This has been said time and time again about each and every "blockchain/defi" project for the past 10+ years: all the guarantees of blockchain protocols are within the blockchain. The very moment you try to put literally anything relating to outside of blockchain all you have is extremely inefficient append-only database - nothing more, nothing less.
NFTs are datums with an URL. That is all there is to an NFT. It's not a receipt for art, it has absolutely nothing to do with an art in question. To translate it to business it is a receipt for an entry to the Louvre with a URL pointing to an image of Mona Lisa. It does not prove your ownership of Mona Lisa. Anyone can access said URL without the receipt. There can be unlimited number of different unique receipts with same/similar URLs to same/similar image on Mona Lisa.
It is merely an overly complicated way of transferring cryptotokens.
NFTs are about representing non-fungible digital assets.
For some reason, NFT art took off (which I don’t understand), but that wasn’t what NFTs were built for. NFTs can represent digital assets that exist fully on a blockchain and aren’t tied to off-chain assets. A digital ID, a in-game asset, a digital license, a ENS name, etc… are all NFTs and don’t need to reference any odd-chain URLs or images.
These are literally things tied to off-chain assets. Your "ownership" of any of those things only matters if someone else cares about the particular block chain it lives on.
If you "own" a game asset on blockchain A and I only care about blockchain B, as far as I'm concerned you don't "own" anything.
There's nothing stopping anyone from starting yet another blockchain and reselling all NFTs on that new chain.
Besides, unless a URL a token "owns" lives on the blockchain it literally points to some off-chain resource. If that URL in any way becomes inaccessible the thing you "own" is meaningless.
In fact the opposite is starting to be true: assets from game A being usable in game B.
Even in the most practical terms, if I sell in game assets they're ones I made for my game. I know they work with my game. Why would I put in extra effort to import third party assets I don't make money on? If your assets are in a proprietary format I'd need to spend more money licensing some importer or build my own.
Neither of these are good examples: the real value comes from the outside legal relationships. If you have an in-game asset, what matters is whether EA thinks you own it and you get what they choose to implement. Similarly, a Windows license key is valid to the extent that you have a legal agreement with Microsoft — if you transfer it and the license doesn’t cover that, the blockchain doesn’t mean anything. If they do allow transfers, you don’t need a blockchain since their SQL Server database is what matters and it does the job faster and so much cheaper.
Very few NFT concepts are different than this: the legal weight comes from the outside world and the cheaper alternatives are likely to win out once the VCs drop the subsidies and start trying to get money out of the system.
> A digital ID, a in-game asset, a digital license
All of which require off chain sync. For NFTs to have any meaning at all, the embedded data must be world readable. At which point that digital ID, in-game asset, license all are usable by anyone else. In order for that "ownership" to have any meaning at all it must be exclusive and therefore the service must check your identity one way or another, be it somehow checking that you actually own the private key corresponding to NFT, or using any other mutually agreed authentication method. If the service does not recognize the particular blockchain fork your NFT resides in your NFT is more than useless, because it does not prove absolutely anything to the service provider. Proving identity via blockchain is probably the most inefficient method known.
NFTs can only make viable statements about on-chain assets. As far as I am aware, there are no other on-chain assets than cryptotokens, therefore all NFTs do are provide a level of indirection to cryptotokens.
However when it comes to gameing, its a whole different story. Think of it more like a key to unlock something unique in the digital world.
Want to own some unique special edition sword with rare attributes in the Zelda-verse? Buy the NFT block chain address to it that says you and only you can have it. Want to own the penthouse apartment in the zucker-verse? Buy the NFT key that says only you have ownership rights. Want to be a unique character with unique pets in World-of-crypto-craft? Buy the NFT's to unlock these. Sell them if you get bored for more money, and the game developer gets a cut!
The gaming application scenarios are enormous. That's why crypto gaming will likely be huge and I myself have invested in it's foundations for the long term (Enjin, Seedify-fund, D-race, etc). It's one of the few applications that makes sense outside of rich snobs flexing.
