Now of course there's a mountain of clueless suckers kicking off a regular tulip mania-style bubble. I wonder how many more weeks it will last.
[1] https://news.artnet.com/art-world/crypto-punk-500-million-sa...
Whew, good thing it's not a security, otherwise it would 100% absolutely be a half billion dollar illegal wash trade, and that kind of stuff comes with time in the big house. IANAL, but stunts, amirite?
I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading. In fact, you can very easily check it on etherscan or similar tools that this was a flash loan.
I think in a lot of cases that's simply wishful thinking. They Howey test is actually a very good fit in the crypto space broadly, especially alongside the guidance from the SEC on how to interpret it with respect to digital assets. [1] Most tokens are just straight-up securities, what we're lacking isn't regulation but enforcement.
NFTs are likely not securities as they fail the Howey test. [2] Fractionalized NFTs, however, probably are securities.
> I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading.
It's still wash trading, of course, it may not be a crime because it's not done against a security as I mentioned.
IMO it could be some other kind of fraud or civil matter already as you're enticing a purchase on the basis of intentionally misrepresenting past trades. If not, I agree, this might be a good area for some additional regulation, either here or in markets broadly (I'm looking at you, art and collectibles).
[1] https://www.sec.gov/files/dlt-framework.pdf
[2] https://clsbluesky.law.columbia.edu/2021/03/19/latham-watkin...
NFTs for things that already exist are likely not securities. But NFTs for things that don't exist yet, such as as virtual land in un-implemented virtual worlds, do pass the Howey Test. You're funding the development of something, not buying something that already exists. That's an investment. At some point, probably after the first widely publicized collapse, the SEC will shut many of the future-oriented NFTs down, much as they did to the ICOs starting in 2018.
Virtual land in vaporware virtual worlds is the same scam as selling undeveloped swampland in Florida, a popular scam in the 1950s.[1] There are few new scams. It's mostly the same old ones with new shiny packaging. Most of them are listed in Extraordinary Popular Delusions and the Madness of Crowds, from 1841.
Why do you think the rule against wash trading is there?
Because people systematically manipulated markets with it.
> I can write a piece of code in a few minutes for all the collection I own, does not make it wash trading.
Your argument is, "I can do this really fast, therefore it's not criminal"?
In fact, marketplaces have already started to flag these transactions[1].
haha that’s a meme in crypto space about being that guy
It’s not a good look to be on the receiving end of government benefits and services, gloating about your lack of contribution and encouraging others not to. This may look good in crypto circles but here in the real world it makes you look pretty bad, not gonna lie.
I've always wondered how those Bond villains accrued an army of employees on their remote militarized outposts helping them do crime, though I'm beginning to suspect they just slippery-sloped their way into it.
It's about not offering anything to a discussion as they also don't even know about what tax is relevant. This person follows that rubric exactly, as they "suspect" a tax is involved, when a flash loan wash sale would just as easily not cause any tax at all and they offer no introspection into the nature of the transaction and what questions remain about how it conforms with the tax code. A person borrows money to pretend to transfer an asset to themselves and returns the money. Neither borrowing money or moving the asset to your other account are tax events. The tax remindoooooooor comes to the discussion way after the party, clueless, and says something clueless. Its predictable, its meme worthy. Pretty much everyone in crypto runs into people like them so the memes are made.
You can see why pretending no taxes are due because "blonkchain" and making fun of someone who suggests that doing some due diligence on a half billion dollar transaction isn't a good look, can't you?
Do you really think it's unreasonable to assume a half billion dollar capital gain isn't a taxable event?
> "... when a flash loan wash sale would just as easily not cause any tax at all"
What's your basis for this guess? Is it because a tax wouldn't be due on the sale of stock you repurchased within 30 days? That's called the wash-sale rule and it only applies to securities. It doesn't even apply to commodities or futures - or crypto. So either it's a security, in which case this is a federal crime, or it's not a security, and the wash trader has to pay taxes on the first transaction - and a hypothetical second transaction would have to be made to generate a loss to cover.
Y'all need to get over yourselves, the toxic community is easily the worst thing about crypto - and that's after figuring in the ruining the world with your emissions so you can gamble bit.
