NFTs are dumb mostly. Digital collector items, ok I get it
I did some contract work with an Ethereum NFT startup several years ago (now defunct), before the recent hype, and the only "value" proposition was that they were selling "genuine" NFTs blessed by particular large consumer brands.
Behind the scenes it was all a centralized SQL server that only touched the blockchain when you exported your tokens to a private wallet because that was slow and expensive -- and turns out almost no one actually cared about that part. As long as you left your tokens in custodianship of the company, the company technically owned them as far as the blockchain was concerned.
And then even for digital goods where the concept of the "original" is meaningless when exact digital duplicates are zero-cost, just... who cares? What do even own, and why should anyone else respect your "ownership"?
All this NFT noise just feels like those scams where you "buy" a plot of land on the moon or name a star. No authoritative body in the world recognizes that claim, and if we ever start colonizing the moon you can be sure as shit that no entity is going to respect your "ownership".
It all feels very regressive in the face of decades of efforts of open source and work to liberalize things like copyrights and fair use in software and digital goods and services. Not to mention that it is an environmental disaster.
Someone I follow who is always right is big on them. Their argument is that people buy expensive and rare shit just to have it and project superiority.
Thus “owning” the HD Clíp of Lebron slam dunking is like cred they are willing to pay USD for.
Not at all the case. All the artist needs to do is publicly declare that they listed their art on an NFT platform, such as Rarible or Zora or what have you and that's enough. Direct communication with the fans is all that's needed, no central authority required.
Not all NFTs are created equal. Some have all the data necessary to reproduce the work of art embedded right on the blockchain, such as Euler Beats: https://eulerbeats.com/ . Others use IPFS hashes and embed the hashes on the NFT itself, so all you need is a single server in the world serving up that file and you can validate authenticity.
An NFT is sort of like a signed, autographed copy of something. Sure, I can have a reproduction of the Mona Lisa printed for about $50, but can I have the original canvas that Da Vinci himself painted on for $50? Of course not.
When I was a kid, I liked to collect baseball cards. I knew a mint condition Mickey Mantle rookie card was exceedingly rare and valuable. A signed and rare card can go for tens of thousands or more dollars. Signed baseballs or gloves can also have additional value compared to the underlying physical item. What is it about the signature that changes the value of something? You know that the player themselves interacted with that item.
That is the case with NFTs. They won't be going away. You can try to mint a copy of an NFT, but it will always have a later timestamp than the first one, and it won't have the original block number, so it's quite easy to root out counterfeits.
What happens if the artist declines to participate in the NFT marketplace, or (gasp!) even in social media altogether? In practice, one of the things that can happen is someone impersonates them, steals their art, mints tokens for it, and the artist gets nothing.
I don’t know if I’m writing this as a joke or not :)
Even NBA Topshot, the golden child of NFTs right now, is only useful when backed by NBA centralized infrastructure.
There's a _little_ value of decoupling the ownership from the centralized infra that controls the thing you own..but tbh it's not much different than an NFT for a physical trading card lol.
Honestly, once Jack Dorsey sells his first tweet, he just sell it again. What's stopping him? He got 2.5MM for it one time and gets to keep ownership. Why not just keep selling an NFT to the fabled First Tweet and rake in the cash. This is clearly an irrational market and seeing how crazy it can get would be amazing.
There was a case where someone stole a JPEG of someone else's art off their website, minted an NFT, and sold it, claiming to be the original artist. You still need a centralizing authority (like with NBA Top Shot) to ensure authenticity and prevent fraud.
The one maybe advantage I can see of decentralized is that the secondary market doesn't have to be governed by the rules of the centralizing authority. In other words, maybe the authority provides for the initial minting of the good (ensuring authenticity, which can subsequently be verified using the blockchain), but don't have to be involved in the secondary sales.
The benefit of NFT for psychical goods isn’t so much proving who the current owner is as much as it is proving the historical ownership so the authenticity of an item can be ensured. You don’t need a central government for this. For example, as long as you know Nikes address, I can confirm a shoe I want to buy is truly authentic by verifying that address is the original owner.
Unless there is a clever crossover to convert from digital verification to physical and back... seems worthless to me.
But you don't need a blockchain for that.
https://en.m.wikipedia.org/wiki/Physical_unclonable_function
And if you want to trade your Nike NFT with someone's Reebok NFT, it would help to use an open standard with an economic mechanism for trade between counterparties built-in.
Knowing the PUF key doesn't let you fabricate a physical widget with the same key (that's the unclonable part). So they can all be public, and anyone can keep a copy of the batch of PUF keys that includes their object's PUF key. When they want to prove it's an authentic item, they can prove the PUF produces a key on that list and prove the list was signed by Nike by normal public key cryptography.
In this scheme, Nike published their public key in an SEC filing, so in the worst case you can go ask the SEC for it. Nike could also stick a copy of their public key in every product and advertisement they make if you want to be paranoid about verifying this in 50 years.
This seems more bombproof in some ways than relying on Ethereum to keep existing and well-governed.
At least nfts now require people to also forge the provenance, which provides an additional hurdle to forgers (my best attempt to steelman the "pro nft" argument)
For instance, if a great great grandson of Henry VII sells a medallion that he claims belonged to his ancestor, that would have more weight than a similar medallion from a random individual, because it's far less likely for a relative to also be a blatant forger. In theory at least, nfts provide a similar (limited) assurance.
To put it another way: the analogue is not original medallion vs new fake one. They're both 100% identical medallions in every conceivable way, but the receipt for one is older than the other. I don't know about you but I don't give a damn if your receipt is older than mine if the items are not unique in any way.
Here’s Nikes patent for this:
Nike could just publish a public key in an SEC filing and you could use that to verify that you're actually talking to the company. That would be exactly as good and much simpler.
Whoever stole the item can try to sell it, but given they don’t own the wallet that the token lives in - everyone will know it’s a stolen good. Another benefit of NFT for psychical goods.
Here is Nikes patent for this use case: https://pdfpiw.uspto.gov/.piw?docid=10505726
So what happens to the shoes I want to sell if I lose my private key or it is stolen (probably more likely than someone stealing the physical shoes)?
Do I simply lose the right to sell? Or do I go to jail for not being able to prove that I own them? What if the person I’m selling the shoes to believes me or doesn’t care?
What is the real cost of stolen or fraudulent goods to the shoe market in percentage terms? Does it justify all of these extra transaction costs being layered on the honest shoe traders?
Are there probably good reasons that the idiom, “possession is 9/10ths of the law” is so common?
And Shoes are the most counterfeited product in the world. 2 I don’t have specific shoes figures, but here is an article about a $400 million fake shoe bust customs made 3.
Yes, counterfeiting is a major problem worthwhile of extra transaction costs.
In the art business, confirming the legitimacy of a painting is a $1b per year market.
What happens when you lose your key? Price would drop in value, I imagine. Similar to if you accidentally dirtied your shoes, both requires being careful and aren’t mistake proof. However, I’ll let people smarter than me figure this out.
1 https://www.france24.com/en/20190318-counterfeit-pirated-goo...
2. https://www.redpoints.com/blog/fake-shoes/
3 https://qz.com/1778276/how-counterfeit-nikes-get-into-the-us...