I think there's a big overlap -- if you're a crypto skeptic, you are almost certainly going to be an NFT skeptic as well.
But the reverse is not necessarily true. NFTs are just fundamentally a lot worse than cryptocurrencies. They have every problem that cryptocurrencies have, except they're also not scarce, require centralized verification mechanisms, have bad incentive structures around hoarding, are prone to link rot, etc, etc, etc...
NFTs are much harder to justify than cryptocurrencies are. They're all of the drawbacks with virtually none of the upsides. I don't know anyone who likes NFTs but dislikes cryptocurrency.
Most NFTs are just links to a publicly hosted asset. They're not meaningfully unique in any of the ways that matter.
Sure, technically you're making a new NFT when the same creator mints an NFT that points to the same work as before. But also technically you're making a new dollar with a new serial label when the government prints money, and we don't call paper money "non-fungible". It's not a kind of uniqueness that matters to anyone.
For the vast majority of people hyping NFTs, the metadata is the only part they care about. The metadata is the part that links the NFT to an actual piece of artwork -- the issuer and the work that it's linked to are the only reasons why some tokens are worth more to collectors than others.
Without the context of the person who issued it and the work that the token is being paired with, you're just trading numbers around and assigning completely arbitrary values to them.
Which to be fair is a common criticism of NFTs. It's just weird to hear an advocate lean into that argument themselves, normally advocates are trying to convince me that NFTs mean something.
Yes, a lot of NFTs will represent some kind of visual media, and you want to know what that visual media is that they represent. But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
Note that the argument that NFTs are useless if you need to rely on social consensus to link token and asset is not valid - the use case is in having a common ledger to track ownership of the token.
> But whether the link is a URL in the contract, a hash, or simply collective memory/agreement amongst collectors doesn't matter.
You voice your objection to this point below, and I'll get to that, but I just want to be clear: the NFTs are adding nothing to the existing social systems we use to determine value. We could have a collective memory/agreement without NFTs.
We're going to get to having a shared ledger below, but I just want to be clear about where we're starting -- NFTs do not add any value to the link between a token and an asset, we use the same social contracts that could always have been enforced before.
> the use case is in having a common ledger to track ownership of the token.
Now, a common ledger is a nice thing, but it also doesn't require NFTs, you could set up the exact same system with a little bit of federation.
Of course, federation would require some degree of trust and moderation, but here's the problem: NFTs require all that too. The only way that the NFT community has figured out to deal with copycat NFTs is to introduce secondary off-chain validation of which NFTs are "real" and which ones aren't. You end up recreating the exact same ecosystem of services that validate which NFTs are safe to buy, and the end result is that the secondary market isn't safe to use unless you run it through one of those services. Those off-chain validators will log fraud NFTs and refuse to validate them. As the ecosystem grows, they'll eventually shift to only validating NFTs that come from sources they trust. It's the same systems of moderation that already exist.
It's really hard to claim that NFTs add any value in the form of a trustless distributed ledger when one of the biggest recent events inside the space is Twitter verification. How much more centralized than that can you possibly get?
I bring this point up in a previous comment, but for all the criticism I have of Bitcoin (and I have a lot), Bitcoin at least doesn't suffer from this problem quite as much as NFTs do. The entire ecosystem for Bitcoin doesn't fall apart as soon as somebody stops trading on Coinbase. The NFT ecosystem has no idea how to keep the secondary market safe from copycat NFTs for normal buyers without cloning the same centralized systems for "genuine product" guarantees that we already have today.
And since NFTs aren't changing anything about our social consensus of value, and since NFTs aren't changing anything about how we verify goods on the secondary market, what on earth are they doing that's of any value? It's just an over-complicated system trying to reinvent federation. If the secondary market for NFTs was safe to use without hooking into a 3rd-party validator, or if the distributed ledger was safe to trust in its entirety without filtering out a socially determined list of bad actors, then you might have a point. But it isn't safe, NFTs have done nothing to make it safe.
