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Comment by __MatrixMan__ | Hacker News Reader

> A lot of the reason why I detest NFTs in particular is because I detest the concept of artificial scarcity, something that has been plauging the digital world long before the invention of NFTs

I agree with this, artificial scarcity is a lousy way to get anything done. The end-game of economics ought to be to eliminate scarcity, artificial or otherwise. But if the alternative to NFT's is the status quo, then you're choosing between a system where only the privileged get to set up artificial scarcity games (usually there are lawyers...) versus one where anyone can do so. It still sucks, but it sucks less.

> Naturally, the exploitation of natural resources and absurd energy demands solely to enforce the value of made up internet items would be the endgame [of NFTs].

I think that the endgame is to exchange NFTs as proofs of contribution to the public good. I minted this NFT by sequestering a kilogram of carbon, by filling this pothole, by serving in a jury, that sort of thing. As it stands it's not really clear why I should accept a dollar from a stranger--for all I know, they made that dollar by making the world worse. Why should I participate in a scheme that enables them to continue doing so? But with NFT's I can look at the circumstances of its minting and decide for myself whether that's the kind of thing I want to see more of.

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> But if the alternative to NFT's is the status quo, then you're choosing between a system where only the privileged get to set up artificial scarcity games (usually there are lawyers...) versus one where anyone can do so. It still sucks, but it sucks less.

This doesn’t really follow. Why would NFTs be the only way to generate artificial scarcity when people have been doing it forever with one-off art, private experiences and concerts, and limited edition runs?

NFTs seem like a step in the wrong direction: You still don’t have the original art or thing that the NFT supposedly represents. You just have a new blockchain entry that says “This NFT represents <thing>“

> As it stands it's not really clear why I should accept a dollar from a stranger--for all I know, they made that dollar by making the world worse. Why should I participate in a scheme that enables them to continue doing so? But with NFT's I can look at the circumstances of its minting and decide for myself whether that's the kind of thing I want to see more of.

This doesn’t make any sense either. Why do you implicitly trust what people tell you about an NFT but not a dollar?

There’s nothing magical about NFTs that solves the social problems you’re describing. An NFT is just a blockchain entry with associated cryptographic procedures for changing said blockchain entry. It doesn’t give you insight into the circumstances around it. You still have to take whatever people say at face value, just as you would with the dollar example.

But with the NFT you have to pay a lot of money just to accept it. Money which goes to miners who are burning energy at a furious pace just to keep the NFT existing, in a system that becomes ever less efficient as more miners join. That’s probably not what people had in mind when it comes to making the world a better place.

Without the ability to sue people who break the rules that create the artificial scarcity, how do you keep it scarce?

And yeah, when it comes to NFT's for some random jpeg... That's pretty useless. But that's all that can be done with them right now because there's infrastructure available to connect the NFT with whatever supposedly valuable side-effect it's supposed to go with. That'll take time. But when it's ready, the side effects won't be some random jpeg, they'll be things that you can touch. It'll be obvious that continuing to support the people who do whatever-the-thing-is is a good idea, and that's why we'll value the associated token.

> It doesn’t give you insight into the circumstances around it. You still have to take whatever people say at face value,

That's the missing supporting infrastructure I'm talking about. If a bridge washes out because of a storm, and somebody repairs it and mints an NFT of the before/after photos, that's just an image. But with a supporting web of trust, complete with verifiers who inspect the bridge afterward and put "yeah that's a good job, and this is the only NFT for it" on the blockchain... now you've got something more.

The problem for the blockchain and by extension NFTs is that the transactions are only trustless for the things that can be known about by the chain. Which is a vanishingly small amount of information, basically the exchange of tokens. There is no way to link a token to something in the real world without bringing in trust of a third party. At which point you’re just replicating what we already have with more complexity and less protection.

You can already donate to people doing good things across a whole spectrum of options and see tangible side effects. You don’t have to wait for NFTs to maybe grow infrastructure to allow this! You can literally build bridges, schools and all sorts of infrastructure for people around the globe right now!

I don't think we need things to be trustless. Most economic activity relies on trust of some sort. We can implement webs of trust on chain and incentivize trusted individuals to validate whatever relationships between the chain and the real world that the NFT's represent. The actual data that the algorithm knows about can be pretty small, just a string:

> There was a pothole in the road at such-and-such time and place, and now there's not. Validated by users X, Y, Z

Just little promises, and don't value the token if your don't trust the validator.

The only kind of trust that's a problem here is custodial trust. A platform can never be more trustworthy than its least trustworthy admin.