This holds no water and the streak remains unbroken: nobody I've seen describe blockchain-fiddling with respect to games describes the process as anything that anyone who plays games wants. Nobody actually wants this except for the people who want to make everybody else play involuntarily into weird cryptocurrency schemes while the schemer still holds the bag.
Diablo could have individual uniques right now if they wanted and you could trade them if you wanted and nobody needs to burn a dumpster full of coal to do it. It is genuinely a social toxin and you should stop.
With an NFT you can prove the ownership of X digital asset, that proof of ownership is what is non-fungible
In order for NFTs-art to make sense to me, artist must attest that "whoever owns that digital asset in the ______ (ethereum blockchain?) " has the artist's recognition of ownership, and is a big UX problem for artists to really prove that, which I believe it's "solved" by platforms like opensea attesting on behalf of artist
So in practice, your buying the recognition of opensea that you own X asset, which opensea claims that is approved by X artist (it's also claimed by the artist on social networks or alike). there's still a problem there if the relationship between artist and opensea will be intact in the future, I don't know if or how they try to solve it
So in practice, most of it could have been done with a centralized database, but that would be missing the point.
There surely are knowledgeable NFT-creators who knows what they are doing and they can provide the attestation by themselfs, without any intermediary party, and that's where things get interesting with NFTs, look for example in gaming, especially where assets are shared among multiple games (otherwise it still could have been done with a database), it's just all impractical for non crypto-savvy folks
There isn't even a uniqueness check, so there's no limit to copying other people's NFTs.
It's like buying a copy of an artwork in a museum gift shop. Your print is yours, but there can be thousands of other copies and there can be printed more at any time. None of them are the original artwork anyway.
That's why the artist has to publicly attest which NFTs he approves
> There isn't even a uniqueness check
Even if there were, it wouldn't change anything, it's too easy to change one bit, or the metadata, and voilá, a new totally different digital asset that looks exactly the same to the naked eye
Again, none of these work without the artist approval of the NFT itself, that's the only thing that adds value to it
But that claim means nothing if the in-game asset is not recognized in the game, and that copied artwork is for some crazy reason not recognized by other interested parties as the actual original NFT. None of them are the original NFT, minted by the creator.
I know people that play games to sell their gold for real money, against the platform blessing, risking getting banned.
I also imagine that generating a market for real money in a game is a legal PITA for game developers, and NFTs frees developers from any liability since they are not in charge of its trading, transactions are not in their database anymore and they have no power over them
Also the same NFT can be used in different games, no need to change anything from game developers, just reuse NFTs. On the other hand, in the database world of games, it requires specific integrations with a centralized database
Why would game developers ever implement a system that lets you circumvent the rules?
> Also the same NFT can be used in different games, no need to change anything from game developers, just reuse NFTs.
What? They still have to write code to interpret the NFT in their game. They still need specific integrations for every single token they need to support, and they also control what that token is. If they choose to interpret your really expensive sword as a common one, well, tough luck.
This is just centralisation -- entirely.
None of this are either actual problems that developers have, or things that users want. Never once has someone playing a game say "boy I sure wish all these hats were more expensive!"
For game assets the game is necessarily the central trusted authority. Ethereum has a speed of C64 and latency of a postal pigeon, so you can't run a game server on the chain. Therefore, you have to trust an off-chain game to actually honor what the blockchain says. This is not substantially different than Steam CS:Go skins, except for industrial-scale coal-rolling.
That's a very valid criticism of most game implementations (maybe all? I only know like 3 and they are all centralized blockchains -- puke), and that's why I'm staying away from them too, at least for now.
But I cannot deny there's real potential here, I can imagine totally open source games without servers, just p2p connection for battles (like we used to do to play Age of empires) and its assets backed by NFTs
Most of the blockchain properties only apply to on-chain assets. The very moment you involve an off-chain party, blockchain becomes append-only database with performance of table top calculator and latency of postal pigeon and is therefore a shitty database.
