There’s a lot of confusion here about why NFTs are valuable if the buyer doesn’t get to own the image copyright. This should not feel mysterious - NFTs are just like baseball cards.
If you buy a Barry Bonds baseball card for $1,000, you don’t own the artistic rights to the image on the card. All you own is the card itself, which has negligible manufacturing cost. It would be trivial for any card company to produce a million functionally equivalent Barry Bonds cards.
When you buy a Barry Bonds baseball card, you hope that the card company won’t dump a million more on the market. You also hope that if another baseball card company springs up and prints their own Barry Bonds cards, people won’t be as interested in that brand of cards. Attention and scarcity drive value; the nuance is that other speculators must care about scarcity along the same dimension that you possess it (in this case: the brand of the baseball card company and the year the card was made). There are a hundred tokens functionally equivalent to Bitcoin, but none approach Bitcoin’s value - purely because Bitcoin sustains more consumer and media attention. This position is fairly stable because attention has strong positive feedback loops.
There has always been interest in speculative collectibles. A purely digital collectible solves a lot of practical problems related to exchange: you don’t have to wait a week to receive the item in the mail, you don’t have to worry about its condition because it does not degrade with time or use, there is minimal counterparty risk due to online escrow contracts, and counterfeits are harder to fake (along the relevant dimension of scarcity, which is the origin address).
People have been speculating on collectibles for thousands of years. Crypto just makes it easier to trade them back and forth.
NFTs are a JSON string on a proprietary entity that point to the image of a baseball card. The image can be viewed by everyone. The bragging rights of owning a JSON string depend heavily on whether or not the proprietary entity will become the dominant player in the I own a JSON string-world.
This also has zero to do with blockchains. The proprietary entity could've used any database they wanted.
It's all a ridiculous scam, but have fun trading JSON strings.
" The bragging rights of owning a JSON string depend heavily on whether or not the proprietary entity will become the dominant player in the I own a JSON string-world." -> as the parent post explains, this particular aspect is exactly like baseball cards; where technically anyone could print other Barry Bonds cards but your bragging rights of owning a rare baseball card depend heavily on whether or not the proprietary entity printing those particular cards will be the dominant player in the baseball card world.
Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
Whether the data representation is a piece of cardboard or a JSON string replicated on 10,000 Ethereum nodes or a tulip or a Venmo balance is arbitrary; it just matters whether a lot of humans are looking at the same thing. And for the time being, a lot of humans are looking at crypto ledgers!
> Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
Oh but surely it does.
Cardboard is fragile, and degrades if not looked after. Over time, the average condition of cardboard cards will deteriorate. So, if you own a baseball card in good condition, and can look after it better than the average, over time you will end up with one of an increasingly rare class of pieces of cardboard - an old baseball card that is in good condition.
It’s not hard to imagine that in the distant future there will still be people who place value on the history of baseball who are interested in owning, for example, a collection of mint original baseball cards dating to the original era of each player, for every hall of famer who ever played for the Giants.
So the speculative value of any baseball card includes some expected value estimate based on the possibility that it might, someday, be the last of its kind, and some millionaire needs to buy it to complete a collection.
Can you really tell a similar story to yourself for why the expected future value of any NFT isn’t zero?
But then I come by and scan your card and print a fresh one. This is fairly cheap to do. Why is mine not valuable? Does this process devalue yours?
NFTs posit that the answer is that yours isn’t authentic and the process won’t devalue mine because mine is. And they offer an algorithmic mechanism to enforce and verify authenticity.
In the baseball card world, that ought to be true, but may not be. Maybe my fake is sufficiently good to fool the market.
Then at that point we realize that what is really valuable is that authenticity. We can make cards themselves infinitely cheap to copy flawlessly and the proof of authenticity remains distinct and valuable.
Your copy doesn't just lack 'authenticity', it also lacks something uncopyable, and which is only relvant to physical artifacts: 'age'.
The fact that digital copies can be perfect, and never age or deteriorate due to the inevitable march of entropy, is a fundamental difference and yes that affects how valuable 'owning' a digital artifact is versus owning a physical one.
