eyeroll I won’t deny that there are tons of NFT projects that are nothing more than modern day tulip mania. On the other hand there is an entirely new world of opportunity that has never existed before for both common people, artists and corporations in the form of DeFi projects.
Basically any distributed form of ownership you can imagine is now possible through NFT and DAOs. There has never been a better time to learn about it either.
> there is an entirely new world of opportunity ... any distributed form of ownership
That is what people say, but what I don't understand is what ownership is actually conferred with NFTs. The only "ownership" is the ability to transfer the NFT to another person, which simply gives them the ability to transfer it to another person (which sounds a bit MLMy).
For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
> For ownership to be worth more than that, you need a legal system and a legal contract ... so back to square one.
That's the part about NFTs that I keep getting hung up on, yes. I get the abstract notion of creating artificial scarcity for digital goods, and how that could have market value. But we've seen absurd things like "use this service to create an NFT for any individual tweet," with no verification that the NFT is being created by anyone who has any legally-recognized right to the tweet's content. If an artist tweets out an image of a new art piece of theirs and I mint an NFT from the tweet, what exactly do I have "ownership" of? I sure don't have any rights to the artwork. I don't even have any rights to the tweet text, which is implicitly copyrighted by its author.
And it's that sort of foofery, more than anything else, which makes me more inclined to be skeptical. Obviously there are NFTs created by legitimate copyright holders who can legally transfer ownership or other rights to you, but the legal recognition of the ownership doesn't seem to have anything to do with the inclusion of the NFT in the transaction -- the NFT itself can't verify that it was minted by someone who had the necessary legal rights to assign ownership of the thing the token represents.
A lot of people on here are aggressively expressing skepticism of NFTs while only giving simple easily refutable reasons. It seems like they're trying hard not to understand. That's what happens when people have cognitive dissonance. Perhaps they've spent their whole life building a slightly incorrect mental model of how society works and NFTs don't fit that model. It's easier to deny the value of NFTs than to change their mental model. The denial has to be aggressive because it's so emotionally dangerous to let yourself lose your grip on your existing beliefs. That kind of hysteresis or stickiness of beliefs is a good thing because it allows us to build elaborate consistent useful models of the world without upending it at every random new idea. But it also means old set-in-their-ways people aren't good at adopting cutting edge ideas.
I didn't vote you down, but I do think it would have been a better use of time to explain why NFTs are the future, rather than ad-hominem attacks on people who disagree with you.
Please tell me why NFT are valuable and useful, with very concrete examples of utility. If you use the word "ownership" please explain in context what this means.
You know, there are people in the space who talk a lot about adding utility to NFTs. This may well work for tickets or whatever, but the kind of NFTs we talk about here don't benefit from utility; art doesn't benefit from utility.
I agree with the OP that a lot of people here seem unwilling to take a moment and think about this more deeply, and how NFTs might compare to existing ways of valuing things. To be fair, it does take some time to wrap your head around, and maybe an open mind.
People complaining about a lack of "real" ownership often seem to mean ownership as in owning the copyright, but note that during the piracy debates of 00s the tech world spent a lot of effort trying to convince the world that a copyright claim is fundamentally different than physical ownership. And so it is.
There is physical ownership over a digital file; and that is having physical access to the bits that make of that file.
NFTs work because of the realization that a significant part of the value of physical artworks has nothing to do with there physical form.
Now there remain a lot of open questions; for example, it may well be that the physical form is still somehow essential, even if a small part of the value. Yves Kleins Immaterial Zones don't seem to be trading a lot at Sothebys, as interesting as a concept they may be. People may well feel the value of hanging your Rothko in a home is a very important part of the experience, even if 99.9% of the value is simply provenance (which an NFT artificially creates for digital goods).
It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
The frustration those of us who are skeptical of this use case of NFTs -- creating artificial digital scarcity -- has with responses like yours and Exporectomy's is that you're pretty much saying "you're clearly not thinking about this deeply enough, because anyone who thought about this correctly would surely agree with us." This is not only not a very convincing argument, it's a little bit of an insulting one.
