Why NFTs are bad: the long version
antsstyle.medium.com
antsstyle.medium.com
Here is the summary they included in their post:
> NFTs don’t prove ownership — ordinary legal contracts are just as good, and in fact better since they are heavily regulated and can be taken to courts for a central resolution when problems arise
> Blockchains (which NFTs rely on) are in the best case no more secure than ‘normal’ relational database storage systems, and in most cases are less secure
> Cryptocurrencies have no innate value and are only useful as a pyramid scheme, something big crypto influencers are knowingly using to profit from those who don’t realise it
> Both cryptocurrencies and NFTs cause high environmental damage, and there are no viable systems to deal with this problem due to security considerations
No one claims NFT proves ownership of entities outside of the used blockchain. But within the chosen blockchain, they do prove ownership of that particular NFT. That's a fact.
Saying that blockchains are less secure than a relational database storage points towards not understanding immutable ledgers with shared state at all. They both have different use cases, that much should be obvious if you understand the basics of both blockchain and relational databases.
Things that people value has value. That value is decided by what people think the value is. I don't understand art, especially not "high-art", but somehow people value it, that's fine by me, people like different things. But then I agree, cryptocurrency "influencers" are horrible. Follow the people developing the software instead, those are real and honest people (mostly).
And finally: no, cryptocurrencies and NFTs doesn't cause "high environmental damage" as those are concepts, not implementations. One implementation of consensus that is used in cryptocurrencies is Proof of Work, that is harmful to the environment, at least current implementations. There are other implementations of consensus, like Proof of Stake, or Pure Proof of Stake, who have their own drawbacks but have almost no environmental impact (compared to Proof of Work).
If I crack your Bitcoin keys, your money is mine. Nobody is going to restore your property.
If I hack into a bank or rob you at an ATM, police will come and get me, and the judicial system will put me in jail.
Crypto is stateless. Lawless. You can't own math. You just have a solution to a problem that you haven't shared with anyone.
And if someone with compute resources cared, they'd take it away from you.
In this world, unless you live in the wilderness without tools and supplies, everyone depends on others to some degree.
Crypto is an attempt to greedily cut others out and play god. The more plebs you convince of your world view, the more powerful you become.
Meanwhile you do nothing of value for society. Just waste brilliant minds and power.
Many in the world don't have access to a financial system. If they have internet, now they do (assuming they can find some way to onboard). Beyond that, plenty of financial tools only were accessible to the ultra-rich/institutions. Many of those are now accessible to everyone.
May be worth taking a step back to see why brilliant minds are intrigued.
If anyone has access to the internet, they have access to banking services. I mean, there are internet banking services being offered in Burundi and Mozambique, two of the poorest countries in the world.
Federal and international regulations require sophisticated bookkeeping and auditing. Banks and fintechs spend billions of dollars on fraud detection and security. Not only is it a matter of protecting their own self interests, but laws and reputation demand it.
> The point is that blockchains can have value, I don’t know anyone reasonable who doesn’t believe this. Git is technically a blockchain.
Git history doesn't have monetary value. It has practical, functional value.
For Git, I don’t see how that’s relevant. If things that don’t have monetary value can be secure at the protocol level why shouldn’t money be just as secure.
If someone steals your coin... That's it. Game over. There's no way to force them to give it back. Assuming they are in the same country as you and you can identify them, then you might be able to start legal proceeding to get your money back, but even then, nothing you can do will force them to return whatever coin they have. If they die, game over, the coin is lost forever and the best you can hope for is their estate has enough value in it to recover the loss.
An error on the side of the bank gives you a clear target for legal action to recover funds, and barring you having more wealth stolen than the bank has value (unlikely), you'll get your money back.
The security of the block chain is both a boon and a curse. It allows the blockchain to operate without a central controller, but it also, by design, makes transactions irreversible.
It's a pretty large downside. The only upside I've heard is that you could avoid oppression or government theft. However, I'd contend that a government that would directly rob your bank account isn't exactly going to stop at just that.
Only if you live in a democratic country with fair courts.
