Most of the NFT marketing I've seen is very fast and loose about this — people will talk like it's owning the item but only when pressed will admit that it means owning the NFT pointing to the item.
> Things that people value has value. That value is decided by what people think the value is. I don't understand art, especially not "high-art", but somehow people value it, that's fine by me, people like different things.
This is conceding the author's point: a hash on a blockchain has no innate value and being the purest form of a fiat currency with weak backing means that nobody has a strong reason to need them. Nobody buys a hash because they like the pattern of ones and zeros.
> no, cryptocurrencies and NFTs doesn't cause "high environmental damage" as those are concepts, not implementations. One implementation of consensus that is used in cryptocurrencies is Proof of Work, that is harmful to the environment, at least current implementations. There are other implementations of consensus, like Proof of Stake, or Pure Proof of Stake, who have their own drawbacks but have almost no environmental impact (compared to Proof of Work).
When the most popular cryptocurrencies used are not PoW, this will be more convincing. Right now it's Bitcoin, Ethereum, and a rounding error.
Stop listening/reading marketing material then and dive into the technology itself.
> people will talk like it's owning the item but only when pressed will admit that it means owning the NFT pointing to the item.
Yes, most people (on both sides of the "love/hate" side of NFTs) misunderstand the technology and what promises itself makes.
> This is conceding the author's point: a hash on a blockchain has no innate value and being the purest form of a fiat currency with weak backing means that nobody has a strong reason to need them. Nobody buys a hash because they like the pattern of ones and zeros.
This is such a rabbit hole and where you end up is "Nothing has value" or "Everything has value". I guess you can put me in the camp arguing for the latter, even for crazy things like "high-art" that I don't really get, but I understand that some people value it.
> When the most popular cryptocurrencies used are not PoW, this will be more convincing. Right now it's Bitcoin, Ethereum, and a rounding error.
No, I think you misunderstand what I mean. "Cryptocurrencies" is an umbrella term for a lot of things. The authors argument that "cryptocurrencies" are bad for the environment is just not true, just like "serverless" cant be called bad for the environment. It's the implementation that matters, not the concept.
But that’s totally reasonable. No one is going to misinterpret that unless they’re deliberately being uncharitable. This is just a normal usage of imprecise language, not very different than saying you own a house when technically you have a mortgage, or saying you bought an album on iTunes when technically you bought a revocable license to play the album under certain restrictions.
Lol, this is a joke? You have the rights to live in your house even if you have a mortgage, the house isn't going anywhere, it is a contract with lots of meaning. NFT's on the other hand doesn't mean anything at all.
Here is a link to a house: https://www.google.com/maps/place/California,+USA/@37.455368...
This is backed up by the ycombinator server, and as the owner of this link I can change the data etc.
Does this mean that I own that house? No. Do I own the picture of the house? Still no. Do I own that link? No, not even that. I just own this post that is stored on the HN server. That is how NFT ownership works.
Do you want to pay me $100 for this post? It means you can own this post which links to a house, cool huh?
If you are talking about all the surrounding infrastructure, then that has nothing to do with NFT's. An NFT provides exactly the same value as a forum post. Someone can build a service which scrapes my forum posts and uses that to put links on another website based on some ownership details, so you can look at your owned posts there. You could make a whole game with assets based on forum post data etc, sounds exciting right!
Edit: Oh I forgot the other big difference. NFT's are crypto and therefore people pay insane amounts of money for it! Nobody would pay money for a forum post, that is just silly, but slap crypto on a forum post and wow, now we are talking!
https://downloads.intercomcdn.com/i/o/336157696/3a04454c884a...
And what's the "innate value" of an original painting, compared to a forgery? They look identical to the naked eye, and can probably fool a fair chunk of experts as well. Sure, you might be able to tell the difference using some advanced analytical methods (eg. carbon-14 dating or whatever), but does the slightly lower carbon-14 isotope content justify the massive premium?
You're right that rich people probably aren't going to be hanging receipts next to their original paintings, but they certainly will bring up the fact that it's an original at every possible opportunity. The "original-ness" is definitely where all the value is coming from, whether from owning the original painting, or the "original" NFT.
But you still paid a few million more for the original painting, even though it's virtually indistinguishable from a replica. It's more helpful to think of an original painting as a bundle of two things:
Original painting = thing that looks like a painting + bragging rights
An NFT is just the "bragging rights" part of the original painting, and the JPG that anyone can access is the "thing that looks like a painting ".
Is it a fact? You can just fork the full cryptopunk blockchain and reassign tokens whichever way you want. And we're just back at the exact same issue to have to go regular contracts and courts if you want to enforce ownership or legitimacy of the actual blockchain.
For example, if someone forked ffmpeg and started making their own improvements on top of that fork without contributing back the changes, that is now something else than ffmpeg, while ffmpeg still remains ffmpeg.