And yes, I know that I don't need a blockchain to do good things, but I do need a blockchain to retire on having done good things. And more importantly, to live in a world that's full of people doing the same.

Centralized institutions become less trustworthy over time, so whatever work I put in to curry favor with whatever authority might reward me will be lost when that authority falls to corruption.

> And yes, I know that I don't need a blockchain to do good things, but I do need a blockchain to retire on having done good things. And more importantly, to live in a world that's full of people doing the same.

I don't think a case has been made for that yet. For example:

> We can implement webs of trust on chain and incentivize trusted individuals to validate whatever relationships between the chain and the real world that the NFT's represent.

This sounds amazing! Except it falls into a recursive problem. You need to trust the knowledge about the real world so you validate it but you also need to trust the validators so you need to validate them somehow and that reoccurs. You could argue that there is a social proof in terms of users vouching for one another a 'web of trust' but those are easily gamed. You exchange explicit centralization for implicit centralization so not only have the issues of a centralized institution anyway but all the extant issues we see in crypto land in terms of fraud and so on. It's also veering into dystopian territory in terms of keeping an immutable reputation score about people which is deeply disturbing.

Are they easily gamed? I give my friends the code to my garage, nobody has gamed the web of trust and made off with my tools yet. If we want tight knit communities that we can trust, then we have to practice it. If we want do have the same benefits that you get from a trusted group of friends, but with thousands or millions of users, we'll need algorithmic help scaling it.

Re: reputation, I agree that some kind of trustworthiness score is a dystopian outcome, provided that it's a single number that the network has universal consensus on. But I think it's a lot less onerous if the score is calculated via graph traversal.

Don't ask "how trustworthy is user A," instead ask, "given users A and B, who does A trust that trusts B (and what kinds of trust have they configured)?" I'm not angling for a credit score, I'm angling to replace implicitly trusted institutions (like banks) with explicitly trusted third parties (like mutual friends, or people that users A and B both recognize as an expert).

> Are they easily gamed?

Yes, like a Ponzi scheme or MLM for example. That's literally a web of trust setup to defraud people and one that often relies on pre-existing trusted relationships to spread. Almost all crimes involving social engineering like fraud are going to involve exploiting webs of trust. And whilst your friends may never steal your tools other people do end up being robbed by their friends.

> Don't ask "how trustworthy is user A," instead ask, "given users A and B, who does A trust that trusts B (and what kinds of trust have they configured)?" I'm not angling for a credit score, I'm angling to replace implicitly trusted institutions (like banks) with explicitly trusted third parties (like mutual friends, or people that users A and B both recognize as an expert).

Right and people won't create fake webs of trust with this to engage in scamming like they do in the real world already? No one would try to ruin your reputation this way and so forth. It feels like proponents of these social credit schemes do literally zero adversarial thinking. Similar to the way no one seemed to have thought about the rampant bot fraud now occurring on NFT marketplaces which are probably a scheme to setup false identities more than offload low value NFTs. But theft, fraud and automating it seem to not have occurred to the designers.

> No one would try to ruin your reputation this way and so forth

The problems that you're describing only come up if there's a centralized oracle for a globally consistent reputation score. But the only angle where we need global consistency is re: who has what token. Reputation can be ad-hoc and only locally consistent. And since you're trading goods for NFT's you're probably co-located with all of the right people anyway. After all, an NFT for filling a pothole is worth more to the people who had to deal with that pothole than it is to people far away.

If somebody is out to ruin your reputation, then they're unlikely to be involved in the transitive trust pathways that are used to validate tokens, so unless you're trying to do business with them I'm not sure why it would matter.

Yeah, there's always the possibility that somebody you trust has decided to trust a bad actor, but someone's going to know about the deception because the alleged impact is nowhere to be found, so get together as a community and figure out who the liar is and revoke their trust.

Right but you’re just inventing local government with extra steps now. Lots of local governments have more direct democracy and I’m all for organising that in a caring manner. It just seems super pointless to involve blockchains, NFTs and technologically verified trust chains where you have to manage interpersonal relationships on chain as well as IRL.

Local governments, in my limited experience and study of history, tend to corrupt easily to the whims of nonlocal wealthy people. Just look at the US's exploits in South America since the 70's (or a recent election in my home town).

If you're going to reject the demands of foreign money, local money has to be different in some way that makes it hard for outsiders to get without demonstrating some level of givashit about the locals. It can't just be a matter of exchange rates.

So yeah, it's overkill for most things, but the things it's justified for are really important.

