Help me Understand Non-Fungible Tokens

I have an NFT for the bottom-most turtle.

I was thinking I could create an NFT for a pixel on the internet (I could host it on its own site), then put that NFT in a box and create an NFT for that box, then box that and create an NFT for that, and so on and so on. I would own the original NFT but allow other people to box and create new NFTs around my burgeoning creation. It would be like a pyramid scheme but without anyone having to pay money to anyone and maybe one day people will be willing to buy some of the early NFTs in that lineage.

This is my idea, who wants in?

You don’t. Why does this matter?

I could hire an airplane to fly a banner over the city claiming I wrote the SMDB’s first post.

The fact that one claim takes the form of a banner in the sky and another claim has been made electronically and then tokenized have equal value in establishing the truth of that claim.

The NFT validates that you made the claim. Presumably, for the sky writer, there is a paper trail validating that showing you made the claim that way. Neither of those validates the factual basis for the claim itself. It’s a fundamental misunderstanding of what NFTs are.

That’s also separate from the debate of whether NFTs are actually worthwhile, but that’s outside the scope of GQ.

I’d suggest taking the pixel out of it. Make an NFT of the sequence of bytes with zero length. Then do an NFT of that NFT. And then an NFT of that NFT. Ad infinitum.

This is the part I’m most confused by I think. Correct me if I’m wrong, but the NFT isn’t technologically linked to the artwork itself, is it? In one example, it’s only linked to a URL where the artwork may or may not be hosted. As far as I can tell, it doesn’t even have to be that. Am I correct in thinking that to make a claim about being the only rightful owner of the artwork using an NFT you need two components: (1) proof through the blockchain mechanism that you own the specific token and (2) a claim or evidence by a trusted (by you or anyone you’re trying to convince) authority that the token actually represents the ownership?

Right now there’s a token representing ownership of that $69m digital artwork for example. Presumably there’s nothing stopping me from creating a new NFT and claiming that it represents ownership of the same artwork. The only difference between those claims is that one is made by a set of organizations (Christies auction house, etc.) that has more credibility in making this claim than I do. If that set of organizations lost interest in continuing to make that claim (or worse, suddenly started claiming it didn’t represent the artwork after all but in fact a stale bag of Cheetos they just found in an old cabinet) then I suppose any residual value of the NFT would only be based on being able to sell it to people who reject Christies change of heart or just thought the publicity around that specific NFT was cool?

I guess my confusion is that it seems to me you still need to trust the originator authority that makes the claim that the NFT means something. And in that case I’m not really fully grasping what the point of the NFT is. What problem does it solve that just asking Christies “hey, does John Smith own this?” and them saying “yes” doesn’t? And in the more general sense of representing ownership, what problem does it solve that law, contracts, etc. that seem to work for everything else doesn’t?

It can be.

One example is an NFT containing thousands of images made by one artist. No reason you can’t put those bits themselves into the NFT.

But here’s the thing - that particular piece of digital art belongs to the person with the NFT but the copyright is still held by the artist. So, a while later, if that artist separately sold a copy of one of those thousands of images, that’s perfectly valid.

Let’s say Paul McCartney recorded a special copy of “Let It Be” just for you and there was plenty of documentation proving you owned it. That doesn’t mean you own the song - just that one copy of it. You “own” that particular copy of the art but whoever owns copyright can still copy it again and again.

Or maybe he just gives you a key where there is a special soundbooth where you, and only you, can listen to that particular recording. Nothing stopping him from demolishing that building or changing the locks. Depending on any signed agreements on ownership rights, that may entitle you to sue for damages but there’s nothing to physically stop him from doing that.

Sure, and that’s true for anything. Our economic system is based on mutual trust (whether that’s between individuals or with a government or bank or whatever).

None, really.

There’s a narrow technical issue it handles but nothing earth shattering and nothing that couldn’t really be effectively replicated by other means.

Basically the same as cryptocurrencies. For most people, they don’t fundamentally handle transactions in a way that can’t be handled via traditional currencies. But there are a few features some people like.

And like baseball cards and some cryptocurrencies, it does seem that NFTs are currently in a speculative boom that is unsupported by their underlying value.