I get the feeling that 99% of blockchain users/proponents aren't in that circumstance.
Consider also the scale: what percentage of cryptocurrency users live in regimes like that versus the percentage who have functioning courts but are one exploit/phish away from irrecoverably losing all of their cryptocurrency?
You assume that from the blockchain kidnappers can find out who I am. I don't think they can, unless I exchange crypto with them.
>Consider also the scale: what percentage of cryptocurrency users live in regimes like that versus the percentage who have functioning courts but are one exploit/phish away from irrecoverably losing all of their cryptocurrency?
People always make mistakes. Do you suggest to prohibit every possible action which might lead to bad consequences? Do you suggest to damage people in need in order to save those living with good conditions?
Sure, if you live like a monk and never talk about it, you can probably avoid attention but there are plenty of people who thought they could do that successfully up until they didn’t. Again, it’s not a problem with a technical fix.
I have more trust in the correctness of encryption than the reliability of the justice system.
HOWEVER, that's not what's at issue with crypto. The issue of crypto is that it's irreversible. It absolutely does exactly what you tell it to do, and no more. But, at the same time, that means that when non-algorithm mistakes or exploits (ransom, cons, etc) happen you have 0 recourse to fix it.
There's a reason crypto is the preferred method of wealth transmission for scam artists, hackers, and ransomware.
Depends on who you ask. Being lawless is not a feature to me, for example. Some of what I think you mean by that I will probably want, but not lawlessness itself.
Anyone can confiscate it.
Let's say the Government wants your cryptocurrency. You rub your hands together with an evil laugh and say it's protected by a private key that you've memorized!
They put you in jail and say you can come out when you hand over the keys to your cryptocurrency.
Or it could just be a random person with a plumbing wrench that will happily stop hitting you in the head with it if you give up your private key. Or it could be someone that breaks into your house and steals your wallet's recovery phrase. Or it could be you accidentally sending ETH to a BTC wallet.
The best metaphor is perhaps digital cash. No government can edit the cash in your wallet out of there, but as the owner, you can definitely lose it by force or stupidity.
Well the FBI owns the largest Bitcoin wallet. And I am pretty sure it's not from mining.
Ref: https://steemit.com/bitcoin/@loryon/fbi-is-global-stakeholde...
What if the state decides the money in the bank isn't really yours (e.g. civil forfeiture, political dissident, capital controls, etc)
Most of the NFT marketing I've seen is very fast and loose about this — people will talk like it's owning the item but only when pressed will admit that it means owning the NFT pointing to the item.
> Things that people value has value. That value is decided by what people think the value is. I don't understand art, especially not "high-art", but somehow people value it, that's fine by me, people like different things.
This is conceding the author's point: a hash on a blockchain has no innate value and being the purest form of a fiat currency with weak backing means that nobody has a strong reason to need them. Nobody buys a hash because they like the pattern of ones and zeros.
> no, cryptocurrencies and NFTs doesn't cause "high environmental damage" as those are concepts, not implementations. One implementation of consensus that is used in cryptocurrencies is Proof of Work, that is harmful to the environment, at least current implementations. There are other implementations of consensus, like Proof of Stake, or Pure Proof of Stake, who have their own drawbacks but have almost no environmental impact (compared to Proof of Work).
When the most popular cryptocurrencies used are not PoW, this will be more convincing. Right now it's Bitcoin, Ethereum, and a rounding error.
But that’s totally reasonable. No one is going to misinterpret that unless they’re deliberately being uncharitable. This is just a normal usage of imprecise language, not very different than saying you own a house when technically you have a mortgage, or saying you bought an album on iTunes when technically you bought a revocable license to play the album under certain restrictions.
Lol, this is a joke? You have the rights to live in your house even if you have a mortgage, the house isn't going anywhere, it is a contract with lots of meaning. NFT's on the other hand doesn't mean anything at all.
Here is a link to a house: https://www.google.com/maps/place/California,+USA/@37.455368...
This is backed up by the ycombinator server, and as the owner of this link I can change the data etc.
