NFTs solve none of these problems. The underlying asset is not stored on the blockchain and can be deleted at any time. Fakes are unaddressed since you can only validate you are the owner of a specific url and there's no guarantee that what you own is the original version (bytes are easy to copy). Any validation of authenticity must happen OFF of the blockchain in which case why are we doing this again? Transaction costs are a function of the market (even on the blockchain) and are not at all connected to NFTs.
If the asset is stored on IPFS, as many are, this is simply not true. Even if the asset falls off the network (which the creator, owner, NFT holder, and anyone else can prevent by pinning it themselves) then as long as you have the file(a) and the IPFS software you can put it back at any time, and it’ll have the same URL thanks to content addressability.
I’d certainly agree that any NFT that links to a digital asset in a mutable / non-content addressable way is worthless.
Bubbles can eventually have value, weirdly - their irrational nature can sort of act as a forcing function taking us out of a local maxima, facilitating the creation of entirely new unforeseeable and previously-impossible things that actually have value of some sort. With cryptocurrencies you could argue they facilitated (through smart contracts and then distributed exchanges) the creation of massively-multiplayer online gambling games with no barriers to entry for publication & interface with the financial system where people win through patience and steely nerve. You may think more-advanced open-source casinos are not good for society, but they certainly hold economic value.
If I wanted I could write a smart contract for a MMO gambling game like POWH3D and publish it tomorrow. That isn't a capability I used to have - quite a few hoops to jump through to get a game onto a casino floor, or start up an online gambling website.
The previous restrictions on starting your own online casino have never been technological. It's really not that hard to set up your own online casino using non-blockchain technology. The main hurdles are entirely legal. Gambling has a ton of regulations and restrictions in virtually every jurisdiction, and many governments are more then happy to aggressively punish those who break the rules. Regulators aren't going to look kindly on your MMO gambling game just because "it uses the blockchain."
And sure, maybe you can more easily evade regulators by making a blockchain casino, over a traditional online casino. But to me, "creating illegal casinos more easily then before" isn't a particularly compelling use case.
You seem defensive. Find a comment that requires the above defense.
That's entirely wrong. None of the NFTs are stored on the blockchain, merely a bit of JSON that contains a link to your image. If you're lucky, it's hosted on IPFS (and it'll disappear whenever everyone stops seeding it). Otherwise, it's just a link to your image host of choice, and the author is free to replace it with the image of a dick in three months, deleting all your resale value.
>their authenticity is cryptographically verifiable
No, it authenticates the seller. I can sell you an NFT of a Botticelli, that doesn't make me Botticelli or a member of his estate. Since every one on the market doesn't care for copyright, it doesn't matter.
>they are easily transferred online
So is the JPEG that I just right clicked
The collectible theory is a load of crap. NFTs are for laundering money and finding suckers.
Reminds me of that tweet about how programmers are like compilers that read things until they find the first concept they disagree with, then post it like an error message. Read the directly-following parenthetical.
The way to make a business model is to associate copyright ownership with the NFT ownership and then assert those rights by filing DMCA takedowns (and/or lawsuits) everyday to anyone who displays the "art" without paying for the privilege and using the NFT owners original work as the source file.
This would create digital scarcity because copies couldn't be used without legal exposure, so any real business or serious person who wanted to use it would pay for the rights to. It's like the Getty Images business model scaled way way up. I don't necessarily think this business model is good for society or will actually happen but it's the way to monetize NFTs.
The issue is you need the legal process to tie ownership of the NFT to ownership/transferrable license/whatever of the work. And once you're setting up that legal process, what then do you need the NFT for?
What happens in that initial sale? The owner declares that whoever possesses the NFT owns the good? Under laws like the first sale doctrine, they can't prevent the subsequent owner passing the legal ownership seperate to the NFT so ownership of the NFT still means nothing legally.
Well how about they take a leaf out of the software industry book, and instead of selling you ownership of the thing the NFT represents, they sell you a transferrable non-revocable exclusive license that requires in its terms that transfers of the license and transfers of the NFT happen in tandem. Well now the future buyers _are_ dealing with contracts.
A problem NFT appears to be an attempt to solve is all the parasitic people, organizations and rules that govern the transfer of assets. These lawyers, title clerks, law firms, title companies, auction houses and governments extract significant rent from asset transfer marketplaces. This rent is a cost to market participants but the larger cost is limiting the liquidity and size of the overall market.
Like imagine if the title to a car was an NFT instead of a piece of paper. I think NFT might just be a complete scam but it might have utility in disintermediating markets.
In reality the only digital scarcity that NFTs directly create is the scaricty of the token itself. Which is fine, and could potentially be used for interesting purposes. One problem is that they pretty much always require off-blockchain knowledge of which contract is the correct one for the purpose.
The other problem is that most plausible useful purposes I've seen discussed (like tracking "ownership" of digital items in a video game) could work just fine as a centralized database.
I've yet to see a proposed practical use (not "art") of NFTs where all participants are sufficently mutually distrustful that a central database cannot be used. There may well exist such uses, and those might be worth getting excited about.
As for the "art", well digital money laundering schemes just don't cut it for me. Like literally: selling some shitty tokens and buying it using other accounts you own, is a great way to provide an explanation for crypto you acquired from some illegal trade or whatever. If anybody asks where you got the crypto from, you can point to your NFTs, and explain that you are just as shocked as everybody else at how much people are willing to buy this stuff for.
Except I believe most NFT contracts don't actually grant copyright ownership, only the kind of standard copyright license-to-use grant you see in most terms of service.
I don't think this part is generally true, since the image itself isn't hosted on the blockchain.
...which brings me to: as someone who knows very little about this technology, why aren't the images themselves stored on the blockchain? Are they simply too big for that to be feasible?
IPFS is ideal for this use case because the URL contains a hash of the content meaning that either the original asset is served or nothing (which you can fix if you have the asset).
There are projects trying to create permanent decentralised, content addressable storage (in some case as layers on top of IPFS), so maybe even that problem will go away.
There are basically two theories of their value: the collectible theory and the ownership theory. These overlap but are best explained separately.
In the collectible theory, NFTs are like an autograph you get on merch from a famous person. Think an autographed photo of Will Shatner you might get at a con. Usually the (cryptographic) autographer is the original artist of the work being autographed. Of course the autographer can release multiple autographed versions of the same work, but this decreases their value (and the value of any further work they might autograph).
Collectibles have long had value to humans, but they also suffer from three annoying problems: storage, fakes, and transaction costs. NFTs solve all three - they never degrade on the blockchain, their authenticity is cryptographically verifiable (assuming one can associate the signing address with the famous person, which is comparatively simple), and they are easily transferred online.
The second theory is the ownership theory. Here NFTs are used to track ownership of the underlying digital asset. In our current internet this is absurd, as the torrent is designed to demonstrate - everything is a copy, and even the NFT holder can never get access to the "original" bits. The ownership theory requires adoption of NFTs as an ownership mechanism in the metaverse, along with associated digital rights management technology. It's an early land-grab for the VR overworld.
Now, personally I don't find either of these theories very compelling. But I also didn't find cryptocurrencies generally very compelling, so I don't have a great track record. Cryptocurrency really tends to turn us all into Frank Grimes -like characters who miss out. I believe the more widely-used term is "midwit".