I think this is basically true. Impermanence is part of what makes possession important. I can totally see the value of all NFTs decaying on long time scales because they're just boring.
But on short time scales all age is similar and authenticity seems to be sufficient to at least toss a bunch of liquidity from place to place.
But you've hit on exact problem the blockchain solved from day 1, you can copy the image (just like you can download hi resolution scans of baseball cards) but the underlying "cardboard" cannot be copied, or copies can be detected with 100% accuracy (depending on how you look at it).
Some day, the last original 1986 Barry Bonds rookie baseball card will disappear, lost in a housefire or an alien invasion or something. There might still be high quality digital images of what that card looked like, in archives of eBay auction pages and the digitized records of the baseball hall of fame and whatever other ephemera wind up in the Svalbard vault.
And in fact, the photo reproduction on that card was already a poor 1980s print quality reproduction of an original photo of Barry Bonds, which probably - no matter how well it was looked after - will have suffered and faded with age as print tends to; and that actual original photo was probably reproduced in a bunch of other places outside of that run of baseball cards - and maybe the original negative of that film exists in some archive somewhere, with a high quality digital copy available - from which you could reproduce an even higher quality picture than was presented on that card.
But you would never be able to replace that card, because the point of the card was its physical connection to the moment in time where a legendary career started.
"Humans preserved this specific lump of matter and kept it safe over a long period of time even though that was difficult and, let's be honest, not very important" is what gives value to antique collectibles.
"Humans preserved the cryptographic chain of custody of this sequence of binary digits that reference a specific widely archived piece of digital media over a long period of time, by creating a distributed computing system that just automatically ensured it would be passed on to posterity whether posterity wanted it or not," doesn't create the same human connection.
I think placing the value of baseball cards on the fact that they are made out of cardboard is mostly trying to rationalize a preconceived notion that baseball cards make sense whereas NFTs don't. But even then, similar dynamics to the one you mention also apply in the NFT world: people lose the keys to their wallets. In that sense, the NFT completely degraded. This will probably happen to many NFTs as has happened to a significant amount of bitcoins.
This is about where I got to when pondering this with regards to NBA Top Shot:
1. Is it irrational to pay large sums of money to collect NFTs? Yes.
2. Is it irrational to pay large sums of money to collect physical cards? Also yes.
Regardless, we humans are weird and will do it anyway.
Fragileness is not a requirement for rarity, you can just as easily print fewer baseball cards / NFTs to begin with to reach the desired circulating supply.
Beyond that though, keys get lost so NFTs do have a mechanism of leaving circulation.
> Whether the data representation is a piece of cardboard or a JSON string replicated on 10,000 Ethereum nodes or a tulip or a Venmo balance is arbitrary; it just matters whether a lot of humans are looking at the same thing. And for the time being, a lot of humans are looking at crypto ledgers!
But are they really? I mean, are there that many humans waiting in line to have a JSON pointing to a tweet?
There were a few reports of NFTs going on the market for thousands of dollars, but at least the ones I'm aware of sounded an awful lot like people buying their own NFTs and leaving that out from the report.
FWIW, I am personally shocked that anyone wants to buy small pieces of cardboard with photos of baseball players on them at all, much less for any appreciable amount of money just because one happens to be "rare" (whatever the hell that means, as clearly anyone with a printer and some cardboard can make their own)... that doesn't mean that someone else is valuing them for some reason, and they clearly do; that most small pieces of cardboard with pictures on them aren't valuable is kind of irrelevant to the idea that some are.
> FWIW, I am personally shocked that anyone wants to buy small pieces of cardboard (...)
I fail to see the relevance of your personal preferences to the discussion, as my point was that the cases I'm aware of sound an awful lot like shills trying to inflate the value of something with no market value whatsoever.
As a concrete example, there was a HN discussion a couple of months ago on how a kid reported a couple thousands of dollars worth of sales from NFTs, but it all sounded like a mix of straight up fraud and money laundering. A few comments in the discussion point out that the kid's father works in finance and it sounds he is trying to case in on the NFT trend.