You are the only one shoehorning your preexisting notions into a benign comment. There are so many better ways you could apply your energy. Many blockchain skeptics wind up defending the technology more often because their other skeptical friends are saying procedurally generated non-sequiturs. So they wind up in an educational role as their criticisms become more valid, and the education winds up strengthening the space by fixing the criticisms. Right now you’ve been stuck on less valid criticisms, for years. Its not going away so why not help make it better when you learn valid criticisms.
I wrote my perspectives, and you are once again just being toxic. This isn't reddit.
We disagree, and we can disagree here, civilly.
No need to be insulting.
I'm not sure if the link between NFTs and money laundering can be downplayed as conspiracy theory. Even yesterday Reuters published a newspiece on NFTs being auctioned by the likes of Sotheby's, and where crypto-rich buyers pay NFT auctions with crypto, where a cryptocurrency lawyer was quoted as pointing out money laundering via cryptocurrencies was a "known fact."
https://www.reuters.com/business/finance/new-masters-how-auc...
Using NFT transactions to launder money isn't exactly a novel idea as the art world is dominated and driven by money laundering schemes. In fact, in Mexico the art market tanked 70% once the Mexican government passed legislation requiring more info from buyers, because it's believed Mexican cartel rings were behind these transactions.
https://www.artandobject.com/news/how-money-laundering-works...
Not really, it's actually the other way around. Whataboutism aside, crypto proponents somehow try to maintain a cognitive dissonance of how crypto is designed to be unregulated and out of government's reach and at the same time show a kneejerk reaction to any comment on how crypto is used to perform transactions not allowed by regulation controlled by governments such as securities fraud and money laundering.
These early NFTs are going to be like the early works of an art movement, and the iconic ones are probably going to be valuable to some degree just because of their place in art history. The art world has probably been waiting for the next kind of innovative movement to come along too. It is sort of a self fulfilling prophecy in that the ones that are bought for absurd amounts of money create the buzz that solidifies them as iconic pieces of the movement. Most will probably end up being worthless.
Art NFTs are like a tiny proof of concept of the idea of NFTs having value. The space, like crypto, is like a sandbox of primitives and people are just figuring things out, throwing everything at the wall and seeing what sticks. That creative environment is probably alluring to people in boring dev jobs who have the financial flexibility to explore. I think it just looks stupid to many because it is basically a completely chaotic wild west where basically nobody knows what is actually going on in terms of a big picture, and so much dumb stuff happens which the media loves talking about for clickbait so that is what everyone sees and uses to form their opinion of it.
A lot of manipulation happens in the NFT markets which creates the illusion of a marketplace that has 'value' in NFTs that are downloadable. It is either for money laundering purposes, artificially creating volume in a NFT collection or both.
There is a tiny subset of NFTs that have value and utility, but the ones that are downloadable or are audio, videos or image-based ones do not have any value, hence the NFT misconception post.
The parent says that they don't see the value in current NFTs. I tend to agree that I don't agree with their current values. But I also don't agree with the proven value (at public auctions) of baseball cards, original NES game cartridges, the vast majority of sports/concert memorabilia, most fine art, etc. But then again, value varies from person to person because we all make priority and value decisions about what we are willing to spend our scarce currency on. Some people are able to make vastly different choices about their NFT purchases because they have vastly different wealth than I do.
Also, CryptoKitties are an interesting choice because they total number of kitties grows as owners breed theirs. The number of CryptoKitties has grown a lot since Dec 2017. Most NFTs I have heard about have a limited run.
Well you can't use a regular database, because it's easy for it to be hacked/shutdown, and if it's run by a third-party then even if you have entry in that database you don't technically "own" it. Turns out blockchains are a good solution for facilitating the idea of digital ownership, it can't be easily hacked/shutdown, it's run by the community, and if you own the keys to the NFT token that represents your ownership, technically you own that "database entry". You can easily sell/trade your NFT to others via smart contracts, transferring the ownership of the collectable/object they represent. The market has decided that NFTs are a good way to represent digital ownership based on the technical solution.
