NFTs and a Thousand True Fans
a16z.com
a16z.com
There is a jpg of an artwork on the internet that anyone can view and copy. There's also a non-fungible token that's linked to this jpg. I just don't see how NFT proponents want to make the actual connection between the one and the other in a way that's both decentralized and unique.
- You can have some authority that says "THIS artwork belongs to THIS token". Then, you don't need blockchain, because you have a central authority.
- You can encode the relation on-chain by e.g. taking an md5 of the jpg. How do you know which token claiming to be "the unique token for that jpg" is the real unique one? Even if there is a class of token that preserves uniqueness, it can only do that internally within the class, we're back to the previous point of needing some centralized allocation to say which class of tokens is the real one.
Edit: for the last point, you can take the one with the earliest timestamp of course, as per another comment.
Anything I missed? Has anyone even thought about this in-depth? Are a16z's crypto dabblings just empty hype chasing?
Still, it's amazing how many people are willing to shell out money for this - many of them are likely trying to sell their acquisitions to the next sucker, though.
You need blockchain because central authorities can shut it down; however, most smart contracts in this space are centrally controlled.
I think the reason people struggle to understand how NFTs make sense is because it is new and there is no mental model for it. It’s easy to dismiss, but if you think about it and in particular if you program an ERC721 contract and/or use it, you begin to get it. Younger generations won’t need to do this because it’ll just be the way things are. You won’t trade MtG cards but NFTs. You may be in a VR game and see a work on art on the wall and buy it right there for your collection. It is absolutely legit regardless of the mania or the fact that contracts aren’t decentralized (yet).
A jpeg is bit for bit identical when copied.
For the longest time, in order to enjoy something, you had to own it. Because physically, there was no way to enjoy it unless you were in its physical presence.
Then we had analog tech like photography, and for a little while, people wrestled with who owned what. But we decided that the original physical painting is proof of ownership, and a photograph of it can still be enjoyed, but is worth less, and not actually owned. This makes sense, because the physical copy is less easy to reproduce.
And now, we've figured out how to make digital things scarce. Now, the ownership of something is indicated by ownership of the NFT, not of the physical original work of something. The tie between the NFT and the digital image is largely a social contract, in the same way that money is a social contract.
https://superrare.co/artwork-v2/bloodsculpt-20261
https://kemendo.com/Images/bloodsculpt.jpg
Which one is the real one?
The first link is on superrare. The superrare image can also be enjoyed by anyone. However, the (very small) link (https://etherscan.io/tx/0xd9e4971bef6d37807605e0eb635eb4b6d9...) to the transaction on the page, tells me the owner of the art piece is 0x053e84e80cfb38d672d53394de3dade1fbbacd25.
The second link is on your own homepage. You can claim ownership on the image (since it's on your homepage), which gives you the enjoyment of the piece. But you don't claim ownership of the art piece.
Now, who determines which one is the real one? Depends on the counter-party you're transacting with, and what they're willing to honor.
If I as the counter-party, am being sold ownership of the art piece from both you and 0x053e84e, I'd take it from 0x053e84e, for the same reason you tried to make: digital images are exact copies. He own the non-duplicable NFT and provably so, and can transfer that NFT to me.
If I as the counter-party is the creator of the piece, I can give certificate owners extra VIP features for the art piece, like a chance to meet me, or a one time delivery of a look-book of the making-of of the piece, I can do that, and be sure that it's not fake owners. The pleasure of ownership is different than the pleasure of enjoyment of the piece.
So what links the NFT (the certificate) to that particular image? Well, right now, it's conferred by Superrare. If this is turns out to be an issue, I can see ways around it.
One option is to use procedurally generated art, where the parameters are stored in the NFT. I think there may be others.
In some respects, blockchain currencies make the most sense precisely because they aren’t bound to some fictionally scarce “physical analogue” to remind you that it’s just a number. The currency says “the number has value, that is the one axiom you must believe”. An NFT muddies this by saying “the number has value BECAUSE it is tied to this unique thing that actually isn’t unique.”
Edit: One added point: if the scarcity is “real” due to some outside constraint (a card that can be used in a game, and thus it’s not yet copyable asset that people are buying but the unique ability to use it), then the above does not apply and NFTs seem like a fine way to standardize a cheating proof way of handling this.
I completed agreed to the point you were making and then I got reminded of sneakers. They are supposed to be of high utility and yet 'limited edition sneakers' command a high price and are never used (in fact they lose value on being used).
I think other threads in the discussion point out the difference between the price people pay for 'owning' an artefact versus 'enjoying' an artefact. In the music case also, I can totally imagine a successful artist taking out limited NFTs on their music and their super fans buying it, trading it amongst themselves. Most people who want to 'enjoy' it won't care but I guess a case can be made for die-hard fans wanting to own it.
The utility of the enjoyment of my art is for regular fans. The utility of the ownership of my art is for super fans. And the value of superfans to me as a creator is to build long life-time value of customers, ready audience for my future work, an effective cheap distribution channel.
