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Comment by udbhavs | Hacker News Reader

Random thought dump of observations from someone who's dabbled in the space a bit (but is not a cryptobro by any means) -

Here's a thing about NFTs that I've seen a lot crypto evangelists and haters miss, and a sentiment that I think will grow once the novelty dies out: The "art" is irrelevant. It's no more than a thumbnail or a poster marketing it's utility, and that's exactly the actual important part - what I can do with it. Can I use it as an in-game item? Do I get access to your next podcast episode early in a patreon-like service? Do I unlock your next online course for free or get a 50% discount on your next concert?

This sense of multiple applications is what I think people may or may not mean when they use the term "creator economy", but I think it fits nicely. People argue that interoperability of assets is useless because "no two games would ever want to share an item, developers don't want that". But another angle to this is that creators can give utility to a single asset across a wide variety of applications for their fans.

Regardless, none of this has been realised yet and maybe this is just a pipe dream if the majority of hype in the space continues to revolve around useless, ugly ass monkeys that are shown off on twitter for some ego-inflating sense of elitism. It could go either way I guess

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> Can I use it as an in-game item?

I don't know why people are so obsessed with this idea of in game items as NFTs. It's a terrible idea.

Games have no reason to be decentralized. All of the information can be stored on the company's servers, like an MMO, or if it's not critical to maintain scarcity, locally on devices without the whole network, like pokemon (the pokemon themselves, which can be traded and such).

You can't reasonably expect games from other companies to implement the same NFT scheme. That's just not how games work. A longsword in dnd is not a longsword in final fantasy, nor is it a longsword in dark souls, nor is it a longsword in minecraft. And even if it were, why the fuck would you want scarcity on longswords? 99% of all items in any game are typically very easy to obtain, with a few rare things standing out, and with a natural progression built in. What would it even mean to bring your 50 hour investment in a top tier perfectly slotted jrpg omni magic blue elemental Atk+++ Spd+++ Crt+++ Mag--- weapon to a game like call of duty?

Even if we're just talking about a single game universe, like a dnd setting. Maybe there's now 3 baldurs gate games, for some reason not designed by the same company, but all willing to share the same exact item spec. Where is this concept useful, still? Can I bring my +10 longsword (a big deal) to the beginning of the game and just trivialize the singleplayer mode? Is it more of a multiplayer thing so we want real world wealth and status to be the primary driver of character strength?

Wait, you are making this much too complicated. I think if you take a step back and realize that the industry of hats in games that have zero effect except being cosmetic is enormous. Don't ask me why - I think anyone who pays actual money for an in-game cosmetic item is a fool, but that's beside the point.

But now imagine if 10 different AAA game studios realize that they can create a market in which people instead of paying $5 for a hat or $1 for a loot box with 10% chance of finding a hat-they pay $100 for a hat NFT and $10 of that is a transaction fee to the studio. They pay $100 for it, because a) it will work across games and b) it might be worth $10k tomorrow. The studios can take a cut on each transfer, instead of just one fee! So these studios just scaled up their hat business a lot and all they had to do was agree to honor the hat ledger which says that only the hat's rightful owners can wear the hats.

There is obviously no problem moving the hats between different games (A purely cosmetic thing is pretty easy to implement).

The fact that the honoring of the NFTs is still voluntary from the studios, that it's just as centralized as ever, and that it might disappear the day the studios no longer make money from this is of course lost on the hat buyers. The tokens are extremely fungible.

>But now imagine if 10 different AAA game studios realize that they can create a market in which people instead of paying $5 for a hat or $1 for a loot box with 10% chance of finding a hat-they pay $100 for a hat NFT and $10 of that is a transaction fee to the studio. They pay $100 for it, because a) it will work across games and b) it might be worth $10k tomorrow. So these studios just scaled up their hat business a lot and all they had to do was agree to honor the hat ledger which says that only the hat's rightful owners can wear the hats.

This seems like a whole huge can of worms to open for what is to the studios a mild gain. The hat market has scaled up by 10-20x in your example, but 90% of that isn't captured by the studios. What happens when two players each have NFTs that point to different URLs where the same digital hat is? Now the game studio has to adjudicate property rights? If a bunch of game studios wanted to band together and sell more expensive for 10x or 100x the current price that could interoperate, why would they give 90% of the proceeds to the hat designer?! Designing a hat is not the hard part of this thing.

Activision implements hats on the blockchain and releases the $10k GOLDEN HAT.

EA Games starts selling an exact copy of the GOLDEN HAT for $1. What now? It's data on a decentralized network. I start selling GOLDEN HAT WITH A DICK ON IT for $0.69. What now?

If Activision wants to sell cross game cosmetics, they should do so on their own servers. Which is totally normal frankly. It's common to get rewards for having content on other games. The blockchain adds nothing.

> EA Games starts selling an exact copy of the GOLDEN HAT for $1. What now?

This is how NFTs work. If you own the $10k hat on a blockchain you own the $10k hat on that blockchain. There is nothing anyone can do about the fact that the monkey bitmaps can be copied. The ownership only applies to the ownership on a ledger, not copying or usage. Same with owning a hat on the Activision blockchain and not the EA blockchain. If they both agree to store it on the ETH ledger, then obviously there is only one copy.

To prevent copying or usage, studios would obviously need to agree (which is why this is so ridiculous - and "fungible"). In your scenario EA obviously weren't in on the scheme together with Activision. There could well be different ledgers, or studios that just use a centralized store like they always have. But those studios can't use the NFT buzzword, so they'll miss out on the sweet $$ that they can make in the 15 minutes this is a thing.

> I start selling GOLDEN HAT WITH A DICK ON IT for $0.69. What now?

Whether or not "user created" items will ever be a thing is obviously up to the studios. The studios can obviously ensure only studio-created artifacts are ever allowed, regardless of if a public ledger is used. They can't prevent a studio from making a golden hat with just one bit flipped in a 100kb artifact, which looks exactly the same. This would be even more likely if there were user-created artifacts.

