There has been a lot of buzz around NFTs of late. I’ve read a few technical breakdowns if them (including the actual Ethereum EFC). The process seems to be:
Generate a hash from a digital asset (very easy CS101 stuff, eg SHA256)
Create a “crypto” key or token (do some dumb, pointless, but computationally expensive, sums that result in big number that’s “yours”)
Link the hash with the key forever. Now the asset is “yours” too.
Profit!!
So it’s that penultimate step that I don’t quite get. Is it just a database somewhere that links it? Is there some immutable “metadata” field you can fill in when you generate a crypto token? Or is there something more complicated going on?
As usual this is GD so not interested in discussion of whether NFTs are a good idea financially or morally acceptable in the midst of a climate crisis.
Step 3 is “put it on the blockchain”. I don’t know how familiar you are with cryptocurrencies and/or blockchains, but in essence it is just a decentralized ledger. And so the ledger entry is just “so-and-so is hereby the owner of hash 0x12345abcde”.
Since the ledger is public and can’t (for some definitions of can’t) be altered, so-and-so has a strong claim to being the owner of that hash. She can transfer it to others in exchange for other things.
Some blockchains support scripting languages, and so can be used to create more advanced NFT types, say allowing 10 to exist instead of just 1, or making it untransferrable after a certain time, or whatever.
Remember a blockchain is not your typical ledger. In theory it is impossible to alter the chain once it has been created and accepted as part of the overall sequence of ledger entries.
This means you can, with certainty, establish a provenance for a given item. This is a big deal in the art world. Being able to trace who owns what and being able to trace the history of a piece of art has long been a bugaboo among art owners. With blockchain you can make that all go away (moving forward…it doesn’t help with what happened before the blockchain was created).
Note that it doesn’t just have to be art. It can be any property. Your lawnmower if you want.
Being able to certify, without doubt, that a given property (of whatever sort) is original and its ownership history can be traced with certainty lends value to that property (i.e. a buyer has less fear they are being ripped off with a forgery).
Providing provenance may be a big deal, but there is no guarantee from the NFT that this occurred. People sell NFTs for things they don’t have the rights for. Anyone hash the data.
The only way I could see it helping is if you hash and record it before you release it, and that the record includes date information. Then you can establish that it was not available to anyone else before that date.
But even that would take work to do. There’s no guarantee that the thing wasn’t released to others but not generally available. You’re still relying on the word of someone and on doing searches to prove the thing wasn’t public beforehand, just like you were before.
And then there’s the issue of what the NFT actually entitles a buyer to do. It seems a lot of times no rights are actually exchanged. The only thing they can sell is the NFT, not any legal right to use it.
It still seems to be a mess. It maybe has potential, but, as is, it seems to not be very useful.
Thanks all think that answers my question. Though how is the uniqueness ensured? Whats to stop me generating a new entry and writing “griffin1977 is hereby the owner of hash 0x12345abcde” in its ledger?
The blockchain is inherently ordered. The author can put the hash on the blockchain before anything else is released, just to stake the first claim. Any further NFT sales can then be seen as coming from the author. Alternatively (or in conjunction), the work can be cryptographically signed.
Sure, someone could still somehow steal the hash from the author before the release, but that’s getting more difficult.
That’s how it works almost all the time. It’s basically the definition of an NFT. You don’t own the work, or any rights to it, just a “token” of the work. But it has value due to its uniqueness.
You could, but then you wouldn’t be the first, and the sale wouldn’t be from the original author. It wouldn’t have any more value than a copy of a famous painting.
Got it. Though its just as likely that 0x12345abcde is the hash of my magnum opus animated GIF, and the previous entry is from some random guy that just downloaded from it the internet.
For the same reason you just can’t say you own a Rembrandt painting because you just say you do.
The blockchain, by its very nature, cannot be modified once it is established. If I have the token that says I own artpiece-X then no amount of you futzing down the line will change that. As long as everyone agrees that on March 25, 2021, I own artpiece-X then that is it. The provenance is established and until I transfer that ownership (which would then be noted in the blockchain ledger) I am the owner. Period. Full stop. You cannot mess with it in the future by just saying you own it because I am in possession of the unique token which confers ownership to me.