I mean, you are certainly right that, again, an NFT is just a blockchain ledger entry, and there could be other kinds of ledger entries. Some examples include:
- Paper certificates of ownership of ideas/ingantible works, which have been used for art in the past going back some decades, and maybe somewhat more common now with certain conceptual / digital art pieces.
- A centralized leger, as the folks from Blain|Southern tried to do with seditionart.com.
- Or, maybe you can do something with federation, as you suggest?
That is just a tech argument of whether a blockchain (say Proof of Stake-based to avoid the energy argument) or something else is better, but note: It changes nothing about what the NFT is (and we can still call it that for simplicity). It would seem to do nothing to alleviate the concerns of people who don't understand paying for a pointer to a media file; since that is still what the federated ledger tracks, right?
If people feel a federated system works better for this, they can certainly build it. But Twitter is just Instagram from a purely technical perspective. There is more to product-market fit than the underlying database.
The whole thing came together with blockchains, maybe because you need an easy way to buy that stuff too, because there was a bunch of rich crypto people actually willing to spend money (when no one before was much interested in paying digital artists for their work), maybe cause the tech was there.
In general, I don't see what the argument is about; the ledger works quite well on a blockchain, and would work less well in a federated system from a trust perspective. I.e. your analysis about the trust vectors involved making the chain useless is wrong. Sure, platforms can choose not to show certain NFTs, and OpenSea has some dominance in the space, but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
There is really nothing centralized at the center of it in the end. Artists publish work on their own websites and their own contracts all the time, and if deafbeef posts on Twitter about his new NFT on this website, I will trust the existing social verification system (my friend telling me about it, his Twitter account being a known-entity).
This is distinct from Twitter avatar verification, which I predict a) will not happen and b) is indeed useless unless Twitter wants to be in the business of deciding which Punk-derivative project is looking too much like the real thing, which I doubt it wants to do.
If the argument is that tokens in general have a use-case, then I agree with you, they do. My concern is specifically with NFTs (not the general concept, the specific example that springs to mind when most people say the word). I have problems with:
A) the technology
B) the average consumer's understanding of the technology
I think we need art-tokens to be on a blockchain, and in a lot of ways the blockchain might even make this kind of stuff even harder. It's often desirable when working with non-fungible tokens to be able to easily update their metadata, block them, or link them together. NFTs are slowly making movement in this direction, but they're moving very slowly, and it's not clear how the blockchain is helping with any of those features.
I also think it's worth asking why this scene exploded specifically with NFTs even though the systems to make it work existed long before NFTs were on the scene. Frankly, I don't believe you that the average NFT investor understands that the ledger is just a ledger. I've talked to people who are involved in casual NFT collection, and they think the technology is magic. They think that the blockchain magically makes their tokens valuable.
> but when OpenSea kicked off a Cryptopunk Clone project no one lost their tokens, they continued to be traded elsewhere, and the community still chose to value their possessions, even if it maybe inhibited their growth.
It's not really the blockchain that makes this happen though; federated systems can split from each other and route around each other just as easily. If a federated ledger tries to remove tokens, communities can still choose to recognize those tokens and either fork the ledger or run in parallel alongside it.
What you're seeing with OpenSea and clone projects is the social side of this, not the blockchain part.
Except no, not easier to trade/verify if you have to hook into off-chain validators to verify that the token is legitimate. The part of transaction security that matters for most people are the trust parts that NFTs explicitly don't try to solve.
The big problem with trust in any token system (and really any art market) is figuring out which tokens are being issued by whom and whether the token/work you're looking at is "real" and actually issued by the artist.
Which NFTs don't even try to help with; they leave that to off-chain validators.
But the reverse is not necessarily true. NFTs are just fundamentally a lot worse than cryptocurrencies. They have every problem that cryptocurrencies have, except they're also not scarce, require centralized verification mechanisms, have bad incentive structures around hoarding, are prone to link rot, etc, etc, etc...
NFTs are much harder to justify than cryptocurrencies are. They're all of the drawbacks with virtually none of the upsides. I don't know anyone who likes NFTs but dislikes cryptocurrency.