Does this mean that I own that house? No. Do I own the picture of the house? Still no. Do I own that link? No, not even that. I just own this post that is stored on the HN server. That is how NFT ownership works.
Do you want to pay me $100 for this post? It means you can own this post which links to a house, cool huh?
If you are talking about all the surrounding infrastructure, then that has nothing to do with NFT's. An NFT provides exactly the same value as a forum post. Someone can build a service which scrapes my forum posts and uses that to put links on another website based on some ownership details, so you can look at your owned posts there. You could make a whole game with assets based on forum post data etc, sounds exciting right!
Edit: Oh I forgot the other big difference. NFT's are crypto and therefore people pay insane amounts of money for it! Nobody would pay money for a forum post, that is just silly, but slap crypto on a forum post and wow, now we are talking!
https://downloads.intercomcdn.com/i/o/336157696/3a04454c884a...
And what's the "innate value" of an original painting, compared to a forgery? They look identical to the naked eye, and can probably fool a fair chunk of experts as well. Sure, you might be able to tell the difference using some advanced analytical methods (eg. carbon-14 dating or whatever), but does the slightly lower carbon-14 isotope content justify the massive premium?
You're right that rich people probably aren't going to be hanging receipts next to their original paintings, but they certainly will bring up the fact that it's an original at every possible opportunity. The "original-ness" is definitely where all the value is coming from, whether from owning the original painting, or the "original" NFT.
But you still paid a few million more for the original painting, even though it's virtually indistinguishable from a replica. It's more helpful to think of an original painting as a bundle of two things:
Original painting = thing that looks like a painting + bragging rights
An NFT is just the "bragging rights" part of the original painting, and the JPG that anyone can access is the "thing that looks like a painting ".
Stop listening/reading marketing material then and dive into the technology itself.
> people will talk like it's owning the item but only when pressed will admit that it means owning the NFT pointing to the item.
Yes, most people (on both sides of the "love/hate" side of NFTs) misunderstand the technology and what promises itself makes.
> This is conceding the author's point: a hash on a blockchain has no innate value and being the purest form of a fiat currency with weak backing means that nobody has a strong reason to need them. Nobody buys a hash because they like the pattern of ones and zeros.
This is such a rabbit hole and where you end up is "Nothing has value" or "Everything has value". I guess you can put me in the camp arguing for the latter, even for crazy things like "high-art" that I don't really get, but I understand that some people value it.
> When the most popular cryptocurrencies used are not PoW, this will be more convincing. Right now it's Bitcoin, Ethereum, and a rounding error.
No, I think you misunderstand what I mean. "Cryptocurrencies" is an umbrella term for a lot of things. The authors argument that "cryptocurrencies" are bad for the environment is just not true, just like "serverless" cant be called bad for the environment. It's the implementation that matters, not the concept.
Just want to /second this sentiment. There are hard problems and interesting work being done in cryptography, distributed systems, etc in the blockchain world. It's why it's attracted a number of the best universities to create dedicated research centers - MIT, Stanford, Cornell, etc.
This is irrelevant to the wider world which doesn't even have basic infrastructure to support blockchain smart contracts. Without that infrastructure you have a curiosity, not an asset you can use as collateral with a bank.
what if i steal your private key? what if i upload a different NFT smart contract that gives me an NFT of the same image you have?
That's what "owning it" means; you have the key.
As another commentator said, the key demonstrates the ownership so you're the owner now. Sometimes that's a bad thing indeed, but blockchains are very unforgiving at their core protocols.
> what if i upload a different NFT smart contract that gives me an NFT of the same image you have?
First off, images have nothing to do with NFTs and vice-versa. Yes, some NFTs links to images but those are uninteresting and hype-driven (or I don't understand it). Once a NFT has been created, you cannot replicate it as it's a single instance of a token (hence the name "non-fungible").
Is it a fact? You can just fork the full cryptopunk blockchain and reassign tokens whichever way you want. And we're just back at the exact same issue to have to go regular contracts and courts if you want to enforce ownership or legitimacy of the actual blockchain.