If I as a superfan has a creator that honors these NFTs, then I too will care about the scarcity--not of the digital artifact that lets me enjoy the work (the image), but of the digital artifact that lets me participate as a superfan (the NFT).
That being said, it will be interesting to see how creators react to these tokens being resold (which is an essential aspect of this). That is to say, in the model you are describing you are taking on a long term relationship in order to demonstrate the scarcity, which is different than a one-time sale of unique piece of art. You will thus take on the problem of scalpers and the realization that many of the superfans you are serving got access to your future rewards through paying a third party much more than you got for the initial sale of the token — which is of course nothing new, this happens with art resale too, it’s just less repeatedly in your face as you provide these benefits over time.
How about MtG cards that are NFTs? Before a match, both players commit to a deck of cards and produce a zero-knowledge proof that they own all the cards in the deck (i.e. without revealing which cards they have.) All kinds of cryptographic tricks will be necessary to simulate the process of shuffling and drawing cards while ensuring that nobody can cheat. Exciting!
(If you want to support cryptographic poker, where opponents learn nothing if there's no showdown; then you need lots of shenanigans.)
So I think NFTs may hit more in other fields outside of art, like digital playing cards, digital event tickets, etc. May still work for art. Could be fascinating to have an app layer on top of the art. Almost like an art museum, or maybe exclusive art events where you have to have specific NFTs to attend. Almost like exclusive membership to a club.
(Oh great, now with all these ideas in my head I may not sleep lol)
For art I'm skeptical (See my reply in this same discussion for why), but for creative works with utility, and NFT might be more useful if the platform they can be used on requires validation of the token. In that sense, it seems to become a sort of public DRM.
I'm sure we can spend a long time musing on the implications of that.
An abstract representation of a digital item not tied to the app/platform has some benefits:
- It can allow a market for them without me having to implement the market itself;
- That in turn makes the items themselves more valuable
But it also has many downsides and some significant:
- I don't have to implement the market but I have to conform all my app to work with that particular way of representing the item and I have to make interfaces to it all. If then I want to implement an internal market it has to be fully integrated with the outside.
- For ownership verifications it's much more heavy to assert ownership. As a practical example, in order to allow users an incentive to play when you signup you get a set of item "packs", with random contents generated when they're opened, the items in that pack can be used in tournaments/matches that require ownership of the items but in order to remove any benefit from creating multiple accounts to hoard items and resell them, the items in those packs are "owner_only". They can be used but not traded or sold. To do verifications for selling for instance, it's a simple db query, to do verifications of ownership before a match is started it's a simple db query. I would imagine it would become easily much heavier to do any of these simple things, or you might need to wait until your "purchases" are settled so that they show up, and etc.
- Then the blockchain itself. Is it connected to the outside world and managed by multiple parties? Can those multiple parties get together in a 51% party and rewrite the story of the blockain in which the assets used in my game are stored? Is it an internal blockchain? If it's internal why use it at all instead of a db with backups and consolidation?
I'm sure there's other considerations. The idea of a market for items that is larger than your app items is certainly interesting but not sure the logistics play out. Would love to see some ideas explored in that field though.
*edit formatting
Amiibo looks more like the skinning/customisation market - probably they don't have an impact on the game.
In TCGs with games/tournaments where you need to own cards to play them there's an actual "desire/need" for a market to trade/buy - although it seems most digital TCGs nowadays all do the hearthstone thing of being able to "create" items by destroying others which diminishes the need for it, I personally don't like that mode, but I also don't see where a blockchain helps instead of a DB and backup of all "actions" recorded.
But when it came to NFTs and art, I think it lines up. It use to be the enjoyment of a piece was inextricably tied with the ownership of something. It was the way physics worked.
And then, we had photography and subsequently digital tech, and now we are able to separate the ownership of a piece from the enjoyment of a piece through a digital copy. Now you can enjoy a piece without ownership!
But aghast! What does that mean for value of ownership? Well, the social contract we all collectively came up with is that the original physical piece is worth a lot, and a copy isn't, regardless of the technique. And we have lots of mechanisms in society to enforce that, from people that specialize in detecting fakes to the court of law.
It also kinda worked, because while you could digitize the painting, you couldn't digitize the ownership of an art piece--because there was only still one original. So the ownership (not the enjoyment) of a art was still scarce due to physics and not digital, because for the longest time, we didn't know how to make digital things scarce and original. In fact, we thought that's why digital was so great. No cost duplication has changed the world.
But, apparently, you can make digital things scarce. Through cryptography.
So if you view this as a progression of the separation of ownership and enjoyment, the enjoyment got digitized first. And now, we're seeing ownership being digitized. But ownership is kinda weird because it's both digital and scarce!
Back to the connection, I think the connection is simply a social contract in the way money is a social contract. "This NFT represent an ownership for this art piece."