But there is just nothing that can be done about that. That problem exists whether or not you use a public ledger or a private one, and whether there are multiple studios or just one.

> the blockchain adds nothing.

It adds the word "Blockchain" and "NFT" to the equation. Remember that's the difference between pictures of monkeys being worth zero and being worth millions of dollars.

> It adds the word "Blockchain" and "NFT" to the equation. Remember that's the difference between pictures of monkeys being worth zero and being worth millions of dollars.

You seriously wrote all of that out and then admitted at the bottom that it’s only valuable because gullible people will buy it.

So you agree the whole thing is a grift. Next time just say that instead of proposing some pointlessly complex system of offloading a tiny DB onto the blockchain. “It’s valuable because you can trick gullible people into buying it.”

In this case it’s a bit of a hybrid, studios can - at least in theory - create a system where they could get a cut of monkey millions through the actual use of blockchains, which they would absolutely not be able to achieve without blockchains.

But yes, the reason the money is in the blockchain tech and no one pays millions for monkeys without blockchains? That’s all hype.

This tech solves a problem that could be solved by studios just making a private store they all agree on. I don’t think anyone will argue anything else, least of all me.

But here is the thing: things like currency and trade able tokens only have value because people think they do. There is a fine line between “gullible” and “currency” here.

> studios can - at least in theory - create a system where they could get a cut of monkey millions through the actual use of blockchains, which they would absolutely not be able to achieve without blockchains.

Sorry, I missed something. What exactly can they not build without blockchains? Surely you’re not saying that the thing they can’t do without the blockchain is “use the blockchain”, because that’s vacuous.

(I’m actually not sure how they wound build this hypothetical system you described with a blockchain, though. Is there a mechanism that allows NFT transfers to accumulate “royalties” to the original seller? Or is this a hypothetical feature of a hypothetical custom blockchain that’s controlled 100% by the studio, eliminating even the distributed nature?)

> But here is the thing: things like currency and trade able tokens only have value because people think they do. There is a fine line between “gullible” and “currency” here.

I don’t entirely disagree with this, but

1) Most people investing in this stuff would have zero interest if it were actually a stable currency. They’re interested in speculation. This is in contrast with dollars (or euros or whatever) which people very commonly hoard in banks, even knowing they are actually declining in value.

2) NFTs are not intended to be currency. So even if you believe that Bitcoin or whatever cryptocurrency has long term real currency potential, NFTs are still stupid.

> Sorry, I missed something. What exactly can they not build without blockchains?

They can’t build tokens that people would speculate in to the point that they are worth millions unless they use a big ledger like eth where people might believe that the tokens have a lifespan longer than the games.

> Is there a mechanism that allows NFT transfers to accumulate “royalties” to the original seller?

That is my understanding yes, and this would be a premise for the whole thing.

So yes - the whole idea would be to set up a market for speculation and see a cut from each transaction.

And the chain isn’t necessary, technically, it’s a necessity to ensure the inflated speculation only.

And both studios and users have aligned interest: speculation, only. Not hats, not currency. They get shiny gear but it’s also a lottery.

Okay, so we’re back to it’s valuable because some people are gullible. This is not particularly compelling. Yeah, from a money grabbing, no ethics wanted standpoint, that is a compelling argument that it will make money. It is not a compelling argument that it actually provides meaningful value to anyone except the ones perpetuating the scam, though. A Ponzi scheme is also profitable.

It is interesting that NFT royalties are thing. I was not aware of that. Although I don’t see that this makes it valuable. Royalties are generally paid for reproduction. If you have to pay the creator to transfer the token, then it seems evident that you don’t even own the token, whatever that’s worth.

Yeah to be absolutely clear: I believe there is value here only in the sense that there is value at the top of any Ponzi scheme (value for early investors) or at best - a lottery or volatile instrument (value only for lucky investors). And this is the reason I think that it will happen in some spaces such as gaming.

I don’t think it’s something that has or adds any value from a technical viewpoint. At least not to the point where it would warrant investment or overhead from blockchain tech. It’s hardly worth even $1 “securing” my ownership of a hat on a public ledger unless the chance of it becoming more expensive through artificial scarcity is counted as “value”.

If your point is that transient hysteric financial trends could allow for financial gains rather than actually having some game design merit then who cares?

The question now is mostly “why, why do you need to add a blockchain” and I think that in a lot of spaces these things will pop up just because of the transient trend.

But that actually solves the short term problem of “where is the infra?” and it’s not impossible that in a few spaces, this will actually survive.

Remember how everyone and their mother had to launch “cloud” services 10 years ago, and in 9 out of 10 instances it added no value. Some of those are still things despite never actually being necessary.

> There is nothing anyone can do about the fact that [IP] can be copied.

Disney's lawyers seem to be doing just fine.

This ignores the effort each studio would need to do, in perpetuity, to render hat tokens in their game's engine and art style. Eventually there would be so many years of hat tokens that game studios would either have to draw a thousand hats just to launch, or abandon older hats. Which would devalue them and scare off future hat token prospectors.

You grab the hats of the players that are actually in the game (i.e. only the ones you need to render). Custom graphics like decals have been a thing for decades. It's not much harder for clients to download a hat model as e.g. an fbx, than it was to download a sprayed decal in counter strike 20 years ago. The actual buying and selling of hats doesn't need to take place in the game.

You misunderstand my use of render. I don't mean render during gameplay; I mean turn an abstract idea, like an NFT for a bull horn hat, into a 3d or 2d asset that aligns with the art direction of the game.

There's no chance for asset reuse across games. Not only do the asset file formats differ from game engine to game engine (or platform to platform) they also differ perspectively, aesthetically, and thematically. Madden 2023 has incentive to sell NFT assets for sports jerseys. And Elder Scrolls 6, NFTs for wizard robes. But render those assets in the other game and they will look out of place. Even two games with wizards in them will have different aesthetics, mostly to differentiate in the marketplace!