For example, if someone forked ffmpeg and started making their own improvements on top of that fork without contributing back the changes, that is now something else than ffmpeg, while ffmpeg still remains ffmpeg.
Except that I can't call my ffmpeg, ffmpeg; because of the trademark. Whereas I can call my crytopunk, crytopunk. And if crytopunk has to register a trademark to defend it, it defeats the whole purpose of NFT as we are back to our regular court system.
I think the author's underlying point is: what is the value in having proof of ownership on a blockchain if it does not correlate to real world ownership in any meaningful sense? The cited example makes this clear: if you steal someone else's art, turn it to an NFT, and then sell it to a third person, the buyer does not actually own the underlying rights to the artwork because you never had the right to sell it in the first place.
So the title deed is absolutely a proof of ownership. The congruence actually goes deeper - saleable land is created when the government creates a title deed for it at the titles office, and what the title office really does is just record the transitions of ownership. Sounds remarkably like a bitcoin, doesn't it? Sadly it proving you own a title deed isn't done anywhere near as securely as proof of ownership of a bitcoin is done, or indeed proof of ownership of an NFT. Because of that I think we can safely say one day in the distant future, title deeds will become NFT's. It will happen in the future because as they say in physics, progress happens one death at a time.
NFT's just extend the title deed concept to other things. It is much easier to conduct commerce when you don't have to bring the car or cow to the auction, just a bag of bits you can cryptographically prove you own it. To think of it another way, we already do NFT like exchanges of commodities such as pork bellies. No one actually sees the pork belly. In fact if you are dealing in futures, the pork belly doesn't even exist. But nonetheless, we create pieces of paper asserting they exist, or will exist, and trade them. Turns out futures are very useful to farmers and the like, giving them some certainty over the price they will get their crop - before it exists. But once you realise we happily trade prices of paper now that assert ownership over things that literally don't exist yet, you will probably understand the proof of ownership thing he is getting worked up about isn't the huge problem he thinks it is.
This ease of trading mostly only existed for commodities. The vast bulk of things we trade aren’t commodities. NFT have brought the frictionless commerce we associated with commodities to whole new classes of goods. Before NFT’s, turning something into a commodity that can be traded required an enormous amount of YAK shaving. You had to define precisely what it was, ensure there was already a large market, create the trading platform - for all I know it might even have required an act of parliament. Now anybody can attach a bag of bits to anything, and it's actually easier and cheaper to trade than a futures contract.
It’s true they did that by making the proof of ownership thing not their problem. The NFT's solve the crypto and trading side, only. Proving and accepting ownership is left as an exercise to be solved by the buyer and seller. But it's not the show stopper problem he makes out. Really, it isn't.
It's hilarious how easy it is to create illegitimate value with anonymous or pseudo-anonymous actors in any market transaction.
You cannot realistically write an article dumping on NFTs and digital assets unless you also go after 95% of game developers which are making exponentially more money on microtransactions than the entire NFT marketspace.
Underground gambling rings formed around CS:GO skins. People are spending thousands of dollars on ships in Start Citizen. Most of League of Legends business model is in-game skins.
These are all digital assets that the users don't even really own if they read the terms of service. They are nothing more than flex pieces in game that can be taken away at any time. Don't even get me started on mobile games targeting kids.
But for some reason the bridge too far is adults putting jpegs in their twitter profile pictures.
I can download any NFT and use it as my own profile picture.
Sure, or if they check the images you upload (YouTube does this on a massive scale). Or if they show a checkmark on verified images. Or if they prevent uploading unverified profile images at all (presumably this is how Valve games work, so that everyone can't just download a copy of the expensive item and use it online).
> But the latter still only works if the general population of Twitter thinks it’s cool.
Yes, of course, but as you explain, that's no different than with video games, especially if the items are purely cosmetic.
If an app wanted to do this in a decentralized way then they'd likely have Kleros curate a list of known NFT sets or use a standard like TokenLists where a user can subscribe to whatever curated list of known NFTs they wanted.