The only valid use case I see is a smart contract that automatically issues certain assets, which could be seen as somewhat of a solution searching for a problem, but games are not the problem. With games all clients must agree on game state anyway, storing game state on the blockchain is too expensive/cumbersome and if you have to agree on game state anyway, the state can also include assets.
I mostly agree on everything else you said as the current state of NFT-games. But unlike you, I do see potential for different kinds of games and dynamics that are not possible or impractical in database-games. I don't think they will be the same type of games we are used to, if you kill it now, we will never see into what it evolves.
An nft can also include a hash of some offchain data. In this way it can make a verifiable claim about content.
Using a trust-no-one arctic-melting decentralised layer on top of a thing that is inherently decided by a single real-world entity makes no sense whatsoever.
If the concert venue somehow checks ownership of private key associated with the NFT it means they are effectively using some form of identity verification and blockchain is really really bad for this purpose
Isn't a crypto wallet, literally a key pair, the purest form of identity verification? It's something you have (private key) and something you know (passphrase). No need for some central authority, no need for privacy concerns.
However, we are talking about NFTs as tickets. Traditional ticketing relies on secrecy, or in other words possession of ticked-id grants entry. Data embedded in NFTs is (and has to be) public, therefore token auth model does not work, you must use challenge-response model. The very point here is that ticket data has to be linked with a keypair and provided at the moment of sale to be verified upon entry. Public key must be provided at moment of sale, blockchains are one way to store that link, private database of ticketing system is another. Blockchains bring their own disadvantages and the only advantage is trustless transfer.
In what scenario trustless pseudonymous transfer of a ticket is an advantage worth disadvantages of the blockchain.
Status and money laundering, so no different to regular art sales.
Like, a company could issue a bearer-bond where the owner wasn't the person who physically possessed the bond, but rather the owner of token XYZ.
So, reverse the pointer. Rather than the token claiming to "own" a good, have the good claimed to be "owned" by a specific token.
The thing that largely seems nonsensical to me about NFTs is that the underlying ownership is...not valuable. You don't "own" anything other than the token itself. If you were granted the rights of ownership of the digital good (for example, if a worldwide exclusive copyright license were assigned to the bearer of an NFT, then it would "own" something).
This is fundamentally wrong.
NFTs allow you to show off who "owns"[0] something.
[0] for some generalized, possibly meaningless definition of "own". I say possibly meaningless, then again, what is property really, just a government-managed, non-fungible, token? Don't gaze too hard at the abyss, unless you are willing to let the abyss to gaze back.
NFTs don't provide that, therefore they aren't a good medium of exchange. They aren't "scarce" in the way that money is or has to be.
They're also a Tulip bubble, but that's a different thing.
Doesn't sound specious to me. The artificial scarcity is real, and has real consequences for real people. While trust is the primary property of money, scarcity-at-any-point-in-time is a fundamentally necessary (but not sufficient) to be a money.
Do you have a different definition of specious?
The print is beautiful and hanging on my wall.
The print won't evaporate when the url suddenly points to a server that was shutdown from lack of payment.
I know I bought a print, nobody was trying to trick me into thinking it was the original.
And, most importantly of all, the artist got paid.
The media does not evaporate as it is either on-chain, or distributed via IPFS (ie: peer-to-peer rather than a central server).
None of the artists I have purchased NFTs from have tried to trick me (including Anders Hoff, mentioned in the OP article, who has distributed his work as an NFT).
And, most importantly, the artists and non-profit organizations in the arts are getting paid via NFT sales.
:)
And I think for most people getting a piece of paper, physically signed by the author stating that it's their work is far more valuable than some UUID on a computer.
For reference, the last NFT I purchased on Hicetnunc.xyz had a protocol fee of 0.002947 XTZ (around 1¢ USD) and a platform fee of 2.5%, the rest of the sale went directly to the artist's wallet.