> But are they really? I mean, are there that many humans waiting in line to have a JSON pointing to a tweet?
This is just your belief in what people would want to do, and is irrelevant to whether people out there exist, and I am claiming (seemingly successfully, as my comment is resonating with a number of people) the same thing would probably be said with just as much confusion by anyone who really considers how utterly pointless a baseball card is.
To me the more likely use seems not a pump-and-dump scam but rather money laundering - get a plausible and legitimate money trail as "capital gains from digital art investment" from some dirty bitcoins coming in from, for example, a ransomware payout.
> are there that many humans waiting in line to have a JSON pointing to a tweet
There are a lot of humans waiting in line for other digital assets that don't do anything, like Fortite skins. That's also just a row in some database, what's the difference?
> Surely the baseball card’s value does not come from the fact that you can hold a piece of cardboard in your hand.
No, but if something physically exists then it's possible for there to be originals and first printings, which can be finite in supply despite the ease of reproduction.
I can understand why some people might prize a 1987 Barry Bonds card over a modern reproduction, even if the reproduction is indistinguishable, because the 1987 version is older or more authentic.
But there is no 'original' of this comment - moving it from my computer to yours (and from your RAM to your screen and so on) inherently makes it a reproduction. There's no authentic-vs-inauthentic distinction to be drawn.
It is a small leap. The balance in your bank account is also a number without a physical presence. It has value because you can convert it to physical goods. The same is true of a Bitcoin balance.
Currency is a contract, it's inherently intangible.
Bitcoin is not a currency, and it's not used for anything, so it's a really just a number, that someone may speculatively want to pay money for, due to the fact a small number of other people will pay for it, but unless there's a more broad acceptance of it, the implied value will also fade.
If NFT's implied ownership of the Baseball card itself, I think this would be another thing altogether.
It's actually simpler than that. It's just an entry in a database with your name attached to it. It's like an autograph.
Why do database entries have value? Well, usually because there are processes attached to them. Often it is as simple as having a court enforce the process.
I don't know why but the whole cryptocurrency space feels like a philosophical parody of the real world. Money without people. Contracts without enforcement. Ownership without property.
They have value because people agree they have value. Trusted third parties (like courts) help people come to that agreement, by providing transparent, objective processes to settle legitimacy and ownership disputes (in the happy case, in the not-happy case they use physical force to reach agreement).
Personally I don't understand the controversy, blockchains are a different kind of trusted third party that also help people come to agreements, by also providing "transparent, objective processes to settle legitimacy and ownership disputes". These third parties aren't mutually exclusive, and the role of blockchains/NFTs aren't fundamentally different, they just use novel means to help people come to agreements, within the same social constructs we've always had.
The problem with using NFTs to verify ownership is that they actually make it much harder to resolve any disputes. An NFT can't be transferred or modified without explicit permission from the owner of the NFT, which means that any dispute is impossible to resolve without bypassing the NFTs entirely.
For example, let's say you have an NFT that represents something tangible (and not just some link to an image download). What happens if the owner of the NFT dies without setting up a way to transfer their NTSs? What if multiple, seemingly valid NFTs point to the same object? What if the NFT was never truly valid in the first place? What if an NFT is stolen?
In all of these situations, a third party (like a court) would have no actual power to fix anything within the NFT space. A hard fork is theoretically possible, but that becomes impractical to do every time someone has an NFT dispute. The only option is to just declare an NFT invalid. But if you have some third party that controls the validity of NFTs, then you might as well cut out the NFTs and just rely on the third party.
I think you're misunderstanding my stance here, I'm not arguing that NFTs are always better than other trusted third parties. I don't know enough about their details to make a claim like that.
In the terms of what you're saying, I'm arguing that the space of scenarios in which people can't come to an agreement is different for NFTs vs. legal systems, because NFTs provide some self-service mechanisms for proving ownership and legitimacy. I'm sure those come with tradeoffs, as you've mentioned. I'm not in a position to weigh those tradeoffs yet, nor claim that one is always better than the other. I think it's too early for that.