Nothing about what you’re suggesting now needs a blockchain and having local money doesn’t prevent outside influence just changes how it is spent. People will just spend it on those that hold local money or have influence over those that do. You’re trying to passively solve a complex, hierarchical social problem with technology when we know that’s bound to fail or at best paper over the cracks.

And yeah there are lots of places that local government sucks but there are also lots of places where it doesn’t and I guarantee you the reason isn’t tech.

I think that when you replace a hierarchy with an arbitrary directed graph, you can be pretty confident that what you've done will at least be impactful re: problems that hierarchies have (namely corruption at the top).

Whether they can scratch the itch in peer-to-peer mode is an unanswered question, but I think we'll get to find out.

> I don't think we need things to be trustless.

If you don't need it trustless, then you don't need a blockchain.

Trusting somebody with admin access to the platform is quite different than peers using the platform to scale the to benefits from trusting each other.

Blockchain is too specific, but you're going to need some kind of consensus tech to achieve the latter without the former.

s/because there's infrastructure/because there's NO infrastructure/ # oops

> I minted this NFT by sequestering a kilogram of carbon

.. while emitting another ten.

> for all I know, they made that dollar by making the world worse ... with NFT's I can look at the circumstances of its minting

Ah, so the opposite of financial privacy, you get to inspect how someone made their money before you accept it?

Well no, I'd only value NFT's for sequestered carbon that were a net negative. The energy overhead need not be Bitcoin-sized.

And also, I'm not proposing that we make the entire pathway auditable. You don't get to know what each user spent it on before it reached your hands, you just get to know that somewhere, at the end of the line, is the guy who minted it. And whether you value it should come down to whether you want to live in a world with more of whatever he's doing.

Creative effort is scarce, so the argument is about how to securitize it. It’s not artificial scarcity, it may just be a poor proxy method around the actual scarce resource.

Therein lies the insanity; a person can create {art, music, game asset} and nothing stops others from consuming that thing. Web3/crypto does not solve that -- it only 'proves' that one person 'owns' the created thing. Abstractly, that's cool. Concretely, who the hell cares? I got to see the jpeg and listen to the album exactly as the 'owner' of the digital asset was able to.

You don't think it's different to experience the art and to own the art?

NFTs just force the idea of “ownership” onto things for which ownership makes zero sense.

You are never going to convince more than a small number of suckers that any of this is true or worth it.

Ownership is one way to interpret the meaning of an NFT, but that's not the only way to do it.

For instance, you could use them to keep track of responsibility/permissions: "The holder of this token is the project maintainer, only they can approve pull requests". That sort of thing.

Interpretation is up to the users, I'm really just talking about nonfungibility in general here.

> You are never going to convince more than a small number of suckers that any of this is true or worth it.

This is exactly the kind of thing that is said before complete implosions or complete disruptions. Time will tell!

Reminder: same was said about BTC.

I'd argue that for most types of content the modern problem is the abundance of creative effort (orders of magnitude more good content being created globally than anyone can consume) because of the global scaling so the major social problems for arts are the curation and discovery of the abundant creative effort, not securitization of some actually scarce resource. A particular piece of art or a particular author's work becomes scarce only due to social factors e.g. their work becoming "hot" among the uncountable other equally good works which aren't noticed or cared about for random reasons, not because such work is inherently scarce.

> I agree with this, artificial scarcity is a lousy way to get anything done. The end-game of economics ought to be to eliminate scarcity

How do you have an economy without scarcity? What are the substantial differences between artificial and natural scarcity?

I think we can use Vickrey Auctions for this problem. Vickrey Auctions are able to give not only price discovery, but also value discovery. Vickrey auctions incentivize bidders to bid their true value. If instead of using price discovery, we use value discovery, the price can stay at 0, so long as a certain (limited) amount of people are faced with a choice that would have them go without.

So for example perhaps we sample 50,000 people and say 75% of people keep access, say when they vote. If you bid in the top 75%, you keep access for the period, and you pay the value that the bottom person that kept access bid. That money is then not used to pay for the IP, some other tax will fund the IP or Open Source Software or Meme, that 25% will then go to all the voters for providing their values. So the average bidder will pay nothing, the below average bidder will lose something they value low, but gain, and the highest bidders will fund that. We then take some other collection and sample another 50,000 people, until we find out the value of all of these digital items to people.

If you do the subsidization process correctly, I think the idea of IP owners holding their supply back would go away, as releasing it to all would always provide more value than holding it back. I think at the very least this would be an obvious answer to Open Source Software, and this would easily fund things like Linux and Firefox. I think this would stretch further to research, and colleges would now be funded through this mechanism, and the professors who currently waste enormous amounts of time doing grant writing would be able to be productive. Thus the whole issue of journals goes away. Even things like ads, people would bid on their service less because of them, so there would be no fundamental reason to include them as it would reduce the subsidy.