I think there are ways around it, for future works. I can imagine art pieces being procedurally generated by a computer, but hand picked by the artist. The artist then records the parameters for the procedural generation inside of the NFT. Then, any owner for the NFT will be able to generate the art, and that would be the connection.
At the end of the day, that still relies on some social contracts, like agreement that these parameters is applied by this procedural generation algorithm, etc.
I realise this is just having a go at a single part of your conversation, that I otherwise have no issue with
That’s just crazy, who in their right mind would want a world like that. Why do we need an authority figure to control enjoyment of a thing?
As mentioned in another thread, NFTs are like a certificate of authentication in the Art world. It represents the ownership of something. That's separate from the enjoyment of something.
The pleasure of owning something is now separate from the pleasure of enjoying something. NFTs address the pleasure of owning something, not the enjoyment of something.
One minor thing I'd add to your picture; the potential for competing NFT authorities. Bitcoin, which was sold as inflation-proof because there are only so many of them, now has 250+ competitors with nominal market values of over $100m. If the NFT thing works at all, a bunch of hucksters will immediately set up in competition, and there surely will be a lot of duplicate registration in different spots. ("I own goatse!" No, I own goatse!") In which case, the only way to determine actual ownership of a given MD5 is provenance from the artist.
I can't find it now, but some genius on Twitter suggested creating an NFT registry for physical bridges, so George C Parker can live again a century later. https://en.wikipedia.org/wiki/George_C._Parker
Last year I bought some fine art photographs. They were “giclee” which is a fancy word for ink jet. They were signed and numbered. I got my certificates.
The artist, or whoever has a copy of the original digital image, can make unlimited prints. They can even make better prints! The only thing stopping them is that the art world has decided to have this made-up rarity and to treat the certificate of authenticity as a guarantee of, well, “authenticity,” whatever that means for a digital photograph or for that matter a shiny metal balloon dog.
So one thing the NFT claims to be is that certificate, especially as applied to work that was meant to be experienced on a screen.
Some years ago, I was at an art convention https://ix-online.com/default.asp) and was discussing this with a couple of collectors one evening, asking if they'd ever buy an "original" digital piece. And they indicated that they would, but only if it either had some sort of embellishment making it truly original as a print (Artist signature on the print, maybe a message or small sketch on the back, etc) or, some sort of agreement, be it binding or on pain of loss of reputation, that more prints in the series wouldn't be made. In other words, something to make it rare.
The only digital pieces I've seen go in excess of four figures are ones that have been "hand embellished", that is, the artist drew their image on the computer, printed it, and then went back over with a physical medium to give it the look of traditional media. And since that can (currently?) only be done by hand, that makes it unique, and therefor to collectors, valuable. And these works are not only valuable in the sense that the individual enjoys it, but many works appreciate and grown in value as the artist grows and so become an investment as others now want to own that unique work.
I'm married to a fantasy illustrator who works in a digital medium, and while I'd love to see her art be juried into the same showcases I see reserved for the physical medium, the flawless reproducibility that's possible seems to deter collectors more than some certificate that says "I own this" does. Perhaps over time that digital signature will eventually be valued more to the collectors than the rarity, but in everything I've seen, for an art collector, holding up your blockchain when everyone else can fulfill their demand for that work and obtain the same quality is cold comfort.
I'm really interested to see if anything becomes of these, but currently I'm more skeptical than optimistic.
What does it even mean to own a Sol Lewitt wall drawing?[0] There is a whole wall of art at SFMOMA that is less “owned” than an NFT-backed goofy little “punk” graphic.
So far it doesn’t seem like the curatorial voices have made it into the NFT conversation.
I found it interesting that Beeple hedged and actually made an artifact to go with the digital version of his daily editions.
The gallery I bought prints from last year has some interesting takes on it, they are only dealing in digital art but they are a (small) physical gallery.[1]
I also have no idea where this is going, I was barely paying any attention until a week ago despite having an artist friend who’s involved in blockchain stuff. But I definitely find the conversations interesting! Learning new stuff almost daily now...
[0]: https://en.wikipedia.org/wiki/Sol_LeWitt
[1]: http://mymuseum.co/
Yes. I think you are taking the most poorly executed NFT (a token and jpeg centrally hosted on the internet) and extending that to all NFTs.
There is no right or wrong way to make these NFTs, and a jpeg/token may work for many use cases anyway...but I can certainly accomplish and satisfy all your issues/concerns. That is create a unique digital artwork that is hosted on the blockchain represented by an NFT that is all self authenticating without the need of any central authority...unless you are classifying the ethereum blockchain as the central authority
You have a token and a jpeg. I have the exact same jpeg. It's not an original in a gallery vs. a mass market print, the copies are identical.
Why should anyone care about who owns the damn token?
Imagine various MMOGs recognizing some NFT standard as authoritative, and only allowing designs to be used for character skins if the gamer owns the NFT corresponding to the design.