More concretely, courts, NFTs, et al are tools for reaching agreements. There's no reason to dogmatically cling to "on-chain" if it's not helping reach an agreement, and there's no inherent reason things can't be mixed between on-chain and off-chain, just as agreements can be made in court vs. out-of-court.
Right! Which is why NFTs are specifically not representing anything physical (despite certain people within the space admittedly pushing this misguided notion). They work because the NFT itself, the ledger entry, is valuable.
>I don't know why but the whole cryptocurrency space feels like a philosophical parody of the real world. Money without people. Contracts without enforcement. Ownership without property.
The common denominator between these being: process without purpose.
And this is why the parody works so well. The world is already like you describe, though it's hard to notice if you view it through the rose-tinted glasses that the ever-shrinking in-group is more than happy to sell to you for good "old" fiat money. (If 50 years ago is old.) Neoliberal "infinite growth" capitalism is already an inter-generational MLM, sanctioned by a global monopoly on violent enforcement. All power grows out of the barrel of a gun, and we have all become so delightfully non-violent... The logical conclusion: Oceania, Eurasia and Eastasia locked in perpetual war upon the background of a collapsed ecosystem?
Well, fuck that. Techno-capitalistic nation-states are an early-stage performance optimization. And since violent uprisings lead nowhere, we're doing the sane thing. We're refactoring 'em the fuck out of existence.
If "having a court enforce [a] process" is "simple", how come so many people already have "avoid courts", "distrust lawyers" as rules of thumb, and "don't side with authority" as a general life principle? For the marginalized majority, every state is a failed state, and every system is hostile and oppressive. The thing everyone's getting out of crypto is the same thing they've been getting out of all the other silly pyramid schemes, from Tupperware to contraband. Which is to say, the same things they've been aggressively denied by the state-sanctioned economic mainstream.
Hope. Opportunity. A voice.
A functioning parody of existing economical processes gives people the hope that there's a better economic system right around the corner. Maybe we just have to collectively sort of stumble into it.
Of course, it's only that simple if you have a simplified view of human creativity. But that's OK, too. Every invention that truly revolutionized our way of life was a somewhat accidental result of thousands upon thousands person-hours of organized research. And that's exactly what we're doing here - about as haphazardly as virtually any other kind of software development, but at the same time crowdfunded on a global scale.
Today, we're offering people the same sort of economic "junk food" that the current system has gotten them addicted to for the better part of the 20th century. Tomorrow, someone finally sneaks distributed consensus technology into the mainstream, and makes the world a little less corrupt.
Can you give an example of the proprietary entity you're referring to? I was curious so I took a short course that covered minting NFTs with Solidity, and the way it seemed to work is that the JSON strings (which contain the base64 encoded image) are stored (as an ERC-721 token) on the Ethereum blockchain. Eg. you can see a random such token here: https://rinkeby.etherscan.io/token/0x6b96751051cd25c29cdcea7...
The only proprietary entity involved in that process seems to be Alchemy. My understanding of them is a bit vague but they seem to just help with making miners aware of the new contract and getting it distributed. But that's just the contract, once it's deployed it's nothing to do with them and the NFTs AFAIK don't pass through them at all.
Maybe a stupid question, but where do I find the base64 encoded image in your linked token? The only thing I can see is a transaction moving it from one address to another, the contract bytecode (which I guess might encode an image but its definitely not obvious[1]) and the "extra data" hex in the transaction (that doesn't appear to be an encoded image either, from what I can tell).
I'm probably missing something, so if you could let me know where to look, that'd be nice!
The contract has no mention of opensea, so they must be reading it from the blockchain somehow - but I guess etherscan doesn't display these tokens in a similar way for some reason. It's all pretty new to me and I definitely don't have a super joined up understanding of it all!
To query the URI of your tokens through your contract, you need to interact with its ABI through code; alternatively, you can upload the ABI to Etherscan, which will provide a UI to query it.
You can use the URI to store base64 encoded image or svg data, and that is super cool; but will be too expensive for larger images, at which point you will link to an IPFS-hosted url.