No I mean that games that do this would literally allow frog-hats and butterfly hats regardless of genre and art direction. They’d then obviously need to be able to import the asset and render it on player’s heads and that’s it. If it doesn’t fit the renderer exactly then it’ll look out of place, badly lit etc. But that’s exactly like hats already are in these game. They are out-of-place, ugly assets. The hat-games some times even seem deliberate directed in a style that seems to be for the purpose of allowing a wider variety of art without looking too off (e.g. Fortnite).

Imagine the outrage when a gamer learns his $1,000 silly hat won't render in the latest horror game.

Why would they run this as an NFT though. They're going to want control over what assets can be added, and TBH would probably much rather they could do something about theft, money laundering etc to avoid bad publicity.

> Why would they run this as an NFT though.

Imagine you had a set of digital drawings of apes you wanted to sell. What can you charge for a nice colurful drawing of an ape? $1? Now add "NFT" to the description.

Same with a hat. The studios would do this because they see a situation in which a few of their assets become $10M ape assets and they make $100k. Before this hype dies down, the studios are afraid of missing out on it. No studio wants to be the one that missed the golden rain of NFT hats of 2023 because they didn't get on the hype train.

of course this won't be a long term thing. But we'll see land grabs like these now for a while because it's a low risk/high reward kind of thing.

Here's the thing you don't understand about AAA gaming. If they make a hat that they sell for 10 mil, there is no way they are going to agree to only take 100k of that price. This discussion ignores the financial realities of the business side of AAA gaming.

You're asking the studios to give away 99% of their profit. Even in the worst case, they can all put their own platinum plated, cancer curing, blow job giving hat on the Eth blockchain and charge 10 mil for it without agreeing to share anything with anyone other than gas fees and miner bonuses. They won't. You know why? Because if they sell it in their own stores they can easily sell one thousand of them for 10 grand each and pay nothing in gas fees and miner bonuses.

No studios barely make anything in this setup (user created content) or they just make what they always did (Fortnite style cosmetic assets). This is studios using their status as "places where people see hats" and the newly invented hysteria around NFTs to set up a scheme with very little investment.

They don't make something and sell for $10M because nothing studios create and market would have that kind of value. The high price of an asset is only because end users trade it among themselves (quite literally in the case of wash trades) to inflate the value. Studios can only provide the scarcity or exposure of the assets - they don't set the prices other than perhaps initially. But the key is that every time an asset changes hands, the studio gets a cut. A hat is sold for $10 then they get $1. Then it's sold 100x over, and the studio takes $1 each time. If a hat for some mysterious reason becomes the $1M monkey picture of hats, then it earns them a bigger cut in the transaction. But the key is: this is only happening because people want to take part in the lottery/hysteria of NFTs on the eth blockchain. Not because they are ready to pay $1M for a game asset. So the studio isn't "losing" 99% of anything. They just tricked people into trading NFTs which earn studios a cut, instead of other NFTs that don't.

> create a market... cut on each transfer

This would almost certainly result in KYC requirements, and I'm skeptical that the delta in profit is big enough to justify that lift.

Perhaps, but the tx fee is part of the crypto transaction, and happens entirely on-network. If standard crypto rules apply, the only people that need to KYC are the ones cashing in/cashing out USD.

Someone is doing the KYC either way. It gets paid for one way or the other, and that cut comes out of the price the consumer is willing to bear for the underlying item.

The cost of KYC might not even be the biggest issue. The friction will be a non-negligible drag on sales.

Two things you are missing is:

1. With NFTs games can take a cut of resales. With something like cs:go there was a substantial secondary resale market for things like skins, which valve wasn’t able to capture but with NFTs they could have taken say 10% of each resale.

2. Because the data is public it’s possible for other games to bootstrap off the data (we have seen this with “airdrops” in the crypto land). Meaning a game which is coming out can give some perk to people who own X in fortnite because they think their game is similar and want to entice people to try their game, especially people who they know like fortnite.

In the tech world we are always talking about how valuable data is. The blockchain makes that data public so secondary products can exist to serve needs the game doesn’t care about. And provides the ability for the original game to capture part of that market if they wish because they own the initial contract. But because the data is public, other games can also use that data how they want.

> 1. With NFTs games can take a cut of resales. With something like cs:go there was a substantial secondary resale market for things like skins, which valve wasn’t able to capture but with NFTs they could have taken say 10% of each resale.

So what is EA's incentive to join the Valve blockchain where Valve gets 10% of each resale? And if there's no incentive for EA to join, why isn't it just a centralized marketplace rather than a blockchain?

> 2. Because the data is public it’s possible for other games to bootstrap off the data (we have seen this with “airdrops” in the crypto land). Meaning a game which is coming out can give some perk to people who own X in fortnite because they think their game is similar and want to entice people to try their game, especially people who they know like fortnite.

Valve and other companies already have this data, in much greater specificity than "this wallet owns a longsword".

> So what is EA's incentive to join the Valve blockchain where Valve gets 10% of each resale?

They already can do this via the [non-nft-based] Steam marketplace where Steam itself takes a 5% fee from every transaction.

That is entirely the point. Centralized is just obviously better.

1. I think Valve takes a cut of every marketplace sale, as well as the game publisher. More importantly they control the market completely so they surely can choose what share to take on every sale. They certainly don't need NFTs.

Am I missing something?

He is talking about 3rd party websites that trade in skins

> With NFTs games can take a cut of resales

How is this a positive? Where were the people begging GameStop to write publishers a check for the used games they bought and resold?

They didn't say it was a positive for users. But users aren't the ones who are going to add NFTs to games.

Penny Arcade explains: https://www.penny-arcade.com/comic/2021/12/22/ubisoft

>why the fuck would you want scarcity on longswords?

You would want scarcity on longswords if your business model included selling loot crates that may contain longswords.

If your business model included selling loot, you would not allow NFTs from other companies from which you earn nothing. And if the token is from a previous game of your own company, you can again just use a database without all the complexity.

Exactly. If you need longswords to be scarce, you're going to have a bad time when marty minecraft builds 1,000 longswords and wants to bring them into your game.