Today Fortnite and games like it get major revenue streams via selling special skins, game items and other art work. Now name a property that let's you trade or gift items? If you can name any - do they let you trade on ebay? How many platforms let 3p artists contribute to the platform? I don't think you can honestly describe this market place as anything but primitive.
NFTs solve the hard problem of accounting for virtual goods in a wildly open, secure and interoperable way. They can codify an incentive structure that allows trading on a secondary market while ensuring creators, platform owners, and even former owners can receive percentage royalties. You could easily imagine Fortnite's Ninja streamer selling one of his skins on a stream to a fan for a significant premium - and some of that revenue could be codified to flow to the platform, the artist that made it, heck ninja could set it up that any later sales send 5% to a food bank.
Thats just one reason for me why NFTs are a high potential technology. Are there challenges? Tons of them (look at eth gas prices...) But it doesn't seem insurmountable. Ultimately there is utility and value. Definitely not hype.
Imagine owning a username in the form of an NFT, and every MMO game that integrates with that system will ensure that the owner and only the owner of that name can can use it in game.
Things that are intentionally non-fungible don't care much about being copied, as long as you can always identify a copy, at the end of the day it's mostly a status game. But status games do have real-world value.
https://en.wikipedia.org/wiki/Keynesian_beauty_contest
The verifiability aspect seems to create a Schelling point where they attain and maintain value.
In other words let's say there is a unique painting, now they established that the owner of a certain nft gets to own certain rights over that painting which could be licensing or other rights.
NFTs have essentially decoupled the ownership of a role of a contract with the transference of that assignment to an individual.
Instead of modifying the owner who has the claim on a certain piece of art or object by modifying a document, they are simply using blockchain to establish the ownership of a token and token links it's owner to the contract.
Why not break out of that and think digitally.
Digital ownership is like putting your name on a building, like a museum. Completely meaningless to most but a few. And that is worth it enough for some folks to send millions to do it.
NFT ownership is exactly the same thing. The article says that creators just need a few thousand of devote followers to make a living. A NFT doesn't have to mean or worth anything to millions of people, just to a few thousand will do. It's enough to create a vibrant marketplace centered around some creator.
If you are a notable artist wanting to sell NFT art, what makes your tokens valuable is that you have verified your identity with the service which deals the NFTs, and that the service is reputable. Otherwise, anyone may set up an account claiming to be you (on another service for instance) and sell the same JPGs attached to a new token.
In the absence of a centralized authority, the only sign of authenticity is chronology (who minted this jpg into a token first), which is very susceptible to chronological "squatting" e.g. an opportunist discovers an artist's works and mints them before the artist does.
The difficulty of replicating physical works of art has the happy side-effect of massively strengthening their authenticity.
The analogy that DID make me understand NFTs is the traditional art market. When a painting sells for millions of dollars, basically all of that value comes from the provenance of the artwork, not the artwork itself. That is, with present technology it is possible to make an extremely detailed replica of, say, "The Portrait of Adele Bloch Bauer I", one that was indistinguishable to the human eye from a distance of a meter or so, that would sell for a few grand max, not the $135 million of the original.
Thus, if humans are capable of assigning a huge amount of value to provenance, why can't this be applied to digital artwork as well? IMO, though, since digital copies are exactly identical to the original (unlike physical objects), it remains to be seen whether humans will value this concept of provenance the same as they do in the physical world.
Weird, but ok.
the money in the bank could disappear (physically they don't exist anymore)
a blockchain could become unaccessible
blockchain doesn't guarantee eternity (for example no electricity or no internet connection, no blockchain)
NFT are virtually unlimited, hence worthless.
they need to keep it small, but if it doesn't work it would be like putting your name on a soda can ...
NFTs as they are being used today, as proof of ownership over a copy able, digital asset, is frankly the lowest hanging fruit. It isn't a very robust or interesting use of the technology.
What we are building is a game distribution platform, like Steam, that makes games and their items NFTs. This opens up many interesting business opportunities that are defined by the built in scarcity that NFTs are built for. Because it is all on chain, it also means that ownership rights move back to end users, meaning that once you are done playing a game, it is then possible to sell or trade it on the open market.
A prime example of NFT use as a business case is the ability for a game developer or publisher to create limited edition games with unique content.
Basically, I see NFT art as just a proof of concept and not really where the future of this tech is going.
The key detail of Bitcoin's use of blockchain is to enable mutually distrusting groups to agree on some state in the absence of any centralized authority. In the above case, as in so many buzzy uses, the use of some blockchain to transact seems redundant since the value of tokens being exchanged are entirely dependent on a central authority, and could much more easily be facilitated by that authority (this is just the common "99% of blockchain uses could just be a database" argument I guess).
