Hacker News Reader

Comment by lrae | Hacker News Reader

Wonder how much money & resources Shopify spent on all of their NFT features & integrations over the last months, how many people worked on it and how many of those are part of the lay-off now. I'd guess the support you'd need to provide for it and their tokengated commerce isn't little either.

Tobi removed all the NFT stuff from his Twitter profile and didn't tweet much about it for months now, after being pretty vocal about it until earlier this year.

Would love to hear his real thoughts on it and why he/they even (seemingly) invested so much into it. One of the few things I never got about Tobi / Shopify. Just seemed so late and weird to be so bullish there. Don't think he's the kind of person to push it just for personal gain, nor that he'd have to, but ...

View on HN

We did some NFT stuff as well. Adding support for NFTs is not that hard to do. Some block chain contracts and some marketing. It definitely didn’t involve significant costs nor the reason for these layoffs.

The issue is the market growth that Shopify saw at the beginning of the pandemic is pulling back. And also we are likely entering into a recession which will also hit them. I am surprised they didn’t cut deeper.

> And also we are likely entering into a recession which will also hit them.

This is a key insight. The Shopify powered shops I buy from are luxury expenditure. The small producers who make nice stuff at high prices. The last couple of months I've been buying significantly less from them as inflation has cut into disposable income and, where I need a product, buying a cheaper alternative from eBay or Amazon.

If others have been cutting back extra expenditure like I have, that's going to compound the post-pandemic online shopping slump.

I was also disgusted and surprised by the NFT shit Tobi and Shopify pulled (still pull?). But I'd be surprised (again, lol) if they had more then a dozen people working on that stuff.

wasn't NFT issue but it was a signal. Shopify has some questionable metrics and its marketcap was very iffy as well as its business practices with partners from what I read.

spoiler: shopify isn't done yet with layoffs, it will go down as another Canadian failure (lots of those in this country)

SHOP has $8B cash on hand. is a profitable business. how is that anywhere close to the definition of a failed business??

$6.85B net

It's counterparts have far bigger amounts and most of its customer base are affiliate markters, drop shippers.

I’m honestly still in disbelief at how many very smart people fell for the NFT trap. If you’ve spent even a single bull cycle in the crypto community you could tell right away NFTs we’re ICO level scams. The mental gymnastics very smart and technical people performed to rationalize paying for a jpeg still makes me question reality. I participate in crypto because I take a calculated risk, and I’m comfortable gambling. People who actually think something like an NFT has any real value still messes with my head. I really can’t grasp how they actually believe this. And yes, I understand technically how NFTs work.

Did they fall for it or did they think they were in on it and applying greater fool theory?

If they truly understood the scam they’d know it doesn’t end where they win. So yes, they actually fell for it because they publicly participated in it.

> If they truly understood the scam they’d know it doesn’t end where they win.

Why?

Because you don’t make money by selling access to NFTs. You make money by accumulating over hyped projects and then dumping them on bullish retail, knowing full well that in another 12-18 months that same jpeg will be worth nothing in the resale market.

Transactions on a few thousand NFTs per day is meaningless (yes volumes that low). So there’s no other option than Shopify actually believing NFTs were a real viable, long term business.

Ah fair. Yes, I think the marketplace builders were truly in on it if they invested a lot of their own money.

Why? The middle people in a pyramid scheme are still winners.

You can be a winner if you're selling pickaxes during a gold rush, but less so if you're building a pickaxe factory. Shopify's NFT stuff was closer to the latter.

NFTs aren't a pyramid scheme. They are a pump-and-dump scheme and involved lots of wash trading.

Exactly. Plenty of smart people signal their acceptance of NFT nonsense because they see the gravy train and want a piece.

> And yes, I understand technically how NFTs work.

That follows from what you said before. I have yet to see anyone not a scammer who understands them but still thinks they are great.

And I say that as someone who’s vastly more into crypto than the extremely anti-crypto HN.

Just the other day I was reading the EIPs for NFTs and other stuff, because at my work we were investigating the idea of using them.

I was surprised by what NFTs really are... it is so simple it is stupid. It is just some "standard" Solidity/EVM functions that you have to follow when writing your Smart Contract, and then it's an NFT. I don't know why I thought it was going to be something more complicated.

At the end we just made our custom Solidity contract tailored to what we needed. We didn't need the whole NFT functionality (we just needed to store a bunch of hashes in an IFPS file and "imprint" the hash of the file in a Smart Contract Key/Value map. Adding some authentication to operate the smart contract.

Do you think they all fell for it or do you think some were just exploiting it?

I agree by the way, it's just I hesitate a bit because a lot of people speaking positively of NFTs were too smart to be mindlessly bullish. I suspect some of them thought it would make for positive press and drive some hype. Like with Elon and Bitcoin/Dogecoin. I'm convinced 90% of the stuff he says and does is to keep Tesla and himself in the news.