You cannot, unless you have a vastly different understanding of what an NFT is than what it actually is. A NFT is not a picture, it's a cryptocurrency that only has one item. You could download the data representing a NFT (it's just ascii data), but not sure what you'd get out of that.
That's not the bridge too far. It's not about the JPEG, it's about the bullshit shoehorning of 'ownership' around infinitely-copyable bits put in place by a culture that seems to care more about ownership than equality.
Digital economies are a land of plenty, where nobody can own anything and bits copy themselves freely. NFTs shoehorn a scarcity economy on top of that, which suits those with no concept of the reality of the digital world. NFTs and DRM have no place in cyberspace, yet here they are.
The world is a much better place without enforcement of "ownership". NFTs and DRM go against the grain of our digital reality.
I can't find the link right now but I literally just read an article on here (not this one) explaining this far more eloquently than I can; it laments the death of open-source culture (openness, equality, egalitarianism) that underpins nearly everything digital.
I do not get the argument that an algorithm for decentralized proof of ownership of an unique token has any moral attribution to it. If anything it enables a future where content creators can get income for their content without the ad industry (youtube, major labels, facebook etc) getting any cut. And that could lead to the erosion of IP laws all together.
We are already seeing experiments with distribution of royalties implemented with NFT smart contracts of today and the tech is still in it's infancy both in implementation and applications.
The reality is that good content, be it art or media, needs revenue for the content creators to produce content. Currently their options are limited to censoring themselves in the name of profit because profits are gatekeeped by the ad industry via the monopolies of google facebook and amazon.
A future where digital economies are decentralized and self sufficient, where anyone can publish and make royalties via the uniqueness of holding the "original" work of content and all future developments in this space is a future I look forward to.
A house ownership NFT on the other hand requires no central authority for validation and complete strangers can exchange that house without a central authority being involved in proof of trust, and the buyer can immediatly charge rent based on his new ownership of the house. Thus removing several layers of bureaucracy.
Indeed, enforcment against mallicious misapropiation of ownership still requires a central authority with monopoly on violence.
> Digital economies are a land of plenty, where nobody can own anything and bits copy themselves freely. NFTs shoehorn a scarcity economy on top of that, which suits those with no concept of the reality of the digital world. NFTs and DRM have no place in cyberspace, yet here they are.
Wait, I'm confused. In the first part you mock the idea that NFTs amount of 'ownership' since its infinetely copyable. but the next sentence you bemoan how NFTs are introducing artificial scarcity and are like DRM.
Imagine a world where contributors to an open source project earn royalties from, say, FAANG using the open source project based on ownership of their contribution. Is that the death of open source culture or the rennisance?
Then you will have no problem if I move in with you, kick you out of the house you own then charge rent on your house?
I think Epic is claiming exactly this, and to be honest, I don't think they are wrong.
You can't do that with NFTs other than just showing people the image you paid for.
From a purely pragmatic ownership perspective, NFTs would only matter if ownership gives the owner exclusive rights to the property. Owning a physical Picasso is always going to be more valuable than owning a unique digital copy of anything (bcs it can only be unique based on a version in a specific network).
Not a single one solved by NFT.
I think your sentiment is phrased in the first sentence. "We are entering a crypto bull market", which is just greed. As usual.
I agree, but I would say that the OP is not even point out multiple problems, or any problem at all. The OP just points to in-game microtransactions, and hopes that if it's possible to make them sound extremely absurd and irrational, the absurdity and irrationality of NFTs can sound less bad.
1. game items don't generally imply worth will appreciate/speculation, while NFTs do
2. crypto consumes the electricity of a mid-sized country
1. Most of society already agrees that paying for in game assets is stupid, so there's no need to make the argument.
2. People who buy in game assets do it because they actually want the thing they are buying, a large portion of spending on NFTs is people who are just hoping the prices will go up
In 100 years, these will bo to 0. Same for NFTs and most probably most current cryptocurrencies. The stock market will be still there.
E.g., because they can't be clawed back -> they don't work? What about that thing we all used 30 years ago called cash?
After >10 years, it's still not even on the road may as far as I know.