Another aspect is that when the central authority is also the sole issuer of tokens, no counteracting forces exist to drive a meaningful market dynamic. No matter how much price pressure exists from users, the authority can always act to restrict issuance or increase issuance to force a particular price, and over the long term in the absence of that authority (due to bankruptcy, obsolescence, ..) the value of all issued tokens drifts towards zero.
On saying that though, there seems to be some promise one step removed -- tokens that activate functionality in software produced across a wide range of vendors. In the case of a game, that could perhaps be realized as something like a common set of power ups tied to NFTs that could be reused in multiple games. The question is how you'd incentivize multiple vendors to buy into the same set of tokens, given doing so is likely to have some real world cost attached to it, and obviously introduces a creative limitation to game design.
Meanwhile, can't help but agree, the current NFT applications (million dollar web site clones, weird eBay for JPEGs clones, ..) seem entirely pointless and more a symptom of something than a solution to anything.
I don't understand your angle here. Instead of buying a game on steam, you buy a token. You convert e.g. a stablecoin to the game token and you can trade that token on the 2nd hand market later.
>Another aspect is that when the central authority is also the sole issuer of tokens, no counteracting forces exist to drive a meaningful market dynamic.No matter how much price pressure exists from users, the authority can always act to restrict issuance or increase issuance to force a particular price, and over the long term in the absence of that authority (due to bankruptcy, obsolescence, ..) the value of all issued tokens drifts towards zero.
That depends on the monetary policy for the token which might not be possible to change later on( at least in some blockchains it is set in stone for trust reasons). So you can't just arbitrarily print more or less unless you set it up in such a way in the first place which is transparent. Also I don't understand how the value of tokens drifts towards zero since they live IN THE BLOCKCHAIN and the smart contracts are working regardless of the gamedev existing or not. So you have a digital second hand market essentially.
This is the software industry after all.
Take for example a multi-player game with purchasable trinkets. Player "invests" in a copy of the game at $50 and 20 trinkets originally costing $1 each. Platform the game is designed for becomes obsolete (say, an app targetting Windows 3.1 or Android 2.1), or the company goes bust and turns off the infrastructure supporting multiplayer functionality. Perhaps having issued all the tokens it can, the company simply loses interest in continuing to pay for that infrastructure.
What happens to the value of the issued tokens? Well we know what happens, much as we know what happened to the millions of 3.5" and 5.25" floppy disks containing licensed software written for Windows 3.1 that were manufactured in the 90s.
The only way to preserve the value of the "investment" is if the token is supported in perpetuity by a functioning market that must by necessity not be dependent on a single piece of software (game), OS platform, vendor or centralized authority of any sort.
I understand this may come as a shock, but the entire point of blockchains is to solve a specific detail in the original Bitcoin design - mutual agreement on the content of a distributed linearized log in the absence of any authority. For almost every application where centralization (indirect or otherwise) continues to exist, they are deeply inefficient from a technical perspective and suffer from deep usability issues from a user perspective. So you end up with the majority of the userbase thinking they're "doing blockchain" but their only experience of it is some centralized eBay for JPEG clone site who also happen to be managing their wallet, in order to trade tokens tied to an asset (in this case) dependent on the future viability of yet another central counterparty (the game producer). This is called snake oil.
Where is the value?
I've been thinking of an possible business idea:
Musicians sell digital copies of their music. Users can resell these but 10% of sales go back to the musician - lifetime royalties basically.
Users can also "lend" the music ...think stream it like on spotify. Streamers pay a monthly fee, maybe $10/month.
Every time someone streams something from your library you get a token good for a share of the monthly revenue, every stream = 1 token, or maybe more valuable streams are worth more tokens? Some sort of value based on popularity of song.
Musicians could control how many albums are in circulation thus controlling their residuals to some extent, there'd be algorithms recommending a good amount based on their popularity, requests to stream, sales and second-hand sales, etc...
Basically merging of CDBaby with Spotify and CD Connection (or any second-hand music store). Maybe there could be a trading function too: Trades are "free" except for a transaction fee split between platform devs and artists, so artists always get something from every trade, sale, stream.
Another feature could be adding in ticket sales... creating one hub to control everything for musical artists...
I'm just not sure how to possibly get started on something like this or if it's even feasible with technologies currently out there.
Some - like punks and hashmasks among others - seem to be taking advantage of the medium, to do things with art that only NFTs can do. Art that embraces the medium and does something unique that only it can IMO will eventually win[1]. In the case of NFTS, having each piece be self-contained bits of code sitting inside an execution engine open up a lot of possibilities, from self-mutation to generation.
1 - longer summary of my thoughts: https://hrishioa.github.io/the-two-innovations-of-hashmasks/
I think the point is, people are fans so they want to collect and have a pride of ownership.
The world is moving to digital. Kids play with digital things more than with physical. So how can you own a digital collectors item? Best solution seems NFT.