The complexity of a NFT system provides a benefit to the company by (A) offloading processing power to people who might be making some money from 'mining' the chain, and (B) not having to run your own marketplace system, while still getting a percentage of TX fees.

If people are mining it, then the processing power required has just gone up by multiple orders of magnitude and is now vulnerable to third parties controlling the mining.

Please correct anything below:

There's a couple points: low- vs high-trust, and distributed vs centralized. Blockchains have in turn two mechanisms to match: proof-of-work to handle low-trust environments, and public cryptographic ledgers to handle distributed work. In this case, games are high-trust, centralized services. There is a single controller that authoritatively owns the current game state. So this does not seem a good match for blockchain technology.

If you're not in a low-trust environment, you don't need proof-of-X. You just a public cryptographic ledger written to by a set of trusted keys. Any party can extend the blockchain by just creating and signing the next block. (Would need some contention resolution for simultaneous write attempts -- could be as simple as whoever got the lower signature hash wins.)

I think Minecraft is an interesting game to bring up since multiplayer in this game exists in a very decentralized way. Anybody can host a server and your possessions (etc) on that sever are completely unrelated to other servers.

One could imagine some sort of opt-in system that servers could enable that would allow for cosmetic items to travel with a player from server to server using NFTs as proof of ownership of the cosmetics.

There isn't a real reason for this to be done with NFTs vs some centralized database, but it does make more sense than the vast majority of games with are hosted on centralized systems already.

There is also a real reason for it not to be done with NFTs: it would take about thirty seconds for someone to be scammed and open a support ticket with [whoever - it won't be the right person, but I guarantee someone is getting a support ticket] and they obviously won't be able to reverse the transaction, and also unclear if they could even ban the scammer (right now, bans are per-server, unless server owners have coordinated otherwise, which they generally don't). Regardless, the user is going to have a bad time, versus a system using a mutable system, where a human could investigate and reverse the issue.

Obviously support agents make mistakes sometimes too, but that's a heck of a lot rarer than scams in MMOs.

This exact point has been my hesitation with NFTs in general. I think the immutable nature of NFTs is actually very incompatible with human nature; we make mistakes and a completely unforgiving system is only going to make life harder.

> There isn't a real reason for this to be done with NFTs vs some centralized database

That's like the main point...

Well my point is that Minecraft does actually feature some decentralization vs the vast majority of online games.

Sure. But to give a more extreme example, Dungeons and Dragons is entirely decentralized with individual DMs hosting games however they choose without even the knowledge or consent or transaction with Wizards of the Coast. Now imagine a player demanding the right to access content from another campaign with another DM. Or even more laughably, that they "bought" with USD from someone who played a DnD game at some point.

I'd argue that Nintendo kind of does this already with Amiibo. You own a figurine you purchased and by scanning it you verify the ownership, which yields a reward exclusive to owners, the tech behind it is different but the concept is very similar, including the fact that you can resell figurines and that some can get to be very expensive because of supply and demand.

I'd also argue that this feature is lackluster and I don't think it would have had any success at all if it wasn't for the fact that you also get a figurine.

There are many reasons why amiibo are not like NFTs, but I'm only interested in trashing this "in-game item NFT" idea. When you scan Mario, you have no expectation of instantiating mario into your game, because that would be stupid in just about every context. Smash AI aside.

There is an Epona Link one that instantiates Epona into breath of the wild, but it definitely doesn't do that in Mario Odyssey.

Amiibo are cool. People like them because they're cool and the in game bonuses are a fun little extra. That's very different from the idea of trading in game item NFTs with the intention of carrying over their utility to other games.

You have an expectation that NFTs would surely instantiate objects, I see no reason for that. Moreover I see no motivation for game companies to keep support.

Imagine you have an NFT for, say, a gun, let's go with AK47 because of its popularity, and say it unlocks it for the current Call of Duty (whatever that is now). Why would Activision make it work with the next CoD? Is it supposed to work with Battlefield too? Is there anything stopping people at Valve from giving you a cosmetic if you validate it, if they so desire?

I mean yeah, that's my point. It's a bad idea.

Nintendo completely owns Amiibo and doesn't see the value in coding the same effect for each Amiibo into, why would any developer want to put in the work to implement items they didn't create and profit from?

Exactly

People literally buy devices to emit fake codes to get the rewards despite the fact that they dont actually own the Amiibo....

So maybe this analogy works better than you realized.

The only thing I can think of that NFTs could potentially add to Amiibos would be part of a form of DRM. The amiibo data is trivially piratable onto NFC cards, and there is a cottage industry of custom amiibo cards.

Still though, if you pirate you don't get the actual official figurine, there are certainly other ways to implement DRM, consumers hate DRM, and despite Nintendo's well known aggressiveness in litigating and preventing piracy, they don't seem to care about DRM on amiibos, apparently because the data is not the core value-prop.

For indie games however, it could make sense. Hear me out.

It's true that items are unique to games. But if you want to allow some kind of trading, you will have to implement it yourself (next to programming, art, marketing, etc.). Linking this to crypto-tokens could have the benefit that you outsource the trading part. Your players "own" their items through crypto tokens, and can trade them on crypto exchanges.

You can implement it yourself in a centralised way of course. But the question is if you want to spend the resources on that.

Indie developers typically want to design, well, their own game. Their own vision, art, music, mechanics working in concert. I don't think anyone is dreaming of creating a showroom for a bunch of random other assets out there in the world. Asset-store flips are already considered jokes. Original, boutique art in an indie game will always win out and stand out.

They'd still need to do the work to implement every single item you are talking about. No indie would even want to do that. Nobody goes indie to work on compatibility drudge-work. Maybe if they are trying to jump on get-rich-quick financialization trend, but not if they want to actually work on their art.

So an indie dev is going to spend the time to create an interface between Stardew Valley and Slay the Spire cards?

It's a huge undertaking that would need to be custom done for each game's data it interacts with. And indie games are less likely to conform to standards than others.