Want to see a successful example of the trading card world gone digital with NFTs? https://nbatopshot.com/
Do those cards provide ownership to anything or anyone? No. Are they signed by the original players? No. Do they give you any other benefit? No.
It's just collector items that refers to something, and there is a limited amount of them. But that's basically it.
Now you could argue that you can hold a card in your hand, and an NFT not. But that is not where that crazy value is coming from.
I'm not claiming that NFT's value is justified, I have no idea about that. But to me it seems like a "collectors" thing.
Because let's be serious, nobody in their right mind would pay millions of dollars for a freaking card with some baseball player at the front. Same goes for NFT's.
You can copy the photograph and stats as much as you want (the player not so much ;)), but the card still stays the card.
So conceptually: the NFT doesn't refer to the baseball card, it is the baseball card. Baseball card refers to something real, but doesn't take ownership of that thing. NFT refers to something real, but doesn't take ownership of that thing.
So even if the video goes down, you still "own" the dunk.
How would you delete the history of a dunk?
And in any other case: archive.org
For some people it's the NFT that the NBA sold. You only need 2 people with a lot of money to believe that.
Do I believe that? No. Do I believe others can believe that? Yes. Do I therefore believe it's a scam? No.
So if we can agree that the card has value because "it's about Honus Wagner", and not really about the picture on the card, then NFT's and those cards are very similar.
But on the other hand, you could indeed claim that the card has value because of the picture itself.
But I still feel the picture on the card is really to act as a pointer, and not about providing value in itself. Because I would think that in that case, a real picture, or a bigger picture, or the original photographic film would be worth more.
So in the end, the baseball card also doesn't become valueless when the player dies.
That's just how I look at it.
It's not fair to discuss NFT's by only looking at a bad implementation. Metadata is stored on-chain.
Why would someone pay _anything_ for an NFT?
You only get ownership over the NFT itself, not the artwork.
Someone else could create another NFT from the same artwork or the original artist could.
1. Ownership of the "original" - why do you pay so much for an original painting when you can buy cheap/free knockoffs?
2. Flexing - look at me I bought an expensive NFT, look at me I own this and this NFT (just like sports cards, pokemon cards, etc.)
3. Money laundering - cleaning dirty money through NFTs.
4. Legit investment / value store - if NFTs picks up more and more (see Reddit, Twitter implementing NFTs), it's a legitimate investment strategy, just like BTC or ETH
5. Hype and FOMO - why do people buy Supreme branded products? Why are lines at Apple stores when a new iPhone is released?
NFT's connection to art is just a way to put a face on new coins. Instead of creating a sum of a coin brand and trade those(HN coin with total of 100K coins), you create a new coin brand each time(The most upvoted post, the post that made something famous etc.) and trade those with each other.
It looks like a solution to the problem of early adopters having all the wealth. BTC up %10 or even %100 doesn't mean much, the crypto wealth was created by investments having %1,000,000 returns. Memecoins, NFT etc. serve the purpose of being able to bet like it's the early days of the BTC.
The misconception of "selling JPG's for millions" appears to be as a result of thinking with the pre-blockchain mental models. I know a few people trading and chasing NFT's and none of them are into the art part, they are into the trade part and they are trying to buy NFTs that they expect to sell for a better price later. Their criteria for buying NFTs revolve around things like size of the community interested in it, promoters having the blue badge on Twitter, the age group etc.
Owning an NFT does not mean you own the underlying asset.
NFT is not a media to purchase rights of an artwork to print it t-shirts or something like that. These things happen within the legal framework of a jurisdiction that has legislated stuff like copyright. Blockchain is not a jurisdiction, it's simply a list record and those records are valid for those accepting the blockchain as the authoritative record.
Compare it to physical art. If you buy physical art you take control of the object and can do what you like with it including keeping it locked up in a customs warehouse.
If you buy a token you own the token not anything it points to. You can do what you like with the token but not what it points to. You own a link.
There's no inartistic ownership, it is a social construct that happens within a community.
The blockchain doesn't operate within the traditional legislations, ownership within a blockchain means people who use it accept the record as true. If it says that you own it, you own it(within the community of people who use blockchain).