A lot of people were exploiting it, with one of the most egregious examples being Long Island Ice Tea, who apparently have been in trouble with the SEC recently too.

https://en.wikipedia.org/wiki/Long_Blockchain_Corp

>I'm convinced 90% of the stuff he says and does is to keep Tesla and himself in the news.

The connotation that no news is bad news is just such a sad statement on the human condition. If you're in the news for wrong reasons with negative connotations && still maintaining an overall positive image, then WTF is wrong with people?

When a particular individual continues to be theirself in public like this, each instance makes me think less and less of them. It then starts to reflect on the compan[y|ies] they represent. I used to regard Tesla very highly, but no longer. The more they focus on FSD and stop progressing EV cars more in general, the less I care about Tesla. To the point now, I no longer consider them as a car I'd like to buy. I'm still holding onto liking SpaceX notwithstanding the CEO.

I don't think they fell for anything. I think it's more likely that they saw an opportunity to make some money and had a loose enough moral compass to go through with it.

I kind of wish I kept note of everyone who took part in the scam. It will be easy to forget once everyone scrubs their profiles clean.

Shades of Inglourious Basterds.

> I don't think they fell for anything. I think it's more likely that they saw an opportunity to make some money and had a loose enough moral compass to go through with it.

But even this means they fell for it. There’s very little money in providing access to NFTs in the short term. The money is made by dumping over hyped projects (ex: anything BAYC puts out).

What Shopify probably saw were the transaction amounts that OpenSea was doing, and thought they could jump on that business thinking it was any sort of long term model. They “fell” for it because they thought building a branch of their business out for NFTs was a good idea. Anyone could have seen this was a bad idea, and not a great way to make money, and also something that would die and fall apart in a few months.

I think Shopify did an ICO (or the NFT equivalent) for their own little cheap blobby avatar art. They sold thousands, starting bids at around 20k. So that was the play.

> There’s very little money in providing access to NFTs in the short term.

This isn't strictly true -- marketplaces take a cut of the fees, and there was a lot of ETH sloshing around at one point.

I think OP didn't mean the NFT sellers (the ones who saw an opportunity to make some money) but the NFT buyers.

Yes, I believe they're two sides of the same coin. Buying an NFT did two things: A) it gave you the opportunity to flip it for a higher price (this is the most visible way that one can make money from NFTs), and B) it signaled to the crypto community that you were one of the tribe. The second was important if you wanted to execute your own trading scam, which many did.

>I kind of wish I kept note of everyone who took part in the scam.

I don't understand those that are vocal with public "threats" like the above.

I remember friends on Facebook with the same idle threats about those not wearing mask. Or those that voted for Trump.

"I see you! I will remember this!"

Ok.

I wasn't thinking of it as a public threat, more of a personal log of people who I don't consider trustworthy.

I unfollowed a lot of people over the last year who had turned to pushing scams. The problem is, my memory is short. I'll soon forget who the scam artists were, and, if they scrub their profiles clean, I'll probably end up following them again.

Associating falling for scammers with stupidity leaves yourself vulnerable through arrogance. Scamming happens to everyone.

The faster we collectively understand the above, the faster we can actually implement in solutions to do what we can to prevent scammers and also lift the shame from people who are victims.

Worse than ICO. An ICO got you something vaguely resembling either equity or a Kickstarter-style prepurchase. Either way, an ICO had some plausible value. (None of that value had anything to do with blockchains, and the whole thing was probably fraudulent to some extent, but at least the potential value existed.)

An NFT is just an NFT and has no plausible way to be worth anything.

While I generally share your view of NFTs, I don't think your dismissal of them is really fair.

I think what it really boils down to is that, in the "real world", consumers are willing to pay many, many millions of dollars solely based on provenance. That is, one mediocre painting may be worth a couple hundred dollars, but if it can be validated that the painting was actually painted by some famous (dead) grand master, that painting is now suddenly worth millions of dollars, even though nothing about that painting has changed.

So, what NFT boosters were arguing was that, if people are willing to pay millions of dollars for provenance in the physical world, why not the digital world? In my belief it's that humans have evolved to view 2 distinct physical object, even if they are exactly the same, as separate - an exact copy of a painting so that it is indistinguishable from the original to the human eye would still be a different painting and not have the provenance of the original. For digital jpegs, we don't view them that way - the same image on two different monitors is "the same image". For physicists out there it's kinda like the difference between fermi dirac statistics and bose einstein statistics.

Thus, while I agree that NFTs are all scams, I think we should also be asking the question of why we are willing to assign so much value to provenance in the physical world - that seems crazy to me, too.

I think the dismissal is fair.

For physical objects, scarcity is an unescapable fact. It would be great if we could right-click on some Michelin starred chef's food and have another copy of it, but we can't.

NFTs unnecessarily add artificial scarcity to something that didn't really need it.

And they didn't even do that. You could still view and reproduce a jpeg without paying for it. It was a classic ponzi scheme.