Yep. Indie devs will spend god knows how many hours and their tight budgets building a cutting edge revolutionary tech, so amazing that will be able to render unknown items with unknown specifications on the fly. All that just for some random investment genius recoup the money that he spent buying a ugly monkey jpeg.

But why. The source of the drop would be some centralised server anyway.

Adding crypto assets seems way more programmer work than doing in game trading, which you would want anyway as a player.

This is close but not quite how I expect they'll come to be used. I think they'll become a lot more important if companies like Meta are successful in creating virtual connected spaces based on open standards. In that scenario, with public buy in, ownership of a digital work shifts meaning slightly to one where NFTs suddenly make more sense.

Biggest issue with some 'use your item as an avatar in any game' is that doing cross-engine models is hard, and pretty much impossible if you want the model itself to be immutable, lest it break with some engine update rendering it useless. The only in game item thing that really works is when the game code has a texture algorithm (like CS:GO skin variants/wear levels) and uses the immutable nft data to calculate their unique item texture.

It's not just technically laughable, cross-game assets make zero sense from a design and aesthetic standpoint. Splatoon and Gears of War are both third-person shooters, but characters in one would look jarring and hilariously out of place in the other.

> That's just not how games work. A longsword in dnd is not a longsword in final fantasy, nor is it a longsword in dark souls, nor is it a longsword in minecraft.

That's not a terrible idea. Crossovers between games. Good gimmick.

And a lot of what you're talking about is culturally constructed, it doesn't have to be that way.

Crossovers are fine. That's not the issue being noted here. The problem is that people imagine generic items are cross compatible within many games, but that just doesn't work. If you want to make a crossover version of the master sword in minecraft, sure, that's cool. If you want to somehow import the data and just assume some sort of parser will get the properties and the look and feel right, you're going to have a shit time. And then still you'd be better off on a centralized setting.

None of that requires NFT though. Literally all of that can be accomplished as well if not better without crypto being involved in any way.

Yes, that is another debate. My comment was more of a response to the many others I've seen debating whether NFT implies ownership of the art or what happens if the server hosting the image goes down (less of a problem if IPFS is utilised). My point is, it's irrelevant. And it never implied ownership of the art, so people who try to pass it off as such are woefully misunderstanding the technology and are probably scammers, and the people buying them are idiots. Cryptokitties, cryptopunks etc. are only valuable because they were the first ones doing these things, sort of like the "million dollar webpage" back in the day. There is literally no point in making an NFT without utility now, unless the minter is someone popular and in that case the NFT is a bet on their fame rising in the future and becomes a speculative asset (just like regular celebrity art).

It is not a different debate, though. If, as you say, there is literally no point in making an NFT without utility now, yet being an NFT does not distinguish NFTs' utility from the alternatives, then what is the point? It is just that which follows in the quote: ...unless the minter is someone popular and in that case the NFT is a bet on their fame rising in the future and becomes a speculative asset (just like regular celebrity art).

Using NFTs offloads asset management to a generalized third party solution so you don't have to implement your own marketplace and trading, the decentralized claim being the main thing making it viable (otherwise you'd just be handing over the keys to your digital warehouse to some random entity). Whether that is desirable or the right fit for your application is another question, but the tech clearly has differences.

> Cryptokitties, cryptopunks etc. are only valuable because they were the first ones doing these things, sort of like the "million dollar webpage" back in the day.

Exactly. A few original JPEG NFTs will survive, but 90% of the late comers and copycats will fail.

> There is literally no point in making an NFT without utility now, unless the minter is someone popular

Precisely. That ship has sailed and this is why you see a popularity of copycat NFTs JPEGs upon copycat JPEGs since that they know it is a scam. They are taking advantage of the market before it collapses just like the wild west of ICO scams in 2017. Now the SEC has put a stop to that and has regulated them as securities, [0] making unregistered ICOs as illegal. Similar regulations may happen to NFTs.

The only form of NFT that seems to have some value, valid use-cases and utility is a blockchain domain name which is likely to surpass the nonsense of useless NFT JPEGs.

[0] https://www.sec.gov/ICO

IMO the benefit to users is the ability of self custody and the benefit to businesses is that you can easily plug in to an existing ecosystem. Do you really want to spend time developing your own version of various things like marketplaces and trading for your platform or do you want to just make an NFT and utilize the existing ecosystem around them.

>IMO the benefit to users is the ability of self custody and the benefit to businesses is that you can easily plug in to an existing ecosystem. Do you really want to spend time developing your own version of various things like marketplaces and trading for your platform or do you want to just make an NFT and utilize the existing ecosystem around them.

Literally every major game company has created their own marketplace despite Steam existing. So yes: they really do want to create their own marketplaces. If NFT's somehow gain traction in mainstream games, they aren't going to allow things from some random public blockchain, they will force users onto their own. You're delusional if you think they're going to forego that revenue stream because of the one-time investment of creating a market. That's not even a rounding error in their budgets.

I never said that this would be good for large game companies. To me NFTs remove control from them which is not desirable. I think it fits better with smaller companies or people outside of the games space who just want to quickly add digital items to their products which are able to be bought, sold, traded, etc.

Similarly self custody isn't great for all users. It's great that a company can get you back your items if you get hacked.

I just gave some pros and not any cons in my previous post.

Building a marketplace is too hard, but building a in game system to handle any kind of asset with any kind of specification that user might wanna play with is easy?

>building a in game system to handle any kind of asset with any kind of specification that user might wanna play with is easy?

I never said that, nor did anyone bring up something like that. Your game system only needs to handle your own items. It's on the developers of wallets and NFT marketplaces (aka not you) on supporting all different kinds of NFTs.

If you own the marketplace you can take an x% cut of every transaction. Seems like something that would pay for itself pretty quickly?

1. You may not want to dedicate resources to creating and maintaining a market place. It's much less work to just add a digital item to your game / product. There might be a better use of your time / resources.