All you do when you use a local definition is note that you’re going against the established definition by society, enjoy none of the protections and muddy the waters for people who don’t know you have a peculiar definition. This happens a lot in blockchain communities where ownership, trust, decentralisation and other terms end up being a lot more local in definition because the whole house of cards gets exposed if you actually look at things more neutrally. It’s a bit cult like in that respect and interestingly a lot of cults have odd ideas about ownership as well.
To own anything in the blockchain in the traditional sense, there needs to be a legislation for it and I’m not aware of any. The point is though, it doesn’t matter.
It’s just the ownership of what the NFT points to doesn’t.
The crypto crowd doesn’t like it but it’s not because the understanding of ownership of the coins and tokens is different. The art a token points to on the other hand.
Put it this way I absolutely think people that own an NFT own the token and owned the currency used to pay for it. I don’t in anyway think they own the art it’s supposed to represent.
The ownership of the underlying asset depends on what you understand by ownership.
Only in the sense that equally anyone can claim ownership of anything. It's just noise rather than a substantial point.
NFT ownership concerns those who engage in the community, just like Bitcoin concerns those who are engaged with it.
What is Bitcoin after all? A transaction record in a distributed ledger. Exactly the same thing as NFT. It exists only because someone said so in a community that use software with the same algorithm to parse transaction records(the ledger distributed as a blockchain).
NFTs don't just get to sit aside from society though. Both as a community and in terms of redefining things like ownership. As we can see in this very conversation.
In some cases NFTs actively embrace regular ownership models. For example Meebits where they very pointedly do not give you ownership of the art, it explicitly remains the property of Larva Labs LLC. And in fact your rights to the use of their IP with the Meebits you buy are extremely limited. Similar is true of cryptopunks.
This has been a fun conversation and you make some interesting points but I'm done for now.
NFTs seem to be the opposite of this. Just "ownership" but no control. How do people not see a problem with this.
I am not a lawyer, but I'm pretty sure jurisdictions that don't have that legislation are vanishingly rare. Maybe North Korea?
NFTs piggy-back off the legislation of developed countries. All of those defend ownership of physical goods.
Also, it’s very complex and definitely not a clear cut. For example, you can’t simply process the plastic disk you bought, called Music CD, and share the output with everyone, you can get into real trouble.
You can buy a plane ticket but whether you can give it back varies and you can almost never sell it, despite owning it.
You can own one aspect of something and not the other, for example you can own the right to make toys from a character but not the rights to make a movie.
You can own a Databese in Europe but can’t own it in US. You can own software patents in US but not on the Europe.
You can buy a very old house in central London but you can’t demolish it just like that and build something else.
In some places men can own women, in other places white colored people used to own dark colored people.
In some places you are allowed to rent your body for certain purposes or inject whatever you want to yourself, in other places you can’t do a lot of thing to yourself.
Also, the way you acquire your possessions is not a clear cut. Purchase is a common one but you can get things by participating or organizing mass murder, a common practice known as “war”.
You can also acquire things through inheritance, a popular option but not a clear cut too because the inheritance rules can change depending on your gender, age, race, nationality and the jurisdiction.
You can own a Gmail or HN account that you never bought and can be taken away at any time.
As you can see, ownership is a complicated concept. You can’t really pin down a property of ownership and say this is the test to determine if you own it or not.
NFT is just another complication but this time enabled through international computer networks(traditional communities would create registers and institutions to deal with ownership management).
That's why you own the NFT, you trade the NFT, you transfer the NFT.
They do have some other rationalisations, which I don't buy(yet). One is, it establishes your identity in the virtual communities. For example, you can buy an NFT for 1 million dollars and be known to be the guy who bought that NFT for 1 million dollars and hangs with other people who also bought expensive NFTs.
I don't know if this works, the person who made that explanation to me doesn't really engage in that kind of communities and could not provide me with an example where that happens(someone else mentioned Mike Tyson being involved with something called cool cats and supposedly, he was hanging out with other owners of that NFT class but I was not able to confirm this). She simply sniffs around, finds NFT's with a lot of hype, buys some and sells for profit.
