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Comment by hn_throwaway_99 | Hacker News Reader

> Scarcity is fundamental to any store of value. There are an infinite number of potential NFTs.

I'm a pretty big crypto-skeptic, and I'm especially an NFT skeptic, but this is a weird argument. It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much? Even more, it's possible to create extremely high quality reproductions of famous Picasso paintings, but they would have just a teeny amount of value of the original.

Reason being, with very expensive art, and other things like a signed book or baseball card, what you're really paying for is the provenance of the item, not so much the thing itself. While I'm skeptical that the NFT form of "digitally assigned provenance" will be valued similarly, I can understand the argument for why a piece of digital artwork with an associated NFT isn't that different from a piece of physical art with the artist's signature.

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> It's kind of like saying there could be an infinite number of paintings, so why should Picassos be worth very much?

We could mint an infinite number of Picasso NFTs, though. None of them are the actual piece of art.

You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting, but it’s still just a fancy hyperlink to a page that says “This is a Picasso NFT”.

NFTs are basically fancy blockchain transactions with a memo field that can say “This represents a Picasso painting” and we’re all supposed to believe that it means something.

The closest equivalent would be something like baseball cards. There is a market for baseball trading cards, but everyone is fully aware that they’re still just arbitrary prices of printed cardboard.

Just minting something does not give it value. Sure, you can give it a price. Likely nobody will pay for it unless they think it truly has value. It’s the responsibility of each NFT creator to convince people that it’s worth anything.

Subsequent 'owners' too. One could say having your name on the trail diminishes the value

Just smells like laundering to me

Well, the art market is also largely powered by the elites' need to launder money, so in this sense they are similar.

> You could argue that one particular NFT is the official Picasso NFT because it was sold by the owners of the Picasso painting

I’m pretty sure the analogy would be that Picasso himself actually issued the NFT. Anyone can “argue” that Picasso issued an NFT, but that’s just like arguing that your extremely skillful forgery is a Picasso original. What’s important is if it actually is an original.

With an NFT everyone has access to the exact same byte-for-byte copy of the art work, but one person gets to hold a special token saying that they have some special pseudo-ownership relation to it.

So, a more apt analogy would be Picasso donating a painting to a museum, but trying to sell you a certificate saying that you own the artwork, but you're unable to move it to your private collection or gain any additional access than the general public.

That seems like a pretty raw deal to me.

A signed print of a picasso painting would quite likely go for quite a bit, even if you could get the same print sans signature for $20 in the gift shop. Even one created post-death by family foundation etc as a limited edition probably would. Some people do value the scarcity and it being tied to the creator more, think an NFT represents that and thus pay more money. (I personally am not interested in owning NFTs, but "people spend money on scarce things I wouldn't spend money on" isn't exactly a new phenomenon)

Your argument is about digital art, and has little to do with NFTs. No one is claiming that the owner of an NFT has different access to the piece of digital art itself, of course.

Then, what is the value of the NFT? You own the rights to a hyperlink?

No, you own the NFT, which people value because the artist issued it.

Cool, if you want to pay real dollars for a digitally signed link to a web resource, go ahead.

The link is a red herring. Just like an original Picasso, the content of the thing you own is responsible for very little of its value (an excellent forgery would deliver all the aesthetic value of the original, but it would be much less valuable). The provenance of the thing is the reason it is valued. There’s really nothing new or unique about NFTs other than the technology used to implement them.

But they aren't. They're pieces of cardboard with a particular story. The card has no value itself, which is why a rookie card isn't very valuable, unless its of someone famous. Why? because one is a story right at the beginning, which may not even be a good one, where there other has an established success story behind it. Owning the card is representative of owning a chunk of that story. You can say its arbitrary, but the fact is the picture on the card is of a real person with a real story, and their image on the card is part of literally that same story.

So with NFTs, its the same, anyone can write a document that says "this certifies ownership of a picasso painting" and it doesn't mean much of anything. However if Picasso writes up a document broadcasts somehow he has done so and the document says you own x painting, then its easy enough to certify to anyone that you own a Picasso from the man himself. The story is not arbitrary, this is precisely why it has value. The arbitrary easily copied stuff is cheap and meaningless and known as such. The "rare" NFTs and stuff selling for massive prices is expensive because it is genuinely so. You can write a comment here about how easily you can create a counterfeit NFT, but how easily can you actually convince someone to buy it from you? You can observe that baseball cards are just pieces of cardboard but how easily can you acquire a card printed when batter X was a rookie?