The objection I mentioned in my previous comment was that the original copyright holder of a creative work is the only person who can transfer any ownership rights. But let me restate this without invoking copyright: if I have the legal right to transfer ownership of a digital file in any legally recognized sense to you -- whether that file is a piece of software that I bought on physical media I am conveying to you, or artwork I created that is being digitally transferred to you -- an NFT is only useful as a proof of ownership if we have contractually stipulated that it does. That contract exists independently of the NFT, incorporating the NFT only by reference, just like the NFT itself only incorporates the digital file it tokenizes by reference. The NFT itself has no legal authority -- it's just a transactional record. As I mentioned in my previous comment, it's possible to easily create "bogus" NFTs of digital files whose creators or rights holders haven't authorized it. Furthermore, since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain, so again there needs to be a framework outside the blockchain to truly establish ownership.
So the question has to arise: do you need the NFT in this transaction at all? Why can't the original contract incorporate the digital file directly by reference itself? The NFT doesn't really do much to support "proof of ownership," while instead clearly creating opportunities for scammers taking advantage of people who don't understand that just because you have an NFT for a digital file doesn't mean you necessarily have any legal authority to sell any kind of right whatsoever, copy or otherwise, in that file.
Maybe you don't see it that way -- clearly a lot of people don't -- but please do not imply I haven't taken a moment to think about this more deeply. I've thought about it a lot, in fact, and so far I haven't found a convincing response to the concerns I've expressed about this particular use case for NFTs.
I didn't attempt to answer your point directly because others have already done a better job of it. Excuse me for making it sound like "You're wrong but I can't explain why".
> This is not only not a very convincing argument, it's a little bit of an insulting one.
My apologies if I came across as insulting, but I do feel a sense of frustration with some of the arguments provided in discussions like these, and I think we can agree that some of the language critiquing NFTs here does not scream "open minded".
First, let me correct a misconception that may give you a slightly different perspective. You write "since there are multiple blockchains that handle NFTs, an NFT is just unique on that blockchain". It is worse than that! There is nothing that enforces uniqueness of an NFT within a single blockchain; not in a way that would make such a duplicate any different than a duplicate on a different chain. You couldn't prevent such duplicates, even if you wanted to. First, artists may on purpose create multiple copies; second, the only way such unique could be detected would be hashes, which can easily be fooled. Third, a scammer minting an NFT of an image belonging to an artist, would then block that artist from being able to mint the NFT themselves. It sounds bad, but it really doesn't matter for the concept to work. People scamming by pretending they are selling art pieces they did not create is a problem, but it is not a problem NFTs set out to solve (and indeed cannot).
The NFT does not confer any legal rights, correct. But what legal authorities would you want it to confer to the owner? There are a couple that are really useful: The right to download a copy of the art piece from a website. Yes. The right to use the art piece as a profile picture on Twitter. Sure! And artists do often provide license agreements along those lines. (If they don't provide any license information, I believe an owner could try to argue that there is an implied license, and may or may not succeed in that claim.) Some artists put their work even into the public domain.
I would agree that owning an NFT which you do not have the permission to copy to your hard-drive, or which you cannot see on OpenSea because the artist refuses to allow OpenSea to show that image, seems quite degraded. It will probably be not very popular. And yet, some people just might pay for it anyway, because the ownership of the token on a blockchain is what matters in the end. If a popular artist such as beeple were to publish an NFT, explicitly denying that the owner has any rights to even make a copy of the image, there is no doubt someone would buy it. Call it conceptual art. There is no legal system required, because like you say correctly, the NFT itself does not confer any legal rights. The blockchain is the definitive record of ownership, because legal modes of ownership are basically orthogonal.
Consider the example of Mitchell F. Chan's Digital Immaterial Zones (I recommend the blue paper: https://github.com/mitchellfchan/IKB/blob/master/Digital-Zon...), which explicitly is a token without any visual media attached; there is nothing that exists outside of the blockchain that you even could own. It is the pure distillation of this idea.
There is a difference between an artist saying "you have the right to download my file" and the artist saying "I consider you the owner of this immaterial piece that I created, I will only acknowledge 10 owners maximum, and also all of you have the right to download the file".
The latter kind of agreement can certainly be modeled with a conventional contract, and indeed that has been done in the art world, but it is just so much easier on a blockchain to track those 10 owners, verify that the person selling to you is an authentic owner and that they sell their claim only once, and so on.
I think you have outlined the fundamental disagreement quite well.
> It's not very strange that people instinctively feel that NFTs are nonsense; but a lot of the arguments being made are entirely unengaged with the actual issues at play, and seemingly no interest in doing so.