To your second point; this remains to be seen—society can place value on many different abstract concepts, "ink on paper" may not be the only valuable vehicle for art and culture.
Hicetnunc fees are fixed, and the free market gives an opportunity for other platforms to improve on this if the community desires a marketplace with lower fees (it's much easier to build an alternative to Hicetnunc than an alternative Stripe/Shopify/PayPal). Artists are also given a 10-25% royalty (which they decide) for each resale of a token on the Hicetnunc marketplace. And, of course, since it is all peer-to-peer, you are free to exchange art tokens with no fees at all, save the negligible protocol/transaction fees.
What society definitely can't place value on is a URL to a digital asset that may or may not be there tomorrow, because an uninsured, untrusted value store can't be relied on.
There's nothing saying NFT artifacts have to be digital, though, I'd think. Using them to facilitate trade of physical artifacts would back the trade with (relatively) reliable value stores (physical artifacts) while benefiting from the low transaction fees.
Not even legally. Unless the artist sold you an exclusive license to hang on your wall, I guess, which they can do with or without an NFT.
So why couldn't you have just donated money to the artists and right-click-saved / printed the art anyway, without involving a blockchain?
A simple way to frame Hicetnunc is a social media platform that is not driven by FAANG, advertising models, and "Like" buttons, but instead by artists, collectors, and OSS developers participating in a digital economy: selling and trading tokens, and also exploring ways to steward and maintain that work without solely relying on traditional centralized third-party services.
The lower fees derive from the medium used (crypto instead of traditional payment processors). You didn't need to involve a NFT to send crypto to the artist's wallet.
> acquiring ownership of an artist-signed asset, rather than a digital media file (the limited-edition token is cryptographically signed by the artist, the media file is not)
I'm going to refer to the rest of this comment thread about whether 'ownership' is a suitable word for having a cryptographic signature applied to your blockchain address, when the media file in question is bit-for-bit identical.
As you can guess, I hardly think so. There is nothing you can do as an 'owner' of a digital ape picture that anybody else who right-clicked it and saved it can't also do, with the possible exception of getting kudos from the artist for the money you gave them. But a simple donation would have had the same result.
> participating in a digital art community
Which hardly requires NFTs, only your involvement and communication. Online art communities go back to Elfwood.
> supporting decentralized systems, etc.
Tautology. "I use NFTs because I want to support the use of NFTs".
--
> A simple way to frame Hicetnunc is a social media platform that is not driven by FAANG, advertising models, and "Like" buttons, but instead by artists, collectors, and OSS developers participating in a digital economy: selling and trading tokens, and also exploring ways to steward and maintain that work without solely relying on traditional centralized third-party services.
I'm a Fediverse user and I want to nuke the FAANGs, so I'm fully on board with promoting alternative, decentralized social networks. I just don't believe that adding glorified baseball trading cards to the recipe makes them better or stronger in any way.
I never heard anyone saying that Team Fortress 2 became a better community after it became an online market for ugly digital hats.
Is it even fraud if the artist didn't actually... what even? the NFT?
On Hicetnunc.xyz, buying a token on the marketplace automatically deducts 2.5% of sale to the platform (for services rendered), 10-25% to the artist (or whatever they set as royalty amount for the token), and the remainder to the seller. This is enforced via the blockchain contract, i.e. it cannot easily be circumvented on that marketplace (but it can be circumvented via peer-to-peer transfer or an alternative marketplace/contract).
The wallets can all be anonymous; it just sends these tokens to different addresses.
Just like losing the key to an encrypted file.
> The print is beautiful and hanging on my wall.
Physical: you can view it, it can be stolen.
NFT: you can view it, it can stolen.
> The print won't evaporate when the url suddenly points to a server that was shutdown from lack of payment.
Physical: might burn down/stolen, insurance + security + safety prevents that.