I'm not saying this sort of value is easily quantifiable, but it is easily observable, identifiable that its reflective of a real element of reality and not (entirely) arbitrarily imagined.

Orson Wells' F for Fake is a terrific film about an art forger, that explores concepts of art, authenticity, and value.

In the film, an artist forges works of art by famous artists and fraudulently sells them to museums. It's implied that the museums don't know they are forgeries or don't care. So why is a Picasso more valuable than a perfect reproduction of it?

I think the point is, it's all just perception, and greed.

Cryptography is a highly significant technology, but cryptocurrency and now NFT too often just smacks of a money making scheme, promoted by self-serving people who happen to own a lot of it.

In my view there's a finite number of Picasso paintings, but an as yet unlimited possible number of digital artworks, and an unpredictable number of things that could compete with digital artworks for the dollars of buyers.

To fix the supply of digital artworks, there has to be at least a loose consensus on what the accepted "canon" of those works consists of. For now, that's an unknown.

There's a finite number of Picasso paintings, but an infinite number of non-digital artworks. Digital art is no different from physical art in terms of availability.

True, all of the paintings in hotel rooms. In my view, the value of Picassos is partly due to a loosely accepted "canon" of paintings that are considered to be of particular value. If hotel paintings were discovered to be of equal artistic quality, it would not put them in the "canon." The supply is artificially limited by social convention.

Art prices are also driven in part by a partial record of sales, so at least we know what some paintings sold for in the past.

What we don't know about the digital art world is what conventions will emerge, that define the "supply" of works of particular value.

Scarcity is necessary but not sufficient. What sets BTC apart from NTFs is its fungibility. In theory, there are an infinite number of potential cryptocurrencies, sure. But everyone has already embraced bitcoin (and a small handful of others), and replacing that userbase is an incredibly tall hurdle.

On the other hand, minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.

I think you're missing the purpose of NFTs. Again, I think the best analogy is really the art market.

Most art in the art market is pretty worthless (at least monetarily) - just go to one of a bajillion garage sales to see why. But a few pieces of art will be worth a lot because something about them is desirable.

It's the same with NFTs. There will be a bajillion "beanie-baby-NFTs" that will be close to worthless. And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".

The difference is that you can hang art on your wall and say "that's an original" when your other rich friends come to visit.

"I control some arbitrary bits on an arbitrary blockchain" will never have the same cachet.

> And then there will be a few of the "Charlie Bit My Finger" variety that people actually have desire to uniquely "own".

Not necessarily. The original creator that issued that "Charlie Bit My Finger" NFT could also create 1,000 more of them tomorrow. And all of those NFTs would be exactly as valid as the original, it wouldn't be equivalent to making a print of the Mona Lisa. It wouldn't be downstream of the original NFT, the original NFT is just a link to a publicly hosted asset.

You're trusting the creator that they won't do that, but you have no real guarantee that they won't. That's doubly true when you start looking at corporate-backed NFTs like what the NBA is doing. They control the entire supply of the NFTs they issue, you have no way to guarantee that they won't re-issue all of their NFTs that you own.

This is no different than any current artist with a limited print run. The earliest prints are typically still the most valuable and the artist has incentive not to create additional runs of the same artwork.

> This is no different than any current artist with a limited print run

Right. But also nobody acts like limited print runs are mathematically non-fungible.

If the best argument for NFTs is that they're scarce in the exact same way that existing systems produce scarcity, and that this scarcity is enforced using the same systems we already have, that's not a good argument for the existence of NFTs. You might as well just do normal token issuance using existing technology.

> Right. But also nobody acts like limited print runs are mathematically non-fungible.

You misunderstand the word non-fungible here. They are non-fungible because 2 copies are recorded like this:

- token 1, owned by Alice - token 2, owned by Bob

Bob and Alice may are may not be willing to make this trade, that is up to them. The two tokens are distinct. After they trade, it is still clear who the owner of each token is.

