gets a unique ID, that only that token has.

So with that in mind, a NFT is as unique as a painting in your example, as a NFT is always "one of a kind".

And what value does this unique NFT have if it has no enforceable or enforced relation to reality?

Not sure how this is relevant to the discussion at hand. Either you think it's valuable, or you don't. I happen to think NFTs are not as valuable as others seemingly think, but they do have some use cases (apparently).

What is reality anyway? We have a distributed, decentralized database (Ethereum) that people can set/get data in/from. Now we also have a abstraction on top of that that allows us to have unique data. What can we do with this? Fuck should I know, also I don't really care. Think of it what you want.

> What is reality anyway?

Have you not heard of this concept? Seems to be a bit of copout to explaining the value of an NFT given an NFT, by it's mere existence, has no bearing on anything outside of a blockchain. But if you are unclear on the concept: https://en.wikipedia.org/wiki/Reality

We seem to differ on the definition as I'd call blockchains and cryptocurrencies real (part of reality), but you somehow don't.

I feel like you're trying to find a more concrete reason than is necessary - the fact that it is unique can be valuable on its own. I can go buy a reproduction Picasso that looks identical to the original and from an art standpoint it's effective equivalent, but it's still worth nothing compared to a "real" one. The fact that the original was painted by Picasso is what provides it so much value, even though who painted a particular piece of art is not a physical part of the art itself. A unique NFT effectively provides value in the same way, it is valuable as long as people care about who/what issued it and thus want to be able to say they own that unique one.

And while it's notable that digital art can be duplicated perfectly and physical art cannot, I don't personally think that matters all that much. People who are buying a Picasso aren't doing so just for the art, they're doing it so they can say they own a Picasso. In the same way you're not buying an NFT for the art itself, you're buying it because it's uniquely identifiable in a way you and others care about.

The value of being used in money laundering.

But the actual image data isn't stored in the token, just its URL (usually). So what you own is not the image, but rather, whatever resource resides at a particular URL, with there being no guarantee that that resource doesn't also live at some other URL.

But everyone knows that. No one is claiming that an NFT literally is a digital image.

No, the ID is not unique. It might be unique in a particular database, where the software enforces such uniqueness, but that doesn't mean the ID unique. Anyone can make an exact copy of the ID, which will be undistinguishable from the original, or they can copy the entire database, any number of times, at a negligible cost. You can't do that with a physical object.

You're not even buying the "1s and 0s" with an NFT either. You're buying a record in a proprietary (albeit public) database that says you "own" it. There can be many records in many propriety databases claiming the same thing and none has any more legitimacy than any other technically speaking

Why the quotes on "own"? You can hold it, trade it, or destroy it—curious what other factors you see as necessary for "full" ownership of a digital token?

Right Click -> Save As

NFTs aren't digital media, they're digital tokens.

You own the token as you own an API key for a service, except since decentralized there's no network operator who can revoke your key ("suspend your account") as with, say, centralized SaaS REST APIs.

You're not buying the JPEG, you're buying an API key that happens to be linked to the JPEG.

You own the token, but only "own" the art.

By that logic, you only "own" your house.

You can't duplicate or send your house by email. The "art" linked to the NFT can be duplicated bit-for-bit. What is unique is the NFT, that is, the certificate of ownership.

Digital tokens aren't certificates of ownership, they're access credentials.

You can duplicate or send the keys to your house by mail, and if the recipient changes them, you lose physical access.

Legally speaking, the Land Registry (in my country) is the arbiter of whether or not I own my house. Because of, like, the law. There is no corresponding law that says owning an NFT means I own [any rights to] an artwork.

Ownership is legal right, so to own a digital token you would need some kind of title to the token. Without a title you don't really own it, just like you don't own a house without the proper paperwork that says you own it.

Even with a title or other legal means of asserting ownership, in the end with digital tokens you're still dependent on their network continuing to exist.

If a national highway system goes down, your house is still there.

If a digital token network goes down, be it a token-based centralized SaaS company with an API or token-based decentralized blockchain, goes down, your assets go down with it, regardless of legal abstractions.

It can be replicated in such a way that you cannot apply a test to determine whether it is original, unless you’re one of a very few experts who can distinguish highly skilled forgeries from original paintings. Historically there have been forgeries that have fooled all experts and thus the entire art world for some time. This is a much more difficult and less reliable process than checking a digital signature in a public database.