If I collect stamps, it's fun to show off your stamp collection because you have those stamps. It's different if everyone can also have all of those stamps, and the hobby is reduced down to "I have these stamps and also my name is on the blockchain next to each of them". There's no physical scarcity for the stamps, there's scarcity for your name being listed as a buyer in a ledger. Call me old fashioned, but that seems to suck the fun out of it.
I struggle to see the value (some CryptoPunks are going for outrageous prices). That being said, I think we are early days. I find these types of innovations to be interesting and want to see where it goes.
Even if you don't have a tangible good, you can still signal that you are apart of a group by buying an NFT.
NFTs are basically about buying status in a community.
With NFTs, the "thing" the NFT shows ownership isn't the piece that's supposed to be valuable, since that's readily duplicated, it's the NFT (and what it represents) itself.
"The social component" requires people to ask agree that NFTs are the right system of value, and that requires maintaining the illusion that the token itself is a valuable thing to own. So yes, if this formalized way of showing that you've spent money is widely accepted by a community as a status symbol, sure, go for it. But there's a lot of people even here in the comments who think that's awfully silly, especially when you can buy actual physical things that show your status to people who don't care about what entries exist on the blockchain somewhere.
You don't get to decide that for everyone else though.
You and many other people can think it's silly, but it's highly likely (If not proven) that there is a subset of people who _do_ think it's cool.
I don't really have an interest in NFTs, but I absolutely see why someone _would_ be interested in them.
I think this really hits the nail on the head. Even if you 'own' an NFT, you have no control over who gets to see it, who doesn't get to see it, who can casually claim to own it and show it on their phone (since it is after all identical to the real deal and no one's going to sit there in the bar and verify it - at least not without the existence of some kind of designated authority). This means that you did quite literally pay to have your name listed as the owner in some obscure place people may or may not care to check unless you're doing a buy/sell transaction.
Let's say you collect some rare item like "the sword of sauron" in some MMO game. This time, it's really yours because it lives on the blockchain. Sure, it's a digital item and the data (3D mesh + prpoerties) could be copied, but only the real thing can be used in game.
This thing is a real digital collectors item.
I could see this work with digital Pokemon and things like that.
I used to play Crossout, and there is no way to trade or sell your things to other players for real money.
I'm not talking about blockchains representing those items, I'm talking about those items being in the blockchain. This way, the item is really yours, you can sell it to anyone you want, on any platform you want. Basically just like a real item.
Right now, game items are stuck on the platform. When it's in the blockchain, it's really yours, and you can use it on the platform. Big difference.
I'm not claiming that this is going to be the future, but I think it has a high chance of succeeding.
Imagine all those digital items you currently own, you just throw it on some market and you can sell all of those for real money.
If there would be a wallet filled with credits where I can gift / tip creators for their work independent of their bank | location | currency, this would be an amazing use case.
Maybe think of NFT as a pointer to the head of a link list, the start of the data distribution chain. And we assign some arbitrary monetary value to that pointer, because, well, there's only 1 head of a link list.
And that already happens.
When prestigious institutions are involved you'll be able to check their addresses and signatures too.
It is more about the transfer and hypothecation of value, which this scarcity and transparency allows.
If it doesn't catch on it doesn't catch on. Right now people are clamoring for this future.
If anyone could, at no meaningful cost, download a physically identical replica of a Jackson Pollock and have it, you can be sure the price of art would suffer quite a bit. Your ability to prove that you are the person who owns the work is meaningless if anyone can just also freely have the exact work itself.
There are people who buy originals because they truly like the work, and they appreciate and enjoy seeing the original, physical piece that you don't get with even the finest print.
You also have collectors who, in addition to the above, also buy art as an investment. Say you buy a piece at a small art show from a new artist. You pay a few thousand for it. They keep painting, and years later, are appearing in larger shows, or may have created a piece or two that generated a lot of attention. Now those early works you have from them could be worth a lot more as they're indicative of that person's earlier period. There are forums, exchanges, and shows exclusively for this sort of trading.
(Source: Married to a (digital) fantasy illustrator, attend a lot of art shows, and talk with artists and collectors. I hope to own an original or two from some of my favorite artists in the coming years. And no, it won't be an investment. =)
Effectively the NFT should be a delegation of some of the IP ownership rights.
a whole industry of appraisers and committees now gone. yay. automatic ability to pay royalties to the artist upon resale just built in, no contracts or enforcement of contracts necessary. no trust involved for lower value works where everyone is unfamiliar with contracts and lawyers. more efficient market available to all.
for it to have some value there must be consensus around it.
if I have the same exact copy of the digital art and I am selling it in a market that does not recognize NFT as proof (think about China that doesn't even recognize patents) what value does this hold?
or if two competing entities are both claiming to have emitted the one true token, which one do I trust?
we are thinking today: the artist can tell which one is the good one, but what if is the future and the artist is dead? do we need a token that identifies the artist statement? and who verifies that the content of the email was not forged?
isn't a piece of paper with a signature in a closet inside a notary office a simple mechanism?