I think when people see utility in physical artwork, to the point they would travel to the other side of the world to see it, they find it hard to credit that almost all the value comes from provenance.
Likewise I think people who see art as nothing more than the name of the person who painted it will wholly embrace NFTs as investments.
These two groups are probably not going to come to an agreement.
I don't believe they're the future, nor do I really understand them much at all. I'm just critical of the way people say "I don't understand them, therefore they're stupid". There may be valid reasons why NFTs are terrible but these people are not expressing those reasons. They're expressing reasons that a quick skim through any popular HN NFT comments page, such as this one, would answer.
Yep, several years ago it was trendy to shill the idea of "cadastre [land records] on the blockchain" to solve some imagined issue with the central authority of land registries, never mind that of any particular asset class, land title was the very last thing any sane individual would cede to a "zero trust database". If you're going to sell or buy land, that title better be backed by all the legal and otherwise mechanisms of force available to the state!
NFTs are just a further abstraction on that same failed idea – a cyptofinancial derivative to make something appear real that isn't real.
If an application (videogame, social network, website, etc.) gives the holder of the NFT special rights, then that is the utility of the NFT. It does not matter about legal ownership of a graphic.
The application becomes the central authority for some arbitrary token. Yes, in theory they could use "an NFT" to represent a key to some in-application capability but at best the owner of the NFT has an exclusive right to that capability at the whim of the application owner. The NFT owner can't really claim to own any real "thing" in and of it's own right.
The application owner gains very little – they could just implement a Plan Old Database within their system.
The owner of the "NFT" gains very little – except the theoretical value of a token they could trade, and might have value, as long as it's backed with some capability provided by the application.
None of this applies to things like "a gif on the internet", for which the NFT means exactly nothing if you have no enforceable rights.
The point is that the application owner does not become a central authority of authenticity though, the blockchain does. The application owner is just one of many acknowledging authenticity.
Many different applications can build on top of this open authenticity verification. This decentralised layer for authenticity verification is much more powerful than a single application builder can achieve with their own database. The concept itself is very powerful for interoperability but some of the valuations of assets currently feel ludicrous.
If everyone agrees that, for example, a particular distributed ledger provides authenticity of some class of artwork, that is fine. But soon the real world happens eg. a court in one country orders the art to be seized and handed over to a third party , but they don't have the ability to force the NFT to be transferred because the former-owner is in a different country. Would the art world suddenly pretend that the artwork is not real because the current owner does not have the NFT? We are back to square one.
You don't think there's value to the application owner? They get a secondary market for the accounts in their application that they don't have to manage and they get royalties automatically paid to them for every resale. The scarcity of accounts drives up the value of those accounts, which also financially benefits the application holder because now they can sell the extra accounts they held on to for more money, and they get bigger royalties on every resale. And on the consumer side, someone is more willing to buy in to check it out because if they get tired of it or they don't like it or they beat the game and want to move on they know they can sell their account easily.
And on top of all that, assets from one application can be integrated into another application. If I build a game and I allow people to use the "sword of NFT" they have from another game in my game then I've created a big incentive for people who like that other game to also play mine.
The application owner gives up control to a secondary market for no gain. They'd do better to simply buy and sell directly, and maintain full pricing control. They already control scarcity, they don't need some other mechanism.
Meanwhile there is very little incentive for some other application to use those same tokens when their value is contingent on the whims of the original issuer. You're tightly coupling your business and liability to some other party who hasn't made any guarantees, promises or agreements to you. Its a can of legal problems.
Ultimately is like trading Apple gift cards, Pre-loaded debit cards, phone cards etc - its an abstraction in which then value of the token will only ever be less than the cash paid for it up-front, and most people trading them have some other reason for taking the hit (ie money laundering, fraud, etc)
The author literally says the following in the article:
>Note: It is important to note here that we think that NFTs as a technology hold incredible promise to help more evenly distribute financial outcomes to community users, not just community organizers. We are in the early days of exploring what digital ownership actually means and it is far too bearish to universally decry the technology. Our concern is with the following types of NFT applications.
You’re missing a big part of the picture. NFTs do provide real utility for anyone dealing with illegal goods or services. They are only selling NFTs publicly while the real goods or services are something else. It’s not a new hack but this is a much more efficient vehicle.