NFT: Host might disappear. Content-addressing solves that.
> I know I bought a print, nobody was trying to trick me into thinking it was the original.
Physical: You can prove you have it because you have it.
NFT: You can prove you have it because your wallet contains it.
> And, most importantly of all, the artist got paid.
Physical: Artist can get paid when it initially got sold
NFT: Artist can get paid when it initially got sold, and can take a piece of each resell thereafter.
In my 40 years, I've never had someone break into my house and take something and I've never had a house burn down. Yet putting a file on the internet, it will eventually get copied, probably some time in the next 3 months. And I have a bookmarks folder full of once-very-popular sites that are now just completely gone, plus a bunch of still-popular sites that have changed their site layout completely. Hell, it's a bit of a meme that one of the only sites you can count on to never disappear is the god damned original Space Jam movie website.
Robberies are down from 30 years ago, flat for the past 5. Cybercrime is soaring.
https://www.securitymagazine.com/articles/94627-19b-in-crypt...
https://www.infoplease.com/culture-entertainment/art-archite...
Here's another physical asset theft category that says 1/3 americans have experienced - something tells me you're also wrong about how many people have been stolen from as well.
https://www.cnbc.com/2020/01/10/package-theft-how-amazon-goo...
This is why I've muted "NFT" on Twitter. You can't get answers out of proponents without them massively shifting the goal posts.
I agree these comparisons aren't perfect, but I certainly wasn't trying to move the goalposts - I am trying to understand how you've not done just moved the goalposts yourself, though.
But what you do get is a guarantee from (a) the author and (b) the fact that prints are reasonably difficult to duplicate that there will only be a limited number in circulation. And this enforced scarcity is what makes it valuable even though it's just a print of the original.
If NFTs could limit duplication of digital art that would be something but right it seems like they are more akin to a payment system like PayPal only psuedo-public.
NFTs do not need to limit duplication; the tokens are already unique, as each is addressable to a different contract hash. This is why, although there are many copies of the CryptoPunks contract for example, there is only one CryptoPunks token that tends to have a market around it[1]. Those tokens are linked with a contract address that has become widely recognized as stemming from the original project.
[1] - https://etherscan.io/token/0xb47e3cd837ddf8e4c57f05d70ab865d...
If you had an image file format that embedded an NFT and every device would refuse to allow copies then that would be something. But right now NFTs seem pointless to me because I can always just copy the underlying image once I see it online.
How so? The author can (and probably does) sell signed prints all the time. How is a print difficult to duplicate?
In limited editions e.g. 50 or 100 as they know that releasing more would reduce scarcity, prices would drop and no-one would buy their art any more.
And the prints are difficult enough to duplicate without having some artistic skill. Infinitely more so then choosing Duplicate on a computer.
Artists in the signed print run business don’t generally run new runs, for the simple reason that they understand the moral contract and more importantly the economic implications: if you do reprint, the value-add of your assertions plummets.
The same artists will usually have other non-numbered or print-on-demand art.
> How is a print difficult to duplicate?
A multi-layer screen print is not trivial to replicate without the original assets for the individual layers, and material information about the inks. That’s like asking how a painting is difficult to duplicate.
You cannot then sell copies of it to someone else. (well you can but not legally.....)
I can of course sell these tokens to others (again, as with signed prints), but if I attempt to copy/clone the tokens and distribute more, I enter into legal/ethical grey area (again, just as with signed prints).
Somewhat related, see MSCHF's latest work:
https://www.smithsonianmag.com/smart-news/art-pranksters-sel...
Rarity is what dictates price, not only social decisions.
If I make an NFT of my photograph and sell it to someone, what is stopping me from making copies and selling it to someone else again? Or giving it away? Nothing. This will crash the price of an NFT if the NFT's value was dictated by the artwork.
So NFT's are just bitcoin, another scam.
Digital art is worthless, though. It's as you said. There are no original copies, all of them are equivalent. They can be trivially and endlessly copied. Once created, the cost of creating more copies might as well be zero.