For NFTs released well after the original work, you have to judge provenance the old-fashioned way, by looking at where it came from. NFTs of tweets and such are easy since Twitter itself establishes provenance. Other cases might be harder.
In the future, for works intended for immediate NFT sales, the author can release the hash before the work. That guarantees provenance from the blockchain itself.
The NFT is similar to a car title. The car title indicates who owns it, but the title itself isn’t useful for getting yourself around town. The state provides a means of conferring that title to other people and making sure that only one person owns it. With an NFT, that ability it provided by the blockchain, and as such is decentralized. Who owns a particular asset is tracked by the blockchain and it can securely be transferred by only the person in possession of the private key for the current wallet that is recorded to own it. In most cases the asset attached to the NFT is not itself a scarce asset, being merely a string of binary digits that can be replicated endlessly; however, with the NFT, it can be said that there is exactly one wallet address that owns the rights to what the NFT is tied to. If the NFT asset is subject to copyright, this can be quite important in theory.
The whole idea of what a blockchain might be able to do better than conventional systems is in its infancy; there are a ton of possible related applications that have nothing to do with art or cryptocurrencies. The idea of the blockchain is a lot more fundamental, and is what has a lot of tech-savvy people interested, but unfortunately too much of that interest has until recently been pored into how to get rich quick with crypto, and not so much what sorts of things a blockchain might handle well.
Also what are the logistics of that. Is there a search functionality over ledgers?
When I enter “griffin1977 is hereby the owner of hash 0x12345abcde” in a ledger. What is the process by which the system (Ethereum I guess?) discovers that two years ago someone created a ledger saying "Dr Strangelove is hereby the owner of hash 0x12345abcde”
Well, it can depend on the blockchain implementation used but as originally envisioned and used in things like Bitcoin the entire blockchain is open to review by absolutely everyone.
Indeed, that is one of its security features. You can change your wallet to say you own item-X but every other wallet out there will say different and ignore you.
There are a zillion trackers for this kind of stuff, just as there are for the cryptocurrency itself. Of course you can always download the blockchain yourself to check, but in practice most people will trust the trackers. Maybe not for the big multi-million sales. If Sotheby’s, etc. ever get into the business, I expect they’ll have their own people check on the provenance.
IMHO the issue facing the art world is having a public blockchain.
A blockchain is considered reliable because no single (or few) entities control it. The blockchain is public and the more people that have it the more reliable it is.
But companies like these and their clients are not keen on public scrutiny. They do not want a publicly available blockchain for all to see.
So, how to create a private blockchain that everyone considers reliable and safe? That’s their goal…no one has been able to agree on how to do it (read: who controls it).
It’s not obvious to me that a “public blockchain” is even a coherent idea. There’s some counterintuitive stuff in the crypto world, like zero-knowledge proofs, so maybe there’s some way to make it work. But it would have to look very different from what a normal blockchain looks like.
I’m not sure what you mean. The theory is well understood and we see its implementation in Bitcoin (you could go download the Bitcoin blockchain in its entirety right now if you were of a mind to).
Certainly there have been loads of riffs on the idea but the base notion is there.
EDIT to add: It may be that Chinese Bitcoin miners have become so dominant that they control the chain and therefore make it useless…no one thought one group could control it but maybe they can.
Sorry, meant to say “private blockchain”. Thinko. Obviously, public blockchains work well already. I don’t know what a private one would look like, without it being a completely different thing.
There are lots of companies working on private blockchains.
It could be as simple as controlling internal inventory and some given people/computers who deal with buying copy machines and phones are on the chain.
Or it could extend to private customers. Think something like a dark pool. They could have various internal computers in the company be part of the blockchain to help alleviate crime within the company.
The trust comes from enough computers in the company keeping check where no one person in the company could possibly get a handle on them all and mess with the system.