I keep wondering what buyers of NFTs get out of it? There was news recently about somebody who paid thousands of dollars for the original photo of a meme. What do they get? Everybody can see the meme online, the owner of the original photo could, potentially, sell it to somebody else. How does the buyer profit?
Here is the previous thread about this:
Who is Dan?
Somebody.
Imagine that a greasy-looking guy in a trenchcoat offers to sell you the Brooklyn Bridge, so you give him $50 million, then he burns down 1,000 acres of Amazonian rainforest and gives you a handwritten receipt that says “Brooklyn Bridge currently owned by Rick Kitchen”, and posts a picture of the receipt on 4chan that anyone can look at as proof that you own that receipt. You don’t own the Brooklyn Bridge, you only own the paper that says you own it. Also, trenchcoat guy doesn’t own it either, and he can sell as many more of those papers as he has Amazonian rainforest capable of being burned.
That’s an NFT.
I fully expected every response in this thread to begin with “I’m not Dan, but …” … I’m sure it’s just an autocorrerror for “can”
Well, since everyone on 4chan can see that you now “own” the Brooklyn Bridge, Trenchcoat can’t sell any more. But he can sell any number of other bridges out there. Also, Trenchcoat’s cousin Shady can sell you the Brooklyn Bridge again, since he uses a different font on his receipt, and calls his system something different.
But you don’t own the Brooklyn Bridge per se. You own that unique receipt - a non-fungible receipt, if you will - of ownership of the Brooklyn Bridge, which is unique because of the specific amount of Amazonian acreage that was burned down in the process of making it.
I know. That’s why I used quotation marks around “own”.
This technology is large and there are many applications, if you take an example, when you have an original picture in the form of nft, you get a picture that only you can use
Unless someone else right-clicks on it and saves it. Then the crypto-bros get all bent out of shape.
Ownership needs two parts. The first is proof of ownership, which is an easy problem to solve. The second is enforcement of ownership, which is very difficult.
An NFT completely solves the part that was already easy, and does nothing whatsoever for the hard part.
I like what Brian Eno has to say on the subject:
NFTs seem to me just a way for artists to get a little piece of the action from global capitalism. How sweet — now artists can become little capitalist assholes as well.
[…]
People I like and trust are convinced [NFTs] are the best thing since sliced bread, so I wish I could have a more positive view but right now I mainly see hustlers looking for suckers.
I generally like Brian Eno, he is no fool. I sometimes call him Dan. He does not know and does not care.
An NFT is simply ownership of the NFT. Different NFTs represent different things. Some NFTs represent the actual ownership of the copyright, while others just represent the NFT itself. An NFT is like a contract. A contract is just a piece of paper with writing, but some contracts are very valuable while others are worthless.
For example, both DaVinci and I can sell a “Mona Lisa NFT” that represent nothing other than a NFT. But the novelty of owning the NFT sold by DaVinci himself will be worth much more than the NFT that I make. Even though neither NFT conveys ownership or rights to the actual Mona Lisa, there may be collector value to DaVinci’s NFT itself. Similar to how a napkin used by a celebrity will be worth more than a napkin used by me even though they are both just soiled napkins with no inherent value.
However, since DaVinci owns the Mona Lisa, he can grant rights to his “Mona Lisa NFT” that gives the NFT owner the ability to use the Mona Lisa in certain ways. Similar to a contract, the NFT may allow the NFT owner the ability to license the image for various uses. Or the NFT may convey no rights at all other than the ability to say “I own the ‘Mona Lisa NFT’ sold by DaVinci”.
What has burning Amazonian rainforest got to do with anything ?
Or do you mean he chopped it down and made paper out of it ?
It’s been argued that the extreme energy requirements for creating NFTs and cryptocurrencies is having a negative environmental impact.
From the article I linked two posts ago:
in a warming world a new technology that uses vast amounts of energy as ‘proof of work’ — that’s to say, simply to establish a certain age of exclusivity — really is quite insane.
It seems ETFs are not quite as bad as Bitcoin, but in the same order of magnitude. For each transaction dozens of Kilowatthours. Burning the Amazonian rainforest, I believe, is an apt metaphor for dumb destruction of nature.
ETA: Hm… does this count as ninja’d?
Ah.