A fungible token is recorded like this:

- Alice owns 1 unit of token CHARLIE - Bob owns 1.3 units token CHARLIE

If Alice sends their one unit to Bob, he now owns 2.3 units. No one knows which one these 2.3 units was Alices. It's just a counter

Note that no one acts like this is any different than I explained it just now. NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".

> NFT people do not claim that non-fungible means "you cannot mint two tokens representing the same thing".

What NFT people do is argue that the uniqueness of individual tokens matters. It doesn't. They try to have their cake and eat it too, they try to argue that the NFT's link to the individual artwork doesn't matter when evaluating the technology, but that it does matter when trying to determine whether or not NFTs have value.

There are two ideas being conflated here about fungibility. If you want to argue that NFTs actually represent an artwork in some way, and that owning an NFT is somewhat similar to owning a piece of art or that it carries some meaningful connection to that artwork, then for all practical purposes NFTs are fungible resources. The attributes of an NFT that link it to an artwork are not guaranteed to be unique.

If you want to argue that the part of an NFT that matters is the individual token itself, then sure, they're non-fungible. But if that's all we care about then they're also worthless, because nobody cares about owning serial numbers, they care about owning a token that meaningfully points towards a socially or personally valuable item. They care about the thing that the token represents.

The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.

I brought this up elsewhere, but if I pull a $20 bill out of my pocket, it will have a unique serial number on it that corresponds to only that bill, and no other bill. So technically, by your criteria, a $20 bill is just as non-fungible as an NFT. It's technically unique in the same way that an NFT is.

But what I'm getting at with that comparison is that it's not enough to have each NFT be technically unique. They have to be unique in a way that matters, they have to be unique in a way that somebody would care about. Otherwise you might as well just collect $20 bills. Back to my original point, if the only thing that NFTs are providing is that the token itself is unique, that's not an improvement over any of our existing systems. You can already issue unique tokens without bringing NFTs into the equation, issuing a unique token is easy.

> The only reason why one NFT is worth more than another is because of who issued it and what it's linked to. So to argue that the individual token's uniqueness is the only thing that matters is to reject the entire relationship between NFTs and artwork.

I don't really understand your concerns to be honest. It is exactly as you say. The connection to the artist and art matters.

Yes if an artist releases 10-editions for their JPEG image (which happens frequently), then those 10-editions may be semi-fungible, in the same way that say "floor-price cryptopunks" are, where many people are sort of happy to put them in a basket and trade the floor without caring too much about whether they have token 1 or 3. But someone might well decide to care, because token 1 is the one their grandfather used to own many years ago.

Some people may value the edition number 1 more than the remaining 9, but maybe edition 8 was previously owned by Elon Musk and carries a premium.

beeple can decide to release 10 thousand more tokens representing the artwork sold at Christies for $69m, equivalent in every way except the serial number It's anyone's guess what would happen, but presumably it would cost him in reputation, and the original would still be able to command a large premium.

Artists releasing physical prints also on occasion release another series some years after the first; Damien Hirst is releasing more dot paintings, and they are all so fucking similar they may well be considered fungible.

The question becomes, what are NFTs adding to this system?

It sounds like the current system is working, that the social system for determining value based on context is working. NFTs aren't making that better or worse, we're using the same social process that we used before.

And I mention elsewhere, NFTs aren't even really helping that much with the distributed ledger either, they still have to hook into the existing systems for determining seller trust and authenticating that the NFT you're buying is "real". There's little benefit in decentralizing the ledger when sellers have to coordinate with each other to ban bad actors anyway.

So we have two systems that already work, that have worked for ages, and now they're linked to the blockchain because... why? All of the use-cases people talk about with NFTs are stuff that you could always have been doing, you don't need a blockchain for any of this. And it's not clear that the blockchain makes any of it easier to do.

There is no “scarcity” notion in NFT, each is by design unique.

That is actually correct and very smart. I can mint an infinite number of ERC20 tokens on Ethereum, and I can create an infinite number of Bitcoin clones. Bitcoin is only scarce in terms of its social support base being different than other coins; the same is true for any NFT. They simply have a supply of 1.