What makes NFT special, except that probably collector are actually paying to collect NFTs and not the item attached to them?
I know many collectors, I don't see them collecting digital fingerprints
The blockchain is nice in that it takes control of that endorsement out of the artist's hands, so they can't "take it back" and stop supporting that endorsement. I'm certain that has happened to people. I'm also certain that this cure is worse than the disease.
I could get behind that.
One interesting dilemma for prestigious artists is as their work resells at auction at higher prices they don't get any of the money, except when they go create a new artwork for their higher priced market. A way to fix this could be by the artist always being able to make genesis blocks for past artwork NFTs.
NFTs with image rights would be great for news photographers and paparazzi for starters. Or rather it would be good for lawyers representing them?
e.g. Marc Andressen on what we all were missing about the Yo app.
https://slate.com/business/2014/06/marc-andreessen-explains-...
> The vast effort it requires also makes Bitcoin inherently difficult to scale, he argues. "If Bitcoin were to be adopted as a global reserve currency," he speculates, "the Bitcoin price will probably be in the millions, and those miners will have more money than the entire [US] Federal budget to spend on electricity."
Bitcoin's energy usage and transaction rate are unconnected. Even the long time casual observer would know when Bitcoin hit is maximum transaction rate for the first time, it's energy usage was literally orders of magnitude less than it is now. Whatever is driving it's energy usage isn't transaction rate. What's more, it's looking unlikely the max transaction rate will ever increase. And as for miners having to mine more coins ... Christ how confused is it possible to be about one topic? Apparently he doesn't know mining of new coins is halving every 4 years, and will end completely on May 7th, 2140.
It's like reading an Emu claiming the desert doesn't bloom because the fish in the rivers drink all the water. The Emu isn't wrong about the fish drinking the water of course, but with that level of ineptitude on display taking anything else the Emu has to say about the climate seriously ain't going to happen.
The Veblen effect also comes to mind. The more something costs, the more [rich] people want it, no matter how ridiculous, typically used as status symbols.
I threw together a contract in Solidity that would do all this and cut out the middleman / middlewinkelvii. It wasn’t hard.
What am I missing? Why is the contract not the token?
I don’t understand how this is any more susceptible to cloning or any other problem. Maybe also not less susceptible but I still don’t get the value add of the NFT versus basically just a good transparent contract with a few things stored.
I do get the value add of the gallery/dealer but what’s their advantage in using the NFT instead of a contract? Is it just so Beeple can set numerology prices in USD?
Still feel like I’m missing something fundamental here, I’m usually not more right than everyone else.
If the contract stores the owner, how is it not the “token” at the same time?
Royalties are pretty easy: contract knows the artist, artist gets say 10% of every resale, owner gets the rest, purchaser becomes new owner. Anyway this and NFT both have a big vulnerability around royalties: I can make some of the payment in cash if I want to cut out the artist.
It depends on the smart contract. I can write a smart contract such that if you did that, the ownership of the art would be still the previous owner. The previous owner cannot change the ownership of the art to you without paying fee to the original artist.
Do you have a solution to that?
You need to use a well-defined, pre-agreed interface (ERC-20 for tokens, and ERC-721 for NFTs I believe) so middlemen like OpenSea can understand and transact your NFT on their platform.
If you don't need OpenSea or Rarible, you're free to define them however you like.
Also, the reason the "token" is usually a location inside an array in the contract is primarily for gas (and legacy) reasons - storage on-chain is expensive, and it doesn't look like it's getting cheaper anytime soon.
The advantage of which is.... I guess centralization.
I don't think that's an issue, plenty of people now making a living thanks to the internet, even though discovery is a hard problem (and thus ads are a flourishing business).
Cryptocurrencies (not NFTs) remove intermediaries, but they don't fix or improve the discovery problem, which is the real problem. There's still a million related problem, and cryptocurrency solves one of them.
It’s like art in the real world. The ones who own a Picasso, sure enjoy it by showing it to guests... but the real pleasure comes when they are able to sell it for double the price they have paid for it.
Every art collector I know displays it somewhere, or has it in storage such that it will be displayed somewhere eventually.
This feels like a way for people to support digital artists directly, which is great. Not sure there's much more here than that though.
Or you can make it as collateral to borrow some (cryptocurrency) assets.
The people selling NFTs talk a lot about buyers "owning" something. From the article:
The logic of blockchains is once you purchase an NFT it is yours to fully control, just like when you buy books or sneakers in the real world. There are and will continue to be NFT platforms and marketplaces, but they will be constrained in what they can charge because blockchain-based ownership shifts the power back to creators and users — you can shop around and force the marketplace to earn its fees.
Some don't mean it.