It's the artist's labor that's valuable. It's the artists themselves who are scarce.
Put another way: there may not be any change in value between one copy and two copies, but there is a big difference between one copy and zero copies.
Once that initial copy is found, any number of copies can be created and distributed at zero cost. Value is determined by supply and demand. If supply is infinite, value must be zero no matter what the demand is.
They aren't digital prints in any sense of the word.
As the OP mentions, people are selling NFT's with URLs pointing to art without the permission or involvement of the artist. This demonstrates that ownership of an NFT does not "prove" anything about ownership related to the art itself.
Which only leads on to the next problem of how you associate the signature with a real human.
You can not buy ownership of a digital artwork because the whole concept of owning a digital work is nonsensical. Ownership in the world of physical goods is not a law of nature but a legal concept. Ownership is essentially the right to control some resource. A collective of people agree that you have the right to control (by force) some physical thing, which is useful because otherwise everyone would be fighting violently for the possession of that thing. In the typical case the sovereign enforces the property rights. In the digital world this makes no sense because you can't possess information and you can't enforce property rights. Anyone can make a copy and everyone can have that information without anybody else losing anything. NFT is only a record that tells you who supposedly owns something but ownership means nothing without possession. NFT is like buying a land deed from a dysfunctional state: Yeah, everyone who beliefs in that state may agree that you are the owner but what use is it to you if a bunch of guys with guns are squatting on "your" land and you can do nothing about it? That is ownership without possession.
One thing to remember is that the first stage of a technological advancement is the bubble stage that leads to an influx of capital to build out the infrastructure.
Eventually we will be able to use this infrastructure to build out businesses with more economic value.
Blockchain can't work for anything that isn't a self-referencing currency. It only ever exists on chain so the chain can be trusted.
Monero for example is fully fungible.
The parent comment almost certainly understands this and was talking more broadly about forms of digital ownership. So your blasting them was kind of cringe.
Maybe it is better to think about NFTs as public official (blockchain-backed) certificates of donation (or support) rather than assets.
NFT can be exchanged without the original artist doing anything and the artist can still get a provision from that.
> That's not machine readable and it needs action from the original artist.
That is the whole point, I donate to the artist and the artist shows me gratitude by performing an action for me, like including my name in his videos!
> That is the whole point, I donate to the artist and the artist shows me gratitude by performing an action for me, like including my name in his videos!
If that's what you want that's fine. But there are artists that don't do videos and some people want other kinds of rewards.
Also imagine if e.g. Twitter would implement support for profile pics with NFTs. Then as an owner of a NFT you'd have something unique to display.
Although I don't think there is any problem in doing a NFT like an ebook or a movie that is encrypted and the decryption key would be transferred to the wallet of the buyer when you sell or resell the NFT.
But that's not how NFTs are used currently. Right now it's just "I bought this" (with not many rights being actually bought).
What NFTs allow are open markets for these NFTs. Imagine the million dollar homepage redone with NFTs. Every pixel would be a single NFT. The homepage could automatically be generated from the public data and more importantly, the buyers of the pixels could try to buy more pixels on the open market after all pixels have been sold without the original artist/seller being involved.
Or gaming assets. DLCs today can only be bought from the game developer. There's no secondary market (or at least not a legal one). Why? Because the game developer doesn't get a cut from resold DLCs. With NFTs this could change. The game developer gets a cut on every resell and even more important, you wouldn't be confined to the game developers shop system but could sell the DLCs on any shop that is compatible with the NFT standards.
This opens up new market opportunities.
Right. If you want to support an artist, you can just commision to produce a new original piece.
Which only goes to prove that NFTs don't provide ownership. The doctrine of first sale limits the power of IP by giving consumers ownership. This mechanism eliminates the doctrine of first sale, giving even more power to IP holders and destroying the concept of ownership.