2. There already exist NFTs that take a x% cut and give it to the creator.

Web3 and its communities sure make all the above easier to setup and get working.

I don't know if it is easy but it is certainly expensive (I see people paying $200 to create an NFT.)

Most NFTs are still made on the Ethereum mainnet which has huge gas fees indeed. There are alternative protocols which make it cheaper but it's a pain (and expensive) to move over to those protocols.

There are some projects working on reducing this though, for example zkSync is doing some really interesting work on a layer2 solution that feels like you're staying on the Ethereum mainnet but the fees are highly reduced thanks to the zkRollup algorithm.

I saw my friend mint an NFT for $1.40 the other day just to showcase the work zkSync has been doing, at this cost it'd be super interesting for real world uses beyond just art provenance.

What if you were a journalist in Crimea and wanted to provide content behind a paywall like Substack or Patreon?

What it seems you're arguing is that the use-case that justifies NFTs is facilitating criminal behavior. (In this case, it's criminal behavior that you or I may deem socially or politically beneficial, but nonetheless criminal.)

A decade on from The Silk Road and this is where we continue to be with crypto.

What if I'm a guy who is really good at picking the winner (and spread) on a football game? Or the movement of a stock or other financial instrument within a specified period of time?

Now what if I'd like to sell access to that genius on a marketplace, locked behind an NFT, bid on, tracked and tied to a leaderboard etc. Now let's say I have generated Token X with the value of "TSLA Feb. 29 2022", inside of which lies the closing price of Tesla on that date, with the value being tied to my previous performance on similar picks...

It's not illegal for the journalist to receive donations and sell their work.

By specifying Crimea and ruling out existing payment structures for journalism based around traditional banking like Substack or Patreon, you imply that the journalist in question is in some way committing an illegal or transgressive act that requires a degree of anonymity from governmental authorities.

No, companies based in the US or that want to do business in the US are the ones that cannot serve the Crimea-based journalist, but the journalist is in the clear.

To build a detailed example for the "creator economy", something that would be profitable for creators and video game studios is cross-game items, not for game play like in the twitter thread, but content creators could have in-game cosmetic items that identify a player as part of their clan/guild.

There is a huge market for content creators having large fan bases that literally pay them money via subscriptions, merch, etc. while they broadcast their gaming sessions live online. The entire business model for Epic's Fortnite is all cosmetic items via season passes, in-game transactions, etc. The game is free to play.

If content creators were to issue NFT's that represented a cosmetic item badge/emblem, which could be bought/sold/traded on an independent marketplace and each game studio was pressured to allow these emblems/badges across games then the content creator would profit on transactions and possibly the game studios could profit - maybe they get a cut via smart contracts if that's possible.

It wasn't very long ago that cross-platform play was not allowed by Sony and Microsoft and the game studios and players pushed for it. Major games have cross-platform play now, its expected in multi-player console games. Cross-game cosmetic items could be a huge thing for studios, indie content creators and and an opportunity for always online game platforms to get income from marketing/advertising. When there's a new comic book hero movie coming out, the movie studio could release cross-game cosmetic items (i.e. look like spidey) that players could then sell/trade later on. I would agree you don't need the tech from crypto or NFT's to accomplish this but it sounds like that tech has the features needed.

I agree. Interoperability of digital goods would allow the creator economy to grow in very cools ways.

NFTs only solve one part of the problem though - rights management. You still need a good way for a cosmetic designed for game X to work in game Y. That's similar to any multi-platform development challenge. There are many other economic decisions that will have to be experimented with, including tax collection, platform fees, creator fees on resale, etc. It needs to work for everyone or it won't get the reach it needs to really empower users.

Whether or not NFT actually add anything here comes down to the remaining technical challenge of interoperability. Is it common for parties to agree on a common asset definition but not a common rights management platform? That's the situation where NFT help.

I wonder if parsing NFTs (especially with smart contracts) could be turned into a new attack vector for something like stealing accounts in online games. In most games people can't get other clients to run their code without forcing them to download some mod or hack. With NFTs it might be enough to join the same server as them.

edit: To clarify, I'm not talking about regular NFTs as currently added by game developers where they're basically just a ticket to an ID referencing something created by the game developers and hosted on the game servers. I'm talking about trying to create a system for NFTs shared between games from different developers.

> This sense of multiple applications is what I think people may or may not mean when they use the term "creator economy", but I think it fits nicely. People argue that interoperability of assets is useless because "no two games would ever want to share an item, developers don't want that". But another angle to this is that creators can give utility to a single asset across a wide variety of applications for their fans.

I suggest you read "How Virtual Worlds work" by Raph: https://www.playableworlds.com/news/riffs-by-raph:-how-virtu...

All 5 parts (more focused on the metaverse topic than NFT, but applicable to both) show exactly why interoperability is a pipe dream by non-game developers and has zero basis in reality. Not just because game developers don't want decentralization but because even simple stuff is hard, and even if you could solve the technical aspects you can't solve the game design aspects of it.

How my logic has been evolving, extrapolating to, is Epic with Unreal Engine - and Fortnite as prime example - creating all game mechanics that can interact with eachother, so if you develop your game with Unreal you have access to "all" game mechanics in your game, with the option to allow users to freely import all their Fortnite skins or perhaps for a reasonable/acceptable fee per skin (if the skin copyright holder allows it; so likely not free, but then that will create the category of buy/license options of "For Fortnite only", "For up to 3 games", "Unlimited use").

A while ago Ninja (top earning game streamer) mentioned he sees Fortnite becoming the Ready Player One universe, something I'd seen myself as they're by far the best positioned to do so.

> How my logic has been evolving, extrapolating to, is Epic with Unreal Engine - and Fortnite as prime example - creating all game mechanics that can interact with eachother, so if you develop your game with Unreal you have access to "all" game mechanics in your game, with the option to allow users to freely import all their Fortnite skins or perhaps for a reasonable/acceptable fee per skin (if the skin copyright holder allows it; so likely not free, but then that will create the category of buy/license options of "For Fortnite only", "For up to 3 games", "Unlimited use").