Paintings are one of those goods where we are able to make almost exact reproductions that, unless you get up close with a magnifying glass, are visually identical to the original.

The scarcity is not in the image itself, it is in a combination of image + canvas.

> For physical objects, scarcity is an unescapable fact.

I disagree. It is pretty possible now to create a replica of a painting that would be indistinguishable to the human eye from a distance of, say, 2 feet.

Yes, the object could still be distinguished by other means, but presumably the only reason we enjoy art like paintings is for their visual effect - there is literally no other reason to appreciate it.

So my point is that the scarcity for the reason we value it in the first place is actually not an inescapable fact for something like a painting.

Art is something we can appreciate the beauty of and for that alone, we don't per se need originals.

Arguably, however, someone wanting to own the original painting by a well regarded artist (say a van Gogh) you're stepping into Veblen goods territory[0] as its a display of wealth, status and prestige. This is what NFTs are trying to achieve

[0]: https://en.wikipedia.org/wiki/Veblen_good

values of NFT is derived on the eagerness for the buyer to signal virtue. It's the same reason a gamer would spend $20,000 in purchases in game items/loot boxes.

> For physical objects, scarcity is an unescapable fact.

But when we’re talking about very expensive paintings, the physical scarcity of the raw materials plays essentially no role in the valuation. Provenance is everything. Sure, the canvas and paint is scarce, but the cost of canvas and paint is vanishingly small. Make no mistake, provenance is the reason people pay lots of money for original paintings.

You can pay a college art student to replicate the Mona Lisa, but the value will be nowhere close to the original.

Artificial scarcity is merely a signal/status booster in a virtual world where post-abundance is present.

If you are in a VR world and want to mingle with other fellow “tribe members”, what signal do you go off of that’s hard to replicate?

I don’t know if it’s provenance or attention. My gut says attention as many small NFTs projects start out with no provenance, and as the attention around the project builds, so too does the hype and price. This article is worth a read - https://cobie.substack.com/p/tokens-in-the-attention-economy...

Some of the value people associate with provenance comes from the mystery Ave human drama involved in establishing a provenance chain. (Think of Byatt’s Possession or the way a scholarly dispute raises the profile of a work of art.) Any digital record really drains the romance out of the whole process.

Do you think the markets for art prints or sports cards are also scams?

Collectable markets behave fundamentally differently from utility good markets so it's often hard to reason about them when you try to apply logic from one type of market to another.

Because people typically believe any narrative associated with a rising asset price. “This person was early and bullish and has made money so they must understand it.”

The ill-informed association of wealth and genius are age-old and in many ways a necessary ingredient for a bubble to form in the first place.

The same is true on the way down by the way. People nobody listened to because they were incorrectly bearish in a bull market are suddenly entrusted. People who were bullish are disregarded. People believe any scary narrative associated with declining asset prices. This process plays out in a fraction of the time.

The conclusion must be that they're not actually very smart people.

Likely that a lot of these "smart" ceos are people that were in the right place at the right time that fortunately had hired the right people that drove their success. To them the internet was a golden goose. Maybe NFTs are the next golden goose? They're running on pure hopium trying to cargo cult their way into their next billion and not really understanding anything about how they got there.

In your opinion, is Warren Buffet not smart because he doesn't know how to check his email?

Warren Buffet is smart and he would also be telling everyone to not touch any cryptocurrency related project with a ten thousand foot pole

No one is categorically smart. It’s domain specific. Know your weaknesses, protect yourself from yourself.

Be precise: paying for a link to a JPEG.

I had an acquaintance who spent a week or so learning about ethereum and NFTs, threw together a quick NFT site, generated some images and make nearly 500k in a weekend selling these to suckers.

I think he did believe in it, but that's independent of the fact that acting quick on this made him a good chunk of cash with very little effort.

Is that sustainable? of course not. It's also not my particular cup of tea as far as making money goes, but I would hardly say he's "not smart" for getting involved when he did and turning a quick buck.

I like non-fungible tokens. The jpeg stuff made no sense but the composability/interoperability is awesome, making items in one application that anyone can integrate into their own applications without restrictions. One developer can make a game where you can destroy your items from other games without the origin game having any say in it. An open API that no-one controls.

Remember CryptoKitties? The first NFT game before it was called NFTs. Someone made a game where you bred dragons, but in order to do so you had to feed them CryptoKitties. That's the type of stuff I like, not the play-to-earn crap.

Nowhere in the article does it mention NFTs being at the heart of the layoffs. The article later says, "The Ottawa-based company will cut jobs in all its divisions, though most of the layoffs will occur in recruiting, support and sales units, said Mr. Lütke".

No mention of NFTs, though wouldn't be surprised if they scale back on that. I _would_ be surprised if they drop support and development for them completely.

Some companies did work on NFTs because they believe in the space and think it's the next big thing. Some do it for marketing to say "look, we have an NFT story!" If you did it for marketing, there's no reason to advertise you spun down that initiative.

Reply on news.ycombinator.com