Generous return policies are also a modern artifact; historically most interactions with cash took place under the terms 'all sales final'. Societies functioned decently well for thousands of years this way with similar financial instruments.
That's not the case with cash, visa or Mastercard. You wouldn't want to get a bad rep with them.
Malicious behavior isn't punished anywhere in crypto. There's an attempt for all those that are getting hacked though, despite the code=law sentiment.
The only thing "all sales are final" prevents is someone deciding after purchase that they no longer want the item purchased.
Even with the law telling a bitcoin vendor they must return the coin, there is no way to return the coin without the vendor performing that action. Cash can be forcibly taken as can property. Bitcoin, however, is completely locked away.
Now imagine how much harder that is when the vendor is in a different nation.
Societies functioned well for 1000s of years with these sorts of rules because the ability to remotely order goods/services wasn't in the reach of most society. The technology for someone to rob you from the other side of the globe simply did not exist.
To steal cash, I need to know where it is AND I need to gain physical access to that location.
To steal crypto, I need to know your passcode. I can steal it from any location in the world.
The fact that cash theft requires physical presence makes it both easier to catch a thief and means you aren't dealing with international law to prosecute them (not likely they skip the country after robbing you).
Using the term 'passcode' for a 256 bit key generated from a good source of entropy is incredibly misleading. But yes, if you can either break secp256k1 or manage to steal a key that is stored with the same care as physical cash that is a distinction. It also doesn't mean that crypto doesn't work; thousands of people have safely stored cryptocurrencies this way for 10+ years now.
My point stands: one cannot conduct a chargeback in a transaction using cash where sales are final. The example of chargebacks is a poor reason for 'why cryptocurrency doesn't work'.
You absolutely can, that's the entire point of receipts. If the seller refuses, that's where trade law comes into play and you can sue.
This of course, isn't a great comparison because in the modern day cash is almost never used for anything other than small transactions (or by the uber paranoid). To even be close to the same you'd have to compare it to putting cash into an envelope and mailing it. Not exactly a common practice.
'Sales are final' is a trade statement; in most U.S. states under most conditions you cannot return an item when this is stated (even if you have a receipt).
> This of course, isn't a great comparison because in the modern day cash is almost never used for anything other than small transactions (or by the uber paranoid). To even be close to the same you'd have to compare it to putting cash into an envelope and mailing it. Not exactly a common practice.
Many people around the world still use cash for most of their transactions. And, as couched, the economy still functioned perfectly fine 30+ years ago where most people in the developed world used cash for most of their transactions as well.
It's also the platforms. Just check rekt.news
Your argument is a bit weird though. We replaced cash by mostly electronic systems that are backed by some entity and we have recourse to get out money back. We generally want that feature.
You arguing it’s good that we lost a feature that we want?
Also "they are in fact functional (at least to some degree)" isn't a better argument.
This is interesting because I think in reality proof of work rounds to proof of stake at the limit. If your PoW coin becomes super valuable then using your coins to invest in miners is the same thing as staking your PoS coins right? I mean, logically, not environmentally. Then you just benefit from all transaction flow, earning free money forever.
If staking is the same as buying an ownership stake in a miner then does the nothing at stake problem not also affect proof of work?
Common sense tells me that NFTs — in the sense that they are non-fungible, immutable entries on a blockchain that cannot reasonably be edited or changed — are brilliant for things such as copyright, ownership (say, a deed to land or a car). They are practically permanent unless the electrical grid goes out, and at that point we’d have bigger problems than proving ownership.
This could also completely change the process of tracking and paying out things such as music royalties.
The list goes on.
Is there any thoughtful content out there regarding “why NFTs (and other blockchain tech) are good” rather than yet another Medium post on why they’re bad, actually? The pessimism is tiring.
Paying for an NFT seems especially pointless to me (and I suspect to most people). But maybe if the crypto folks keep lecturing us all online, more and more people will start to come around...
Who determine which blockchain is the "legitimate" one?
Legitimacy of the original blockchain compared to the cloned one is purely a marketing result. There is no blockchain of blockchains in other words.