Ah thankyou! In that course we did write a web frontend that interacts with the contract ABI to mint the NFTs, but we didn’t do the display side. I’m curious how opensea are doing it, because they can display NFTs from my contract without me ever giving them the ABI. Can you go from decompiled contract (like etherscan can generate) -> ABI maybe?
When you are implementing an NFT, you are likely implementing either the ERC 721 or the ERC 1155 interfaces; as such, certain standard functions will be available using a standard ABI call.
So OpenSea will just try to call `tokenURI`; if you have implemented the interface correctly, that will succeed, if not, OpenSea will not show a placeholder image.
No thats confusing one possible technical implementation with the concept, there are other ways to solve that. Thats like saying a Picasso painting is just a specific canvas with som paint on.
You are wrong. The JSON data is metadata and is optional. Also, you’re still not refuting GP’s explanation. If you can understand why people buy baseball cards, you can understand NFTs
> There’s a lot of confusion here about why NFTs are valuable if the buyer doesn’t get to own the image copyright.
Mostly because of two persistent lies around NFTs: 1) That you buy a piece of artwork. 2) Blockchain makes it automatically watertight.
All you get is transfer rights of a single number via a blockchain, optionally (usually) with a URI pointing to some media.
Now, why is owning blockchain transfer rights to that number valuable? Because an artist was involved in creating it, and they stated somewhere that the number refers to a specific artwork.
Outside the blockchain, more things have to be trusted for this to hold up:
- The artist in question must be the seller. Sure, you bought it from "banksy44" on nftgox.com, but is that the artist? There are soft ways to verify it, and you can get all sorts of receipts, promises, or statements from semi-official authorities.
- Whatever links the number or the URI to the artwork must remain up. If it's on a regular URL, the host owner gets to decide when to delete it, or when to replace it an ad for their gambling site. If a IPFS resource goes dead, it's gone. If the number referring to the artwork is stored on a 3rd party ledger you rely on them being honest, online, and correct.
AND NOW you have two weaker links in your trust chain, on the level of "humans trusting humans", rendering the blockchain basically useless. The premise is a lie, intentional or not.
I will not disagree that there is confusion and bad arguments on both sides of the debate, which is why you are essentially arguing within the wrong framing.
At the same time, people buying NFTs are generally quite a bit less confused about what you consider "lies" than you seem to think.
Importantly, the blockchain is not useless because they have to exist within the universe's rules of impermanence. You may want to ponder the differences and shared properties between something like seditionart.com, MASS MoCA's ownership of Sol Le Witt wall paintings, and an NFT on a blockchain.
Finally, let me point out that the URI issue is very much a misunderstanding that is widespread within the NFT community as well. It helps to think of the URI as a convenience feature rather than someone implying anything about the value of the token. There are fascinating experiments with tokens that have no url, tokens that have no visual representation, tokens with changing urls, or arbitrary urls; tokens that point to the same url. There are of course tokens that use data uris, and have the image-representation on-chain, or generate it dynamically; or they do so but not in URL form. There are technical implementations where the database of urls is separate from the ledger of tokens; there are early experiments by artists with blockchains (many years before anyone cared about NFTs) where there is no ability to store a URL in the first place.
Cryptopunks, a really early project, simply stored a hash to a file containing the assembled images, and that is all that is needed.
There are various vague touching points of NFTs and real world collectables like baseball cards, but they are not the same. Artificial scarcity is one of them, e.g. there is no reason why there couldn't be a billion baseball cards of the most expensive kind (which would make them stop being the most expensive). Somebody else could create fake ones, but they would have little value for the fact that they are not genuine, which can be verified. You can make the very same arguments for an NFT, including that they are genuine based on who issued them.