> minting a new beanie-baby-NFT takes less effort than making an actual beanie baby.

I'll add onto this that the core technology has no way of verifying which beanie baby NFT is "valid" outside of traditional centralized mechanisms like IP law and large validators. You can duplicate NFTs that point to the same beanie-baby-NFT link, are totally indistinguishable, that don't have any artwork that you own, and nobody can stop you outside of centralized mechanisms. As soon as you try to build a market on top of NFTs, you're right back inside the current system of ownership enforced by legal contracts and centralized validators.

At least with Bitcoin, you don't have to tie your wallet to a Twitter verification system to figure out whether or not your funds are real or just a low-effort scam.

People can disagree with whether Bitcoin has value (I think it's a bad system), but at least it doesn't completely fall apart as soon as you leave Coinbase. NFTs really don't work at all unless they're tied to centralized services, because anybody can make an NFT for anything, regardless of whether they have any real relationship to the asset they're issuing. Even official accounts that are validated: you can mint 5,000 NFTs of the same beanie baby, nobody can stop that from happening. Any scarcity in the system is only self-imposed by the actors within that system.

Is this really a meaningful thing? I mean, of course it is somewhat in terms of how things are viewed. But, theres no religious law that NFTs must be a pure blockchain thing. Possibly they're finding their niche, and that is to be a sort of intermediate, which uses traditional systems as the origin of verification/trust, but can then go forward on its own with no further verification. (Of course, your wallet keys could be stolen and used to impersonate you, but the same is true for login credentials of twitter blue checkmarks)

Selling digital assets like that predates NFTs. NFTs are supposed to be special because of the stuff crypto adds not in spite of it.

What does the addition of a blockchain help with here? Selling? Not really, because the recommendation to avoid copycat NFTs is to sell/buy them through official platforms that will verify them. Display? NFTs do nothing to prevent link rot, and in fact make it harder to correct when it does happen. Coordination/portability between platforms? There's nothing that guarantees that platforms will respect each other's NFTs.

> But, there's no religious law that NFTs must be a pure blockchain thing.

Every time someone tells me that verification and enforcement are inherently social/legal processes and not processes that the blockchain is designed to solve, I feel like they're just one step away from finally understanding why people don't like NFTs. The only value of adding all of this math and environmental impact and complication and fragility to the system of buying digital assets is if doing so decreases the social/legal burden of verification. And NFTs don't do that, they don't do anything. They don't even make the secondary market safe.

There are of course systems you could build on top of NFTs that would help solve some of these problems. But you could also build these systems without using NFTs. None of the proposals I've heard about enabling decentralized verification on the secondary market, or making it easier to pay artists, or building a web of trust for issuers -- none of those proposals need NFTs to exist before they can be built. The vast majority of these proposals don't require anything other than basic federation, and many don't even need that.

The blockchain part isn't adding anything, it's useless. We could have the exact same conversation we're having right now, and come up with all of the same solutions for verifying and distributing digital assets without ever needing to talk about or consider a blockchain. It's not adding anything, it's just kind of there.

And you're right, there's no strict law that everything must happen on the chain. So we could also just drop the chain entirely, use the same token issuance systems that have existed for ages, and focus only on solving the problems that actually need to be solved.

Let’s look beyond the “art” NFTs for a moment and think about how else they can be used.

NFTs, in addition to being collectibles, can be used to unlock access to features, like an exclusive chat room or give the holder access to bonus content only available to those X number of NFTs which were minted. Furthermore, secondary markets could easily exist for transferring access, something that is not really doable these days with accounts.

I’m with you that the current art/collectible NFT craze seems a bit much, but I actually think the future utility of this “access” property is where things will get interesting.

You know what's actually useful - today - for compensating artists and unlocking access to features? Patreon. A glorified mailing list with a subscription fee. NFTs are inferior to that; at least the artist gets your email address.

Unlocking features - you’ve just reinvented a subscription plan. We have those and they work fine, why the blockchain?

Secondary markets - why would vendors want or put up with that?! This is explicitly disallowed in most contracts for a reason.

There is no utility here, the use value of nfts for tracking ownership and of bitcoin as a currency are both close to zero.

And what is stopping someone from creating multiple NFTs for the same art?

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