I'm sorry, I have no idea how this relates to either of my questions. Can you clarify?

> The end-game of economics ought to be to eliminate scarcity

This doesn't make sense. Economics isn't something with a goal, it's a praxis which exists solely to manage scarcity. Eliminate scarcity and economics disappears.

When you grant a monopoly over items that have zero marginal costs, you are creating massive dead-weight losses. The reason that we use artificial scarcity is because then we can use supply and demand on that, and use the funds to reward the creator.

There will always be new things to create. Some think that because IP is a monopoly, you should tax the monopoly. But that's going at it from the wrong direction. Creating new things produces a positive externality to others. You want to reward that. This is a scheme that might possibly do so.

I'm sorry, I don't understand how any of this responds to my questions. I didn't ask about monopolies, I didn't ask why artificial scarcity exists, I didn't ask about intellectual property.

You asked how to have an economy without scarcity. There will always be certain things, like natural resources, that are scarce. You can not make more land. Those things will always have scarcity.

There are other things that have zero marginal costs, and can indeed eliminate scarcity. But if you eliminate scarcity on those items, there becomes no incentive to create new things, as the natural price of anything with infinite supply is zero.

The creation of new digital items needs to be balanced with the very real scarcity of natural resources. The essence of your question is - how do we reward the creation of things if we can not restrict the use of it? And so we need to find a way to figure out the value of infinite supply items.

I had not heard of those before, that's cool.

What do you need an economy for once you've managed to get rid of all scarcity? Th economy is imho just a tool for allocating scarce resources.

Scarcity will exist until we become a type-2 society. That's not happening for hundreds or more likely thousands of years. If you want to perform the intellectual exercise of speculation then I'm on board but let's make it clear that's what we're doing.

I thought that's what we're doing in this thread, since we're talking about the "endgame" of economies.

If I'm an artist I still need food, shelter, and to buy things in the real world. If I can't make money making digital assets then that heavily disincentivizes me to make them.

Of course in your scenario we haven't reached the "endgame of economics" that we're currently speculating about, because there still is real-world scarcity.

Luckily, I don't think this is an issue that we need to have consensus on. Even if 95% of the world thinks that NFT's are silly, if 5% wants to use that model to fund the creation of things that they like, there will still be a market for your tokens.

> How do you have an economy without scarcity?

It's easier to imagine the end of the world than to imagine the end of capitalism.

Once you've done away with scarcity, you don't need an economy. After that it's gay luxury space communism for all.

And I'd say scarcity is artificial if making more of it requires you to break somebody's rules.

I don't understand the point you're making. I'm all for Gene Roddenbery post-scarcity space communism, but the entire crypto space is based on scarcity...

The original comment was about the "end game" of NFT's. My point is that money has value because we choose to value it, and fungible tokens often don't give you enough information to adequately make that choice, which means that nonfungible tokens have a bigger part to play than their current form would indicate.

Currently, most people don't consider whether using a given type of money is in line with their personal values because we all value food and shelter and clean water, so there's enough common ground that it's not worth splitting hairs over. But if you chart a course to a post-scarcity world, then it will take you through a time when food and shelter and clean water are no longer scarce. There will still probably be people causing problems in the world (and using money to do it), and the nonviolent way to take the wind out of those people's sails is to stop valuing their money because it's encouraging behavior that's not in line with your values.

This might happen several times before the greedy learn to behave, so in such a world it might be difficult to decide which type of fungible token to use. If you end up using tokens minted by people that ultimately end up pissing off the masses, those masses might reject your money. One way to hedge against this kind of risk is to just go around doing things that you're pretty sure everybody will agree are good things. For each public good provided, mint an NFT and use it as money. Initially we'll need some way to burn stale NFT's to keep the scarcity-logic in check, but this is the road to post-scarcity. Once we're well practiced in valuing a token for its effects, rather than for its scarcity, we'll be prepared to let go of the scarcity logic entirely. Or at least that's the plan.

Huh? Money, currency -- these aren't market goods, they're exclusive mandates established by sovereign states. You don't get to decide which money you want to use, it's a function of the government of wherever you happen to be.

Bitcoin isn't a currency. NFTs aren't money.

If you anticipate that whatever government mandates your money will still be around when you retire, then you're not living during (what I'm claiming is) the endgame of NFT's.

I'm so confused by what you're saying.

> money has value because we choose to value it

Yes, in a broad sense.