The only thing I can think is proof of authorship, but private key cryptograph already solves that.
Edit: after reading some other replies I've come to the conclusion that NFTs provide a way to prove who put a file on the blockchain first. Thus the use case is trustless transfer of the ownership of this fact of "being first", which is where the scarcity of the NFT comes from and thus the value.
Now suppose each of use are selling the 'first' post of that data. How does a buyer know that we're really the first?
And so I'm saying that even claiming 'first' is practically impossible via blockchain. Even if someone knew about both of the instances above and could arbitrate between them, there might be a third, older instance yet.
1. For example, say they sell to one of the big companies and the new boss with an MBA in gamer milking decides that virtual land needs annual property taxes, utilities, and improvements purchased from the company store or it’ll be reclaimed or simply that they’re creating new, more desirable terrain which will devalue yours. They control the code and servers, so your options are paying, giving up, or trying to convince other players to build, operate, and adopt a clone. The blockchain’s heavy cost doesn’t appear to be providing anything significant.
To be what you define, I should not be able to copy-paste the digital artifact and then create a second token. The token should, in some way, behave like a hash, where the blockchain should complain that this digital asset has been accounted for already.
now that I've thought about it for a bit longer, I think you're right.
> I should not be able to copy-paste the digital artifact
no, because then the NFT would be exactly the same as the digital artifact, and they're not. that's the point I'm trying to make.
I suppose they fact that NFTs can be traded is what's so weird about them (and why my own argument fails).
I should not be able to copy-paste the digital artifact and then create a second token.
You should be able to copy the digital asset, but the second part (creating a new token) should fail. Otherwise what’s the point?
Of course, there are other NFT implementations that store metadata directly in the smart contract, but that requires a lot more gas.
In a way they do, they solve the problem that crypto was only about fungible stuff (money) before, now there's also non-fungible stuff. I think the point of NFTs is not exactly to prove that you own something, but to offer people an easy and non-fungible token to exchange with other people. The goal is not ownership but exchange (some would say speculation). At least that's how I understand it.
Really, it's just adding a level of indirection, as always :-)
> Really, it's just adding a level of indirection, as always :-)
Yeah, that's basically how I see NFTs currently.
But otherwise there's no advantage compared to a traditional database that I can see...
This is similar to how I was always worried that Bank of America would arbitrarily change the balance in my account for some reason, but bitcoin solves this problem. Now I just have to worry about losing my password or getting hacked and losing all of my money, and that's just much less realistic than a major bank abusing their centralized admin powers to change my balance.
If Bank of America deducts money from your account, you can call customer support and threaten to file a complaint with a regulatory agency, threaten to close your account, or just take them to court. No guarantees that you'll get your money back, but at least there's a chance.
If you lose your wallet password. It's game over. 0% chance of ever recovering any of that money.
How do you prove that said NFT is issued by OEM?
How do you avoid NFTs being issued by the seller themselves?
That's still rather convoluted.
The same thing applies to other similar "NFT as certificate of authenticity" schemes I've seen, such as around luxury goods.
That sounds like a convoluted and impractical solution looking for a problem. Mobile service companies and hardware vendors managed to implement services that support activation and bricking without getting any crypto-related buzzword in the way.
This seems to be no problem in finance — who owns what in a contract-for-difference?
It's possible to imbue an NFT, itself, with real value. Like if it was a legally recognized title. Or if ownership of an NFT could be used to produce an authorization token for access to some physical or digital experience.
TL;DR: NFT's are a money laundering and tax evasion scheme. There is no value for average consumers, unless the NFT appreciates in value over time and there remains a buyer's market for them. But that's highly volatile and uncertain.
It's like a certificate of authenticity that was just written on a napkin by some guy you found on the corner.
How much authenticity does such a certificate convey?
But then you make sure that napkin is really hard to copy! there's only going to be one napkin you got the guy on the corner to write on yesterday attesting to authenticity of something else. (There might be other napkins other guys on other corners wrote on, but only one copy of this one!)