Except that I can't call my ffmpeg, ffmpeg; because of the trademark. Whereas I can call my crytopunk, crytopunk. And if crytopunk has to register a trademark to defend it, it defeats the whole purpose of NFT as we are back to our regular court system.
If I crack your Bitcoin keys, your money is mine. Nobody is going to restore your property.
If I hack into a bank or rob you at an ATM, police will come and get me, and the judicial system will put me in jail.
Crypto is stateless. Lawless. You can't own math. You just have a solution to a problem that you haven't shared with anyone.
And if someone with compute resources cared, they'd take it away from you.
Anyone can confiscate it.
Let's say the Government wants your cryptocurrency. You rub your hands together with an evil laugh and say it's protected by a private key that you've memorized!
They put you in jail and say you can come out when you hand over the keys to your cryptocurrency.
Or it could just be a random person with a plumbing wrench that will happily stop hitting you in the head with it if you give up your private key. Or it could be someone that breaks into your house and steals your wallet's recovery phrase. Or it could be you accidentally sending ETH to a BTC wallet.
The best metaphor is perhaps digital cash. No government can edit the cash in your wallet out of there, but as the owner, you can definitely lose it by force or stupidity.
Well the FBI owns the largest Bitcoin wallet. And I am pretty sure it's not from mining.
Ref: https://steemit.com/bitcoin/@loryon/fbi-is-global-stakeholde...
Depends on who you ask. Being lawless is not a feature to me, for example. Some of what I think you mean by that I will probably want, but not lawlessness itself.
If someone steals your coin... That's it. Game over. There's no way to force them to give it back. Assuming they are in the same country as you and you can identify them, then you might be able to start legal proceeding to get your money back, but even then, nothing you can do will force them to return whatever coin they have. If they die, game over, the coin is lost forever and the best you can hope for is their estate has enough value in it to recover the loss.
An error on the side of the bank gives you a clear target for legal action to recover funds, and barring you having more wealth stolen than the bank has value (unlikely), you'll get your money back.
The security of the block chain is both a boon and a curse. It allows the blockchain to operate without a central controller, but it also, by design, makes transactions irreversible.
It's a pretty large downside. The only upside I've heard is that you could avoid oppression or government theft. However, I'd contend that a government that would directly rob your bank account isn't exactly going to stop at just that.
Only if you live in a democratic country with fair courts.
I get the feeling that 99% of blockchain users/proponents aren't in that circumstance.
Consider also the scale: what percentage of cryptocurrency users live in regimes like that versus the percentage who have functioning courts but are one exploit/phish away from irrecoverably losing all of their cryptocurrency?
You assume that from the blockchain kidnappers can find out who I am. I don't think they can, unless I exchange crypto with them.
>Consider also the scale: what percentage of cryptocurrency users live in regimes like that versus the percentage who have functioning courts but are one exploit/phish away from irrecoverably losing all of their cryptocurrency?
People always make mistakes. Do you suggest to prohibit every possible action which might lead to bad consequences? Do you suggest to damage people in need in order to save those living with good conditions?
Sure, if you live like a monk and never talk about it, you can probably avoid attention but there are plenty of people who thought they could do that successfully up until they didn’t. Again, it’s not a problem with a technical fix.
I have more trust in the correctness of encryption than the reliability of the justice system.
HOWEVER, that's not what's at issue with crypto. The issue of crypto is that it's irreversible. It absolutely does exactly what you tell it to do, and no more. But, at the same time, that means that when non-algorithm mistakes or exploits (ransom, cons, etc) happen you have 0 recourse to fix it.
There's a reason crypto is the preferred method of wealth transmission for scam artists, hackers, and ransomware.
Federal and international regulations require sophisticated bookkeeping and auditing. Banks and fintechs spend billions of dollars on fraud detection and security. Not only is it a matter of protecting their own self interests, but laws and reputation demand it.
> The point is that blockchains can have value, I don’t know anyone reasonable who doesn’t believe this. Git is technically a blockchain.
Git history doesn't have monetary value. It has practical, functional value.
For Git, I don’t see how that’s relevant. If things that don’t have monetary value can be secure at the protocol level why shouldn’t money be just as secure.
What if the state decides the money in the bank isn't really yours (e.g. civil forfeiture, political dissident, capital controls, etc)
In this world, unless you live in the wilderness without tools and supplies, everyone depends on others to some degree.
Crypto is an attempt to greedily cut others out and play god. The more plebs you convince of your world view, the more powerful you become.
Meanwhile you do nothing of value for society. Just waste brilliant minds and power.
Many in the world don't have access to a financial system. If they have internet, now they do (assuming they can find some way to onboard). Beyond that, plenty of financial tools only were accessible to the ultra-rich/institutions. Many of those are now accessible to everyone.
May be worth taking a step back to see why brilliant minds are intrigued.
If anyone has access to the internet, they have access to banking services. I mean, there are internet banking services being offered in Burundi and Mozambique, two of the poorest countries in the world.