The fact that something is or isn't one of a kind doesn't make it valuable though. If value only came from the art itself then whether something was one of a kind shouldn't matter - especially so if a reproduction is close enough that they are visually identical. For expensive paintings the value of the painting is completely separate from the art itself - I think we can agree that a Picasso would sell for a lot less if you didn't tell people it was painted by Picasso. That's despite the fact that who painted something is not a physical aspect of the painting.

An NFT is basically like a 'certificate of authenticity' - whether you think it's BS or not depends entirely on who issued it. A item that includes such a certificate from a known reputable source may be extremely valuable to a collector, where-as the regular item may be practically worthless, and that can be true even if nobody can tell the items apart. At the same time, John Doe down the street signing 'certificates of authenticity' doesn't provide any value because nobody cares who John Doe is, in the same way that some random person signing an NFT doesn't automatically make it worth anything since anybody else can just come along an do the same. But if the author of an artwork came by and produced an NFT of it, that's unique in a way that people may care about.

It all comes down to technology. If we had the technology to create an atom-by-atom replica of a painting, then this justification would need to change. People would probably say “but these atoms are still the original ones.” Of course the only way to verify that at this point would be to have evidence of a chain of custody, which would likely be very difficult to establish with any confidence.

So paintings just “lucked out” and already had a convenient scarce item that interested parties could agree represents the “original act of creation of the work of art,” because the technology to create an exact copy doesn’t exist, and it’s extremely expensive and difficult to create a convincing forgery.

An NFT cannot be a certificate of authenticity, because the content is hosted by a third party. The third party can replace the supposedly original content with a non-original copy at any time.

I'm not saying they are a certificate of authenticity, I'm saying the value it creates is similar in concept. A certificate of authenticity has value based on the issuer of the certificate of authenticity - if the issuer is some random person it doesn't create any value because anybody can create such a thing, but if it is someone important/relevant in that field then it can be very meaningful.

In a similar way an NFT has value based on particular details about the NFT such as the author and database it is in, not just the bytes themselves. You can certainly create the same NFT with a new author, or on a new database, or etc. but it's no longer the same NFT at that point, it's a replica and can be distinguished from the original. And while an NFT published by the author of the art might be a interesting thing to own/control, the same NFT published by a random John Doe doesn't carry the same relevance. And fundamentally you still can't change the properties of the original NFT in the original database.

I don't think that certificates of authenticity work like that. A certificate of authenticity has value in as much as it certifies authenticity, not because someone important has signed it. That would be an autograph.

> A certificate of authenticity has value in as much as it certifies authenticity, not because someone important has signed it.

I think you missed the point, someone has issued the certificate and it only matters if you value that person's or entity's opinion. If you don't then it's just a meaningless piece of paper.

For example, PSA grades playing cards. A rare card that is graded highly by PSA will generally make it much more valuable than an ungraded version of the same card. However, if someone send me a card in the mail and I grade it a 10 and send it back, that means nothing because nobody cares about my opinion on cards.

Similarity, if PSA were to issue NFTs, they would have value specifically because it was PSA who authored the NFTs. I could take the exact same data and author an NFT myself, but nobody would care because they specifically want the one that was created by PSA, and that is something that is verifiable and that I cannot duplicate. They don't want it for any real tangible reason, they want it so they can say "I own an NFT from PSA".

Of course, because a certificate is a statement about some fact. Therefore a certificate is useful as a certificate to the extent that the issuer can be trusted about the statement that is being made. But that doesn't apply to NFTs because the issuer of an NFT is not making any statement. An NFT is more like a blank piece of paper that has been rubber stamped by somebody.

> An NFT is more like a blank piece of paper that has been rubber stamped by somebody.

Well it has something written on it, but yes pretty much. If the "somebody" is someone you care about though, then that can make it more than just a piece of paper, in the same way that if you care about the issuer of a certificate then it is more than just a piece of paper. I get the distinction you're trying to make, and I don't think it really matters, but perhaps it was a bad example and autographs would have been a better one.

To be clear, I don't own NFTs, I get the idea but they don't appeal to me. But I also don't own any expensive art either for the same reason, so to each his own. I do own a bunch of trading cards, and I'm sure plenty of people would just view them as pieces of paper. Point being, people value plenty of silly things, NFTs are just one of them.

> … the content is hosted by a third party. The third party can replace the supposedly original content with a non-original copy at any time.

Generally the content is hosted in IPFS and identified by a content hash which was recorded as part of the transaction which minted the NFT in a blockchain, which makes it somewhere between "difficult" and "impossible" for any third party (or first or second party, for that matter) to replace the content.

Reply on news.ycombinator.com