But a baseball card, or a Lego set have value on their own. Their collectable value stems from the fact that they are desired as such, and the scarcity makes the price of a certain type go up. Somebody might buy them just to show off or speculate, but another might be a huge Lego nerd and buy the rarest set just to feel joy by looking at it. But an NFT has no value beyond the scarcity. Nobody feels human joy by looking at an NFT beyond being able to show off that they are able to basically burn money in the "i am rich" app type of way. Thus it can only remain a toy for the rich. A van Gogh painting is most likely just a speculation and a show off object, but I might buy a painting from a local artist for $200 because I like it, and to put it on my wall so it makes me happy because it reminds of something nice. I will not buy a $200 NFT just to say I have one too.
Yeah, I follow Peter Mohrbacher who's a surrealist fantasy artist. I've bought some physical prints from him (not even originals or anything, just normal art prints) because I like his art and wanted to have it on my wall and preferred to pay him for a proper print than print a digital copy myself. He also at some point made some NFT sales and I really tried to find a reason to get excited but just couldn't.
I can understand why he was, though, because on his particular platform, artists get a cut of future resale of their art. So he sells a piece for $100, someone later sells it for $200, and he gets a 5% cut (made-up number, I don't remember what exactly it was) for an extra 10 bucks, and so on (but it's still always just a digital token, not a physical piece).
But that doesn't require NFTs to happen. Since it was a proprietary platform, a plain old database could have done the exact same thing.
> e.g. there is no reason why there couldn't be a billion baseball cards of the most expensive kind (which would make them stop being the most expensive)
This is a hilarious contradiction. You are saying there can be a billion baseball cards of the most expensive kind that are at the same time not the most expensive kind.
> People have been speculating on collectibles for thousands of years.
Have they really? IMHO the whole concept of intentionally creating collectibles as a market started (and IMHO became possible) only after strict IP laws that could prevent anyone from making and distributing large quantities of items that should be rare by design.
My favorite example is the fictional collectible card game Gwent in Witcher 3, where the whole concept of rare/scarce cards is ridiculous in the absence of a single organization being able to enforce a monopoly on issuing Gwent cards; the actual expected result should be like ordinary cards, where everyone gets an ace of spades in their deck or chess where both players get a queen, no questions asked; for human-created marketable collectibles (as opposed to actual collections of butterflies or the like) the scarcity can only happen if artificially enforced.
This is one of my main gripes with MtG. It just feel like a scam, a 90s loot boxes situation. I do not want to contribute to the business model, even if the product is solid.
I will probably sell my collection and print some proxies.
MTG is kind the original lootbox, but I guess at least there is a reasonably good game behind it.
I dumped my MTG in the early 2000s, these days I'll only buy into a card game using the LCG/ECG model. It's not necessarily cheaper but it is less scummy.
Unlike NFTs there is at least a (physical) product.
(And even in the digital version, you have a limited digital item in a verified/trusted (digital) environment, backed/supervised by an entity (company). In crypto you're backed by a concept (an algorithm))
To me this whole crypto stuff seems like a bigger and better incarnation of the tulip mania (https://en.m.wikipedia.org/wiki/Tulip_mania), very little crypto stuff /coins are backed by anything of intrinsic value. In a way it's the ultimate decadence.
If we are going to approach the issue through analogies, here's an alternative one: selling an NFT is like the old scam of selling a bill of goods (this is where the victim thinks he has bought a number of tangible things, but the contract actually says that all he has bought is the document listing the goods.)
The big difference with NFTs, of course, is that the true nature of the transaction is not being disguised. That makes it legal and even ethical, but whether that is enough for you to be a buyer is up to you.
If not for the energy costs NFTs would be just like you describe above - a somewhat pointless but harmless hobby for enthusiasts (what good does speculating on baseball cards do in the world? What good does speculating on art do for that matter? As far as I can tell "little to none" for both of these).
NFTs themselves don't have any energy costs. Depending on what network you're using for buying/minting/trading NFTs, there might be energy cost associated with it, but not all NFTs are equal. NFTs based on Proof-of-Stake networks won't have the same energy cost as NFTs based on Proof-of-Work networks.
Unfortunately, it seems that most NFTs are based on the Ethereum platform, which is currently Proof-of-Work. Fortunately, Ethereum is moving to Proof-of-Stake slowly but surely.
But the point still stands, NFTs themselves have no energy costs, only the transactions