Imagine that its the same trading card pools of capital that would have bought collections at MSRP, what would the seller’s annual revenue be? There had been no transparency in that. Instead, imagine if the seller only did a single set and everyone could verify that was the only one, the same amount of capital is squeezed i to that one set, which would push the price up. The issuer here makes more money from royalties when people trade pieces of the collection, instead of needing to continually issue that collection.
I wrote this a little while back, and it might help you. https://interjectedfuture.com/nfts-unbundle-ownership-from-e...
If NFTs as deed to art isn't convincing for you, check out ENS. https://ens.domains/ It's a name registrar that's a smart contract. Each ENS domain name is an NFT.
You can't. But surely some wise guy is pitching a blockchain for that right now.
It's actually worse, the same certificate could exist on multiple blockchains, and none of them guarantee approval by the original artist; all could be legally void certificates of nothing.
Hence, it becomes a schelling point for users. It assumes that the project owners are in control of their servers and DNS. For users, there is then just one official contract, regardless of how many others are published and on different chains.
As an aside, there is ENS, which people are starting to use to say they own a DNS domain https://docs.ens.domains/dns-registrar-guide. ENS itself is an NFT, so it's turtles all the way down.
Plus, all you gotta do is change one imperceptible bit in the video to get a different hash. Now your "proof" method is useless again.
Well, actually, that's incorrect. It was always useless, it's not useless "again."
Going a little bit further, modified versions of videos could be signed by the private key of the creator, proofing that the modified version was published with the consent of the creator.
Proof of Ownership of digital content has existed for at least 30 years; digital signatures were a feature of PGP.
I could host the original video (original quality before upload) on my own website, link to / host my PGP public key, host the content digital signature on my website, then post these links in the YouTube description after I upload it there.
NFTs don't always identify the owner publicly by their real world identity; typically the blockchain only proves that a particular wallet id owns the content. Hence, there is another link in the chain to be proven for your use case. PGP doesn't necessarily fix this either; it only proves that the digital key pair own the content, not an IRL identity.
Wasn't Namecoin solving the same problem years before Ethereum existed? What makes ENS/NFTs novel?
> Owning an NFT generally doesn't grant you copyrights over the underlying work of art. Owning a baseball card doesn't mean the athlete now works for you. They can both still have value as collectible items, if that's something that interests you.
Think of a booth at Comic Con, where an artist hands out signed copies of their comic books. The comic book itself is nothing special, but the signature is. But there is a problem: if you ever want to sell the signed comic book, how do you prove it's a real signature? NFTs solve that problem.
But even in offline space, the artist or seller could transfer an NFT to your account. You could then verify its authenticity (or even before the transfer).
Anyone could verify it's authenticity using even Adobe Acrobat Reader, which has had this functionality for decades.
An example of something is the fact that I am a vim donor and a neovim initial backer. I really like that I’m in backers.md. If they would have handed out NFTs for backing, I would have loved that too.
They do leave a public audit trail in the blockchain/ledger, so potential buyers can know how many authorized copies of the asset there are (at least on a given NFT platform). That is generally an improvement over baseball cards (which may not have accurate manufacturer-supplied print counts).
Personally, the only value NFTs currently provide in addition to say PGP/GPG digital signatures are features similar to joining a country club. When you buy the right NFT, you can opt to schmooze with other owners of that class of asset (celebrities, sports stars, etc). I suspect governance or additional smart contract features will provide more benefits in the future, but they may also come with SEC/CFTC oversight so they may also come with more drawbacks.
None of this needs a energy-hungry blockchain.
This is just a mechanism that provides that in a general way.
It’s sort of like, how, before Uber you could call up the few cabbies you had who you liked and get a ride but having Uber was a game changer anyway because the friction fell below some threshold.
To me that assertion, albeit convenient to paint a rosy picture, doesn't make any sense. No one needs a convoluted technical scheme to support artists as donating cash is easy and effortless. Buying the rights to a work from an artist also does not require a convoluted technical scheme, and considering that NFTs haven't been used to enforce any right then that hypothesis is also highly dubious.
What NFTs offer is the ability to perform transactions, and ones which don't have any artist or provenance in consideration.
What? That means nothing at all.
I don't agree with it and I suspect this type of thinking captures lots of fools, but I would grant that it does "mean something".