You! And me! And the rest of the people who chooses to use one. Maybe not you in particular, but the people. Bitcoin is only as legitimate as the people having/wanting Bitcoin makes it. Which, by judging how much it's currently is worth, seems very legitimate.
But for speculation.
I've seen the assertion that there are "lots" of other applications for NFTs many more times than I've seen those applications actually described.
A guy from a band I'm into (The Disco Biscuits) just started making band-themed NFTs and he's doing private events and stuff for the owners. The band also released a free limited one (I think 420 units, because jam band) that gives the bearer access to a concert video that they're not releasing elsewhere.
It definitely seems like the community aspects to NFTs is something that can be leveraged to do cool and interesting stuff. I'm not rushing to buy one but I'm pretty curious to see what else they do.
And of course this isn't unique to NFTs, if you buy a Porsche there's plenty of Porsche clubs you can join.
> An attacker with 51% power could invalidate all new transactions for other users, and could for example slowly start limiting the transactions of other users or companies using the currency (targeted or otherwise) unless they paid a certain amount to the 51% owner. Once a currency is embedded enough in the economy, it will not be a feasible option for people to simply abandon their money and start over (and you won’t be able to sell it in such a situation). Like all such situations, an attacker would use a form of salami tactics, slowly taking a bigger and bigger cut from other people’s money via transactions whilst doing it slowly enough to stop them from moving away from the platform. Even in the event that the cryptocurrency later dies, the attacker will easily end up with more real-world currency than they started with.
The idea of a single entity holding 51% of all of a circulating currency is completely at odds with the notion of a currency being "embedded enough in the economy" that people won't just dump the currency immediately and crash its exchange rate. Even the richest individuals alive have nowhere near 5%, never mind 51% of all circulating dollars.
The section on Byzantine fault tolerance is particularly baffling.
> Consider the aeroplane again. What motive does the sensor have to malfunction? None. As a result, we can be relatively sure that its failure would be down to one of three main causes:
> Software failure
> Hardware failure
> Human inteference (e.g. a soldier tampering with sensors on an enemy warplane)
> Byzantine fault tolerance is excellent at protecting against the first two possibilities in many systems. It is much weaker against the last possibility, because the human who sabotages the plane has a motive for the sensors to fail in a specific way which will breach the maximum fault tolerance of the system. Provided the human or humans can tamper with enough of the system, the fault tolerance breaks.
This is the exact opposite of how Byzantine fault tolerance is defined. The entire point of Byzantine fault tolerance is that some of your nodes may not just be faulty, but actively adversarial. In the original Byzantine generals problem, some of the generals are active traitors.
These issues made it hard for me to take the rest of the article seriously, but the author does raise good points with regard to how users are generally the weakest link in a given security model. If someone tricks you into sharing your Bitcoin credentials with them and steals everything from your wallet, good luck getting any kind of regulatory authority to recover your money. This is one of the main issues of cryptocurrencies when compared to centralized currencies - but that assumes you want to trust the central regulatory authority to begin with.
Personally, while I think NFTs as a concept are fairly useless as currently applied (buying and selling URIs of random images that you may or may not actually own), they're not an inherently bad idea. For example, shares of stock in a virtual company could be minted as tradeable tokens, and then dividends could be paid out periodically to whichever accounts currently own tokens. In this case the entire concept of ownership is embedded into the token itself, so you don't need to rely on any external resources.
Euh, already happened...
> The idea of a single entity holding 51% of all of a circulating currency is completely at odds with the notion of a currency being "embedded enough in the economy" that people won't just dump the currency immediately and crash its exchange rate.
Certainly, 51% attacks are very viable against nascent or unpopular cryptocurrencies. This includes Bitcoin in 2014. But the author was specifically suggesting that a 51% attack could be carried out against a cryptocurrency that is firmly entrenched in the global economy. I find this very implausible.
The level of discourse I see on Hacker News surrounding NFTs and crypto is abysmally arrogant, misguided, ignorant and so profoundly vitriolic that it is incredibly energy-consuming to engage with the amount of misinformation.