From the TOS for Genies:
Digital Goods are not purchased by you, but rather are licensed to you on a limited, personal, nontransferable, non-sublicensable, revocable basis, solely for your non-commercial use in connection with your use of the Services. You may not transfer Digital Goods to any other user of the Services or any other third party, except where the Services expressly authorize you do to so. For example, you may transfer your Digital Goods to other users of the Services through Genies’ Digital Goods re-sale marketplace on the Services. You acknowledge and agree that Genies may manage, control, change, or eliminate Digital Goods at any time. ... Digital Goods and Virtual Currency do not constitute personal property, nor do they have any value outside of the Services. Virtual Currency cannot be sold, traded, transferred, or exchanged for cash.
"Revocable". Genie giveth, and Genie taketh away. Plus, you can only transfer ownership through them, not via some blockchain they don't control.
Art Blocks is very funny. This is an Art Block.[1] Current price, US$223. It's not unique; there are 2000 copies for sale.
There's a lot of sucker bait for sale in this space.
What do you exactly control?
Think about it, anyone could be the customer or the creator of the NFT 'art', the platform can charge a percentage. Meanwhile if the platform offers financial services the need for KYC/AML locks them from doing business with themselves and anything else doesn't have enough volume.
I think AML/KYC is an extremely draconian regulation so I sympathise to some extent but NFTs have no value as art. They have various interesting use cases though but those things require more effort (you know, cause they are actual products) but no one has done anything like that yet because blockchains have not had a big enough market or fast enough transaction speed to attract talent to build on them (yet!).
Hopefully we can leave this era behind soon and abandon nation states and taxes for insured crowdfunding and internet-as-means-to-solving-climate-change, i.e. fair allocation of the earths resources.
It has reached over $8MM... why
Or pieces of land, see Fabrica [0]
(disclosure: I am still affiliated with the company, and I used to be a co-founder there)
One of my favorite artists just came out with an NFT. They also do limited edition 'drops' which I would much prefer an actual print, but I've missed them on Instagram or haven't hit refresh fast enough.
Check out the app NTWK i think a more interesting way to bring art online. They have live stream videos of launches, more like actually visiting a show. And they also have more fair raffles instead of whoever hits refresh first.
For now these releases are more accessible (but still not totally), and the artist doesn't have to give 50% to a gallery (yet?).
But it's still a reseller scalper market.
<br> Long context / my thoughts if interested:
Art is incredibly exclusive. For small collectors it's almost impossible to get in on rising stars; sucks if you have supported them from before they started getting big and now it's way out of your price range and even if not you don't have the connections to buy.
Check out @jerrygogosian they always have a good take lol.
Galleries will say there is a waitlist. The waitlist is a lie.
Can't see art in person at fairs anymore. But you can still get a PDF to zoom in on though!
no prices. And all pieces are pre-sold lol.
Nina Chanel Abney - who recently made it 'big' - posted on her stories the other day the typical large gallery email response to a buy inquiry:
'i can put your name on the waitlist. But what is your collection like, what artists do you own.'
She replied she has the largest collection of Nina Chanel lol. I guess the intern didn't recognize her name. Unless you buy other artists that the gallery is trying to prop up you can't get the actual artist you want.
Also the book 'Dark Side of the Boom' does a really good job laying out the start of contemporary art and how a few gallerists ended up controlling - often colluding - to corner the market, increase prices, and make art inaccessible.
At the high end contemporary art is a levered asset (you can get loans against it) so there is incentive to artificially prop up the price at auction to get bigger loans and higher returns.
BUT there is still a huge amount of accessible art, only 1% or less of artists make a sizable living. So if you are in it for the art there's a ton out there and it feels good to support a struggling artist (almost all are) even if a gallery gets 50%.
Maybe you even get lucky and pick an artist that others connect to and then you can't afford it anymore haha. Has happened to me 2 coming up on 3 times so far.
Check out Yale graduates and a few other non-profits or galleries that do like sponsored residencies.
But bet your ass senior directors at Gagosian look there too - you know while they aren't busy sexually harassing & abusing their wealthy white pretty staff.
https://www.instagram.com/p/CLsua3Klz0LIJMR_t0RiRsii_2AclS4g... https://instagram.fapa1-1.fna.fbcdn.net/v/t50.2886-16/887100...?
For a digital object to be scarce it needs a central authority.
If a digital object is decentralized, it has no scarcity and is worthless.
E.g. a limited edition skin in a game needs the central authority to make it usable in the game. So why do they need blockchain?
E.g. a blockchain piece of data is accessible to all, so why pay for it?
> a limited edition skin in a game needs the central authority to make it usable in the game. So why do they need blockchain?
Why do you need a central authority to make it usable? I believe anyone can check the ownership of an NFT on the blockchain. You would just need to cross-check a player's game account against their blockchain address.
> a blockchain piece of data is accessible to all, so why pay for it?
It is accessible to everyone, but only owned by one person.
Ok though maybe in the future call of duty servers will be decentralized and use blockchain to trade game items...
But I do see now that utility from owning is not the right concept here
Also if Gursky made the photographs downloadable and the printing process was standard then his photos would have a very different price.