> and fungible tokens often don't give you enough information to adequately make that choice

If by "fungible tokens" you mean things like fiat dollars or crypto bitcoins, then this is a nonsensical statement. The "we choose" of the prior clause isn't an individual choice, it's a collective choice expressed via government.

> which means that nonfungible tokens have a bigger part to play than their current form would indicate

This doesn't follow at all.

> the endgame of NFT's

What is the endgame of NFTs? It seems like you're speculating about a post-scarcity society? But in that scenario there would be no reason for any money, fungible or non-fungible, to exist at all. Money is an abstraction, a time-tested mechanism for economic exchange and growth. And the purpose of economics is to _manage scarcity_. If you remove scarcity then economics, money, bitcoins, NFTs, they all have no reason to exist and disappear.

> If you anticipate that whatever government mandates your money will still be around when you retire

Yes. Obviously this is true. China and the yuan, Russia and the ruble, Europe and the euro, America and the dollar, they will all be around, in one form or another, when I retire. And when you retire. And when my children retire. And their children.

Sovereign states are the evolutionary output of humanity's effort, over all history, to achieve peace, growth, and stability. They're not problems waiting to be disrupted. They're solutions that we as a species have arrived at, after enormous toil and suffering.

I'm speculating about a state that's pre-post-scarcity (at least for most things humans want, there will always be scarcity somewhere) by maybe about 50 years. It's not like you're going to be able to just wave a magic wand and poof the scarcity away. We'll have the capacity to provide what people need, and that day will come and go long before somebody actually authors the commit that makes it happen. That author is going to need a sense of security that everything is going to be ok if they just start giving everything away for free.

I'm open to hearing alternatives, but the best I can come up with is a system where we allocate whatever resources remain scarce based on merit. Not merit like whoever manages to wrest more money from whoever else wins, but merit like wow that's a really great contribution to society--I personally value what you've done, so I'm going to behave in a way that benefits you. A generation that grows up thinking along those lines just as often as they think in terms of market clearing price is more likely to produce the magical commit that redirects the robots from competition to cooperation, and fungibility just doesn't fit that use case very well.

In the more immediate term, I wish that I shared your optimism about the stability of sovereign states. I'm not saying that we should disrupt the government, I'm saying that the government is doing a fine job of disrupting itself and I wish we had some kind of backup system in place.

Eliminating scarcity requires unlimited and easily accessible resources i.e. energy. We are hundreds to thousands of years away from this point.

You are otherwise describing a barter meritocracy, which is dystopian :(

It strikes me as rather utopian compared with:

> The "we choose" of the prior clause isn't an individual choice, it's a collective choice expressed via government.

But I guess it's ok that we disagree about which modes of exchange are desirable, the world is probably big enough for both :)

I mean, humanity started out as a loose collection of independently-governed city states. We evolved to the current notion of larger-scale sovereign national governments. This wasn't an accident or a pathology. It delivers better outcomes. A competent single governing body like the Roddenbury Federation would be better still! What you're suggesting is a regression :(

It's a regression that has happened several times, and it'll happen several times more before we've got that pre-to-post scarcity transition to contend with. It's what happens to systems that don't regulate their parts well--they get cancer and die, and in the case of societies, their people move on and try again.

When I said that I'd prefer to live in a world with decentralized power structures, I should've said that I'd prefer it to a centralized one that's on the decline. I think we need to iterate faster on our societal structures until we find one that works for everybody, and bail earlier on things that clearly don't work. Probably, when we find it, the ideal system will involve some central authority--though held better accountable.

100 years ago, getting creative with how we structure society meant starvation and bloodshed. I see crypto as an opportunity to build a stop gap. It need not be better than whatever we build that follows it, it just needs to hold us over until we can figure out what that's going to be.

There are some use cases like concert or event tickets where the scarcity is not artificial

Right but those cases are already solved in a cheaper and less complex way and have been for an extraordinarily long time.

Wow. Imagine actually thinking this.

This is a pretty empty comment. Access to scarce events has been a solved problem for thousands of years the Ancient Greeks used tickets for example. NFTs don’t really add anything to this system even in the secondary market aspect. So yeah, imagine thinking this when billions of events over thousands of years have successfully negotiated the problem.

Concert tickets are an absolutely pointless application of a blockchain.

The concert venue is an unavoidable central authority. You don't need to melt the arctic for a fully decentralized trust-nobody system that merely manages a database of a single ultimate authority that can't be removed from the equation.

This problem can be solved with a REST API and it will have the exact same amount of (de)centralization and trust.

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