Just want to /second this sentiment. There are hard problems and interesting work being done in cryptography, distributed systems, etc in the blockchain world. It's why it's attracted a number of the best universities to create dedicated research centers - MIT, Stanford, Cornell, etc.
I think the author's underlying point is: what is the value in having proof of ownership on a blockchain if it does not correlate to real world ownership in any meaningful sense? The cited example makes this clear: if you steal someone else's art, turn it to an NFT, and then sell it to a third person, the buyer does not actually own the underlying rights to the artwork because you never had the right to sell it in the first place.
This is irrelevant to the wider world which doesn't even have basic infrastructure to support blockchain smart contracts. Without that infrastructure you have a curiosity, not an asset you can use as collateral with a bank.
what if i steal your private key? what if i upload a different NFT smart contract that gives me an NFT of the same image you have?
As another commentator said, the key demonstrates the ownership so you're the owner now. Sometimes that's a bad thing indeed, but blockchains are very unforgiving at their core protocols.
> what if i upload a different NFT smart contract that gives me an NFT of the same image you have?
First off, images have nothing to do with NFTs and vice-versa. Yes, some NFTs links to images but those are uninteresting and hype-driven (or I don't understand it). Once a NFT has been created, you cannot replicate it as it's a single instance of a token (hence the name "non-fungible").
That's what "owning it" means; you have the key.
So the title deed is absolutely a proof of ownership. The congruence actually goes deeper - saleable land is created when the government creates a title deed for it at the titles office, and what the title office really does is just record the transitions of ownership. Sounds remarkably like a bitcoin, doesn't it? Sadly it proving you own a title deed isn't done anywhere near as securely as proof of ownership of a bitcoin is done, or indeed proof of ownership of an NFT. Because of that I think we can safely say one day in the distant future, title deeds will become NFT's. It will happen in the future because as they say in physics, progress happens one death at a time.
NFT's just extend the title deed concept to other things. It is much easier to conduct commerce when you don't have to bring the car or cow to the auction, just a bag of bits you can cryptographically prove you own it. To think of it another way, we already do NFT like exchanges of commodities such as pork bellies. No one actually sees the pork belly. In fact if you are dealing in futures, the pork belly doesn't even exist. But nonetheless, we create pieces of paper asserting they exist, or will exist, and trade them. Turns out futures are very useful to farmers and the like, giving them some certainty over the price they will get their crop - before it exists. But once you realise we happily trade prices of paper now that assert ownership over things that literally don't exist yet, you will probably understand the proof of ownership thing he is getting worked up about isn't the huge problem he thinks it is.
This ease of trading mostly only existed for commodities. The vast bulk of things we trade aren’t commodities. NFT have brought the frictionless commerce we associated with commodities to whole new classes of goods. Before NFT’s, turning something into a commodity that can be traded required an enormous amount of YAK shaving. You had to define precisely what it was, ensure there was already a large market, create the trading platform - for all I know it might even have required an act of parliament. Now anybody can attach a bag of bits to anything, and it's actually easier and cheaper to trade than a futures contract.
It’s true they did that by making the proof of ownership thing not their problem. The NFT's solve the crypto and trading side, only. Proving and accepting ownership is left as an exercise to be solved by the buyer and seller. But it's not the show stopper problem he makes out. Really, it isn't.
Here is the summary they included in their post:
> NFTs don’t prove ownership — ordinary legal contracts are just as good, and in fact better since they are heavily regulated and can be taken to courts for a central resolution when problems arise
> Blockchains (which NFTs rely on) are in the best case no more secure than ‘normal’ relational database storage systems, and in most cases are less secure
> Cryptocurrencies have no innate value and are only useful as a pyramid scheme, something big crypto influencers are knowingly using to profit from those who don’t realise it
> Both cryptocurrencies and NFTs cause high environmental damage, and there are no viable systems to deal with this problem due to security considerations
No one claims NFT proves ownership of entities outside of the used blockchain. But within the chosen blockchain, they do prove ownership of that particular NFT. That's a fact.
Saying that blockchains are less secure than a relational database storage points towards not understanding immutable ledgers with shared state at all. They both have different use cases, that much should be obvious if you understand the basics of both blockchain and relational databases.
Things that people value has value. That value is decided by what people think the value is. I don't understand art, especially not "high-art", but somehow people value it, that's fine by me, people like different things. But then I agree, cryptocurrency "influencers" are horrible. Follow the people developing the software instead, those are real and honest people (mostly).
And finally: no, cryptocurrencies and NFTs doesn't cause "high environmental damage" as those are concepts, not implementations. One implementation of consensus that is used in cryptocurrencies is Proof of Work, that is harmful to the environment, at least current implementations. There are other implementations of consensus, like Proof of Stake, or Pure Proof of Stake, who have their own drawbacks but have almost no environmental impact (compared to Proof of Work).