For the most part assets in the Unreal store have to be modified (some slightly, some heavily) to work in another game. You don't get it for free because decisions are made for each game. You can't just download a helmet from the unreal store and it just magically sits on your character's head and works with all animations, because there's no clear idea of what a "head" is and how it should work.

There's no way a helmet from the unreal store can provide working stats for your game because health, food, armor, etc.. all vary in fine detail from one game to another.

So no, go read the link I pointed. Even what seems simple is extremely hard to do for interoperability, even if developers wanted it.

Assets in the UE store are meant to give *developers* an easy integration path, it's not designed to be a trivial integration path without development involvement.

This is an absolutely terrible idea that combines the drawbacks of existing non-blockchain based systems with the downsides of blockchain.

The problems of centralized control:

The game dev can decide that your skin should not be in the game for any reason - now you have a broken link

The game dev can suddenly make 1000 more of your limited series skin - now the value has deflated

The game dev can shut down the game permanently - what is your NFT worth now?

This is combined with typical blockchain issues, like if you get scammed, or somebody hacks your account and transfers out your items, there are no backsies - no support person can help you.

I just want to say that interoperability of assets makes me think of Nintendo's Amiibo system. They're little statuettes with RFID tags in the base which can be scanned by various consoles and unlocks a lot of rewards. These rewards are often tied to the specific character in question.

As an example, I have the Twilight Princess Link Amiibo. In most games it gives some reward related to The Legend of Zelda in general. When I scanned it in "Yoshi's Woolly World" for the Wii U it unlocked a Yoshi looking like Link, as would any Zelda themed Amiibo. When I scanned it in The Legend of Zelda: Breath of the Wild for the Switch it instead unlocked Epona, Link's horse featured in many games, including Twilight Princess. Which can only be unlocked by that specific Amiibo and no other Zelda ones.

Of course, these tags are not unique and can quite easily be cloned.

There's a number of reasons why amiibo are not like NFTs:

* Nintendo chooses what amiibos are made. Centralized.

* There are many copies of a small number of amiibo types. Fungible.

* You get a physical thing. Not a token

* Only nintendo games may use amiibos

* The data on the amiibo is uniquely interpreted for each game. It's not a generic interface. Not all amiibos will do anything to every game.

Amiibo, and pokemon (trading the pokemon) are great examples of how to trade and scale information exchanges in the real world without needing an NFT blockchain. Blockchains are terrible ideas for games.

While all of this is technically true the NFT implementations I've seen for games so far seem like unique tokens for some ID identifying a generic item interpreted by server or client code of the game.

The point I was getting at was that udbhavs' comment on "no two games would ever want to share an item" reminded me of a case where several games do share some item, though in this case not a unique one. Any item shared between games would always have to be interpreted by each game unless they're based on some shared engine feature or module for interpreting them.

The important difference is that Nintendo has no incentive to implement interpretations of items from Activision. Since it is dependent on Nintendo implementing each item, even if it were a decentralized network, the utility of it is not so secretly still centralized to nintendo only activating the meaning of items for their own content. An incredibly inefficient method.

And like Amiibos, support across games is almost always "you get a small non-unique bonus" because implementing specific content for each amiibo is time consuming. So you end up with a complex matrix of which games actually have real support for which amiibos, and realize they aren't as interoperable as they are advertised.

Absolutely. I have a few Amiibos which I've gotten as gifts, I keep them as little figurines on my desk and every now and then I'll realize they are more than that and when I get a new game I like to check whether it has Amiibo support. I like them and they bring a little bit of joy when I look at them and I like the unexpected fun of having some Breath of the Wild equipment in Skyrim or a Link styled Yoshi.

> Can I use it as an in-game item?

its just a URL. an expensive one.

Recently cryptobros are obsessed with backporting scarcity into the "creative economy", but NFTs don't provide any primitive to do that. Its immensley amusing to see the same people who were railing against DRM in the Zune era, are now saying how brilliant NFTs are. All the while advocating for DRM but with cool glasses.

> what I can do with it. Can I use it as an in-game item? Do I get access to your next podcast episode early in a patreon-like service? Do I unlock your next online course for free or get a 50% discount on your next concert?

Yes. But apart from some specific edge cases (cryptocurrencies, specific name registries where the ledger is actually the store-of-value) how would that even work?

For an NFT to somehow be a proof-of-ownership it has to provide the owner of the token with some value. Access to some material, for example, like you mention. But where dooes NFTs come in? The provider of the service or product would need to agree to honor the NFT! And by that, magically, it's just like any gift card or rebate code!

There is a massive divide between on the one hand a tiny number of systems where the ledger is central (E.g. a cryptocurrency) because the users have already agreed that the value is stored on the ledger.

But why would a seller of hot dogs or concert tickets agree to that? And more importantly, how is it ever guaranteed? It can't be! So it's just a gift card!

What am I missing?

What is the difference of a company using an NFT for tracking ownership accross multiple applications, instead of just maintaining it in their database? The NFT will still have to reference something internal to the company, and the minting costs will make this NFT prohibitive

Why wouldn't a company just try to do something like steam marketplace?

As always. The most compelling use for crypto ends up being a less useful and significantly more expensive database.

We already do all of those things you listed just fine with databases. All NFTs would add are transaction fees and massive power wastage.

I would agree with you - and this is what I fear will happen. There will be gatekeeping across resources in the future that we previously didn't have formal gatekeeping (ie had different ways to monetize) and that NFTs + Crypto end up serving a gatekeeping functionality. Enough of a function that people HAVE to buy into crypto which would then raise the valuations even though it doesn't have large scale functionality.

This use case isn't an appealing use case FWIW - it is a use case though. Already seen coffee with NFTs being sold (mind you its marketing BS trying to signal its modernity, no function).

If this does happen in the future, I doubt it will be driven by large corporations looking for new ways to make money because the incentives aren't aligned. Example: Valve banning games on Steam that use crypto assets. It posed a threat to their own market of digital game items and trading cards where they enjoy a hefty cut of all transactions and maintain complete control. There is no difference between an NFT and a CSGO skin except for the fact that one is stored on a decentralized database and the other isn't.