Does it convey more authenticity by virtue of being really hard to copy?
Why does an NFT convey any "authenticity"?
From the OP:
> Alongside platforms that make no effort to prove ownership of artworks for sale, artists are waking up to find that their digital artworks are being sold by fraudsters to unwitting victims.
What authenticity do these NFT's "prove"? Authenticity in what?
But you can prove this is really the very same napkin you had a guy on the corner of Park and High write "Mona Lisa" on, at 9:45ET on November 9th 2020. It's the very same napkin! So surely you should pay me what the Mona Lisa is worth for it, right?
I can throw in a napkin with "Brooklyn Bridge" written on it if you like...
The other use I read about recently was using them as a proxy for buying some sort of illicit good or service, i.e "here's $600,000 for that wink NFT wink I wanted".
Not my space though so might be off by a mile :')
Better yet send money from X through a bunch of privacy oriented tokens like monero, tumblers and mixing services, losing 20-50% in the process and consolidating the rest in account Y. Now you have plausibly clean money but you can't pay taxes yet as there's no paper trail for this income. Solution is easy, buy an NFT from yourself, declare it, pay taxes and buy a new yacht.
For a larger operation going business route is still preferable but on an individual level NFTs are much easier due to ridiculously high margins that have been normalized there.
To my understanding, all these things leave simple 1-1 paper trails that can be followed later and lead to consequences, but I might certainly be wrong.
I'm trying to separate people who simply don't like cryptocurrencies and NFTs (which might be your case, I don't know) from actually informed thoughts about what's happening.
Bob uses artbreeder.com to generate cool looking AI art piece.
Bob lists it on OpenSea or similar site.
Alice creates a few dummy wallet addresses and makes fake bids on the NFT, eventually winning with 10 million dollars worth of eth.
Money laundered.
Not so sure about that.
In your example you have successfully transferred the funds between two parties, but you have not laundered anything here.
The "legit" transaction (NFT<->Money) would be declared and taxes would be paid on any gains.
The "real" product would be delivered off chain and without anybody knowing.
From an outsiders perspective it looks like a high value art purchase.
But how do you recover the funds again? You'll need to declare that you sold art for X, and tax it so you can actually use it.
Again, nothing has been washed here, you've just made a normal transfer with zero benefit.
Yes, in every respect you treat it as legitimate trade, when in fact it's payment for something illegal, in order to conceal that it isn't payment for a legal service or good. That's a basically a dictionary definition of money laundering.
I'm not sure what you expect of it here, or why paying taxes matters. The point is not to evade taxation, but to conceal the illegal transaction and make it appear as though it's legitimate and legal.
> Again, nothing has been washed here, you've just made a normal transfer with zero benefit.
Something has been washed in the sense that you've intentionally created a plausibly legitimate cover for the transaction in order to conceal the illegal goods/services the payment actually concerns.
I think there are several use cases people associate with NFT. One is money laundering and that is indeed hard as you mention.
The other is payment for illegal services and goods. I can't wire you money for "one assassination" but I can wire you money for "art" because who knows how much it's really worth.
Physical art has strict laws about sell value and speculation exactly because of that, if NFTs really take off (somehow), it's easy to imagine that the same scrutiny would follow.
I'm curious to understand how NFTs would be used to launder, for instance, drug cash. I often see the expression "money laundering" being used in these discussions without a real understand of how it would work.
NFTs supposedly allow you to prove who owns something. However they don't actually form a contract for the thing that you think you are buying. You are buying the NFT, not the artwork them selves.
This is the main problem, so if you get scammed, or you try and assert what you think your rights are, you have no support.
To translate it to business, its like buying the sole share in some company, but its not actually the sole share, its a letter that says you've bought a receipt for a sole share from person x.
There is no assertion that you own the actual thing the bit of paper says its a receipt for, or indeed that the person selling it to you owned it in the first place.