There is no hope for a reasonable discussion, everyone is coming to the table with their own opinions and not listening to what industry experts have to say.
These are some of the most toxic discourses I see on HN, and some of the most fruitless. I have so much to say on the subject, one of my favorite subjects, and I'm scared and nervous to contribute anything lest I get bombarded with narrow-minded, played-out talking points.
Can we as a community please improve this situation? We're forming our own crypto bubble, an anti-crypto bubble. It's just as toxic and just as misguided.
HN is the only place I've seen a significant number of people who are pro NFT's. Everywhere else everyone just agrees they are scams and that is the end of the discussion. Might be some NFT communities where it is different, I'm talking about non-NFT forums here.
> NFTs don’t prove ownership — ordinary legal contracts are just as good, and in fact better since they are heavily regulated and can be taken to courts for a central resolution when problems arise
Blockchains allow strangers to transact high-value amounts across borders, quickly, securely. The fact I can move $1 billion USDC, $1 billion in BTC, or a $1 billion-valued NFT in seconds is why it leapfrogs the slow, manual, corruptible legal system. Can blockchains be a replacement for everything the courts provide? No. Can they allow moving digital goods quickly and safely across the world? Yes, because that is what they are designed to do.
> Blockchains (which NFTs rely on) are in the best case no more secure than ‘normal’ relational database storage systems, and in most cases are less secure
This is so fantastically incorrect the author has no business speaking authoritatively on this subject. Bitcoin is incorruptible. If you disagree, go and try! A relational database only needs a central party to fail. Does everything need a blockchain? No. Tweets go in the relational database, financial assets go on the blockchain.
> Cryptocurrencies have no innate value and are only useful as a pyramid scheme, something big crypto influencers are knowingly using to profit from those who don’t realise it
This book will refute the point https://www.amazon.com/Bitcoin-Standard-Decentralized-Altern... TLDR Bitcoin is the hardest money ever created, politicians / society cannot manipulate it, therefore store wealth in bitcoin.
> Both cryptocurrencies and NFTs cause high environmental damage, and there are no viable systems to deal with this problem due to security considerations
Layer 2 solutions like Arbitrum and Optimism are live now that scale Ethereum without centralization. Proof of Stake chains like Cosmos, Avalanche, Polkadot, etc. are live now. ETH2 moving to PoS will happen soon.
I would think that moving it with checks & rules, would be a feature on such amount of money.
Just curious, is there a reason you've ommitted the two largest (by market cap) PoS coins (SOL, ADA) from this list?
Doubt grows since crypto gets used less and less as a currency and more and more as an asset bubble. A few years ago you could go and buy a hotdog for crypto in many places, now you can't, most shops accepting crypto stopped doing it. The value is still soaring, but the legitimate everyday usages are shrinking, it is really hard to conclude that today this is anything other than a scam.
Like most HN crypto haters, you know barely anything on this subject so you repeat a bunch of misinformation. Very common and disappointing.
Additionally, they are experimenting with your money on lightning since there is still the Canadian traveler problem.
And lightning goes directly against the "spirit" of Blockchain. Centralized and offchain transactions that could be stored with sqllite...
It's just a workaround causing new problems for a problem that already have been fixed.
But NFTs have a demonstrated a wonderful product market fit, as better said in https://news.ycombinator.com/item?id=29279991
You may not like it, for many personal reasons (traditional explanation: "What didn't exist when you were 25 is an horrible heresy"), but I disagree with most of what's said.
On a more personal note: you shouldn't try to force your tastes down other people throats.
Say you don't personally like NFT or crypto, but not that they're "bad".
Ps. Those pics are mostly avatars too... ( I think monkeys were popular)
Proof of ownership of a jpeg on a Google drive means that you can proof that you own a deleted pic. Nice, but worthless.
Happy to have a good faith discussion with you, but doesn't seem like that's your intention given that response.
They think they actually own a Jpg on someone's gdrive. While there is nothing they can do if the "property owner" actually deletes it.
Also:This response is bad.
As long as your statement is presented as an opinion, I'm fine with that.