Maybe - and that was an interesting move by Valve. In the short run keeping control of their system - in the long run TBD.

The funny thing about NFTs and gaming that I find is that if you listen to VCs and other people talk about the future of gaming. They say things like people won't play games unless their getting paid (i.e. NFT like reward system).

Personally I find that disturbing that the only reason people would play video games is for work/make money (dystopian). The original concept behind video games was for sheer enjoyment .. Not trying to make this a rant but the twitch monetization of gaming really changes the incentive structure and NFTs would further cement that poorly aligned structure in that video games are considered "work".

> They say things like people won't play games unless their getting paid (i.e. NFT like reward system)

I agree that is BS. I tried out a few "Play2Earn" dApps and they are in no way a replacement for modern video games. Some of them weren't even dApps, like one game running on a discord bot where you basically had to spam commands to earn tokens that you could withdraw. Guess what happened? Discord banned the bot for gambling features and the token tanked. The server is back up somehow with some features stripped out and I'm amazed people are running back to it after countless red flags.

Nobody is in it for the enjoyment because there is no "game", it's just people looking to make a quick buck. The P2E games which are "single player" necessarily have to function as a Ponzi to keep new players coming. If you try to run the game logic on chain, you will be severely limited in terms of scope which means that PvP games will need a centralized server to run the game itself in which case there's no reason not to cheat the hell out of it.

Here's an example of an NFT use in the real world. The NFL (football league) has started fazing out selling real paper tickets to fans. You buy a ticket digitally and the barcode is scanned on your phone. Back in the days, fans liked to have a paper ticket they could have to remember the event, maybe their birthday or some record breaking play happened. The NFL is now selling commemorative paper tickets for a specific game to fans that is essentially an NFT. The fan had to have purchased the actual ticket and attended in order to buy the commemorative ticket.

What part of that requires a blockchain NFT? I just took a flight this weekend and had a ticket on my phone that let me on the plane. Is that different?

Average people may think "wow, I won't ever lose it", for they have no backup strategy?

(only thing I could think of)

In that case, given that plane tickets are bound to a specific person, you walk up to the counter, identify with your passport/drivers license, request a replacement ticket and that's it.

What are they selling? Paper or digital? And how is it an NFT?

The difference is that the fans actually get a ticket.

I subscribe to a couple private podcast feeds. I paid for those with a regular credit card, no NFT or cryptocurrency needed.

Yes, but what if the podcasters wanted to give you a special episode or discount for, let's say, buying their latest course on Udemy? You can set up a flow using private posts on both platforms by figuring a way of giving out promo codes or gift cards, but the implementation basically comes down to "Show me a receipt" - and that's exactly what NFTs happen to be.

Udemy can sign a receipt with a simple cryptographic key. But what's the benefit of blockchain here?

Blockchain is not necessary to accomplish and does not enhance the utility of any of the things you've mentioned.

> Here's a thing about NFTs that I've seen a lot crypto evangelists and haters miss, and a sentiment that I think will grow once the novelty dies out: The "art" is irrelevant. It's no more than a thumbnail or a poster marketing it's utility, and that's exactly the actual important part - what I can do with it. Can I use it as an in-game item? <snip>

Thinking of it in terms of utility vs ownership is useful because ownership is a social/regulatory concept.

The problem with utility is that that utility is still bound to the seller/market. Can I use it as a decoration in my Meta VR home if it was bought outside Meta's marketplace? Does the utility actually transfer with sale?

As such, it looks like a purchase receipt of a DRM-protected good in a single centralized ecosystem, regardless if it that receipt is represented in a third party or decentralized system.

It's just selling stuff to suckers. Same old industry as it ever was.

Convince me that the "decentralised web" isn't just selling something and you might start to convince the average person.

I agree. NFTs are currently useless, but interoperability would change that. One of the big drawbacks of current DRM tools is that they're centralized within a single vendor. If there are multiple vendors for a digital item, you can't carry your ownership of that item between vendors.

There are a few existing solutions to this. Movies Anywhere[0] consolidates your video purchases across 8 vendors[1]. It mostly works ok. The problem is that I still have to trust those vendors, and this industry consortia, to manage the property rights for me. I can't prove that I own a particular movie outside of that ecosystem. I want to download the movie and transcode it for personal use, and prove that I legally own the right to that movie file outside of their system. If I own a copy of the movie, I should be able to take that copy of the movie anywhere.

Music is similar. Remember a few years ago when a bunch of music services added "upload your offline library and we'll make it available on the cloud" services? That was basically using the files on your computer (ostensibly obtained by ripping a physical CD you bought at a store) as a DRM key to unlock new features within the platform. Personally, I got burned by this when Google Music got shut down and took my uploaded music with it (backups, yes). It would make a lot more sense to have a wallet of licenses that I could present to any of these services.

Finally, the BIG thing with interoperability is freedom of exchange. I want to be able to sell my digital stuff to somebody else. Or lend it to them. Or present it to a new vendor / media player / device.

MOST importantly, I want to use the media myself wherever and for whatever I want, without worrying that I'm somehow breaking the law. I want to make mashups. I want to self-host. I want to dump everything in a new hosted service and see how it works. And I want to do all that knowing that it's all above board and the creator's are compensated fairly for their work. The current system works for Disney. I'm much more interested in the artisan digital economy.

NFTs do not deliver on this vision today. Additional technology is needed. Content-addressed, distributed storage like IPFS would be helpful. We might even need opinionated regulation to get the big players on board. Just look at the difference between electronic bank transfers in Europe and the state of US electronic medical records to see what I'm talking about.

[0] https://moviesanywhere.com/welcome

[1] AppleTV/iTunes, Amazon Prime Video, Fandango/Vudu, Google Play/YouTube, Microsoft Movies & TV, Xfinity, Verizon and DirectTV

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