Insane, yes.
Quite.
I am learning about this myself and have read around the subject. One way to try to learn it to try to explain it to someone else.
So let me try. If I get anything wrong or someone has a clearer explanation, please chip in.
It is better to first consider more tangible applications for the blockchain technology that NFTs are based on. Those digital artwork examples are a bit abstract.
A public distributed database that records property ownership is one obvious example.
You buy a property and a record goes in the blockchain, everyone can see it and no-one can change the record. If you sell it, the transfer of ownership transaction is added to the blockchain, everyone can see it, no-one can change it. Property is non-fungible. Examples or fungilbe assets are dollars, wheat or gold. You can exchange for another dollar and they are equivalent. A property is an asset that is unique and can’t be changed. In the case of property the NFT is like a deed.
Here are some other types of non-fungible asset:
Collectibles
Artwork
Event tickets
Music and media
Gaming
Virtual items
Real-world assets
Identity
Memes
Domain names
The token bit means that the asset can be represented as a long, unique number that exists on the block chain distributed database. It is also possible to mint sub-tokens based on the original asset. An asset can have lots of unique sub-tokens associated with it and these become like company shares.
If it was a piece of artwork, normally you have to buy or sell it as a whole. Turn it into many Non-Fungible Tokens and you can shares. Note that there is a real world example of this and that is Prints. When an artist produces a print from an engraving, the prints can be numbered and signed for authenticity by the artist and then sold separately. This is a nice way for an artist to make money.
Being able to divide up an asset into lots of shares makes a lot of sense in the world of finance because they do it all the time. This technology makes creating new investment products very easy. It comes with a database that is distributed over many computers in the blockchain network and it is a secure record, unchangeable record of who owns what token. This is makes normally non-liquid assets liquid, so that shares can be bought and sold. Moreover, the technology is such that tokens can be bought and sold instantly and at any distance with the blockchain taking care of the accounting.
Now the problem with applying this to real world assets is that there are usually existing regulations applied which undermine some of these advantages. There are government property registers. There are stock exchanges designed manage share trading. There are lots of rules and they have to go through a centralised authority to oversee the transactions and confirm ownership. And there are fees and charges, all of which add up to a barrier to new investors entering the market.
However, this is not the case with digital assets such as you find in computer games. Games makers have cottoned on to the fact that game players will pay money for a new light sabre of new outfit for their avatar. They have created internal trading networks.
I may sound like a lot of childish nonsense, but there is big money in gaming, It is a business that is bigger than Hollywood and digital assets are big deal. These NFTs and a blockchain database fit nicely into that world.
Besides ownership of the NFT and being able to buy or sell it, there is scope for defining a whole set of functions. You could rent that light sabre for a few hours of gaming. The rules for the transactions are described in a program called a smart contract.
Consider how rentals are done on AirB&B, or transactions on EBay. They have worked out the rules for the transaction and charge a pretty penny in fees for their centralised control and management of the transaction. Blockchain technology and these digital tokens can enable individuals to trade directly with each other instead of going through a third party and this is a key advantage. Blockchain is the same technology used to implement cryptocurrencies like BitCoin. But currency is quite limited in terms of transaction, it is just a store of value like gold. Blockchains for these, more complicate token based transactions come with programs to define the steps such as you would need in a transaction like an auction or a rental.
There is a lot of potential for applying this technology to both public and private trading networks. Why there is even a tokenised ad watching payment system built into the Brave browser that you can use to reward content providers.
[quote=“Miller, post:16, topic:941126, full:true”]
It’s been argued that the extreme energy requirements for creating NFTs and cryptocurrencies is having a negative environmental impact.
That is an important issue.
It is being addressed by a migration from Proof of Work (that is using a power hungry crypto coin mining computer to find an elusive coin by doing very processor intensive work). To Proof of Stake where the financing of the blockchain computers to look after the distributed database is paid for in tokens. You want to use the global block chain to become your transaction ledger for your smart contracts. You pay.
The figures for how much power existing cryto coin mining operations use is quite frightening. When they designed Bitcoin they needed a way to ration the coins being produced and it must have seemed a good idea at the time to make each one mined the result of more and more computer power. But it is very wasteful of both electricity and technology and it causes major problems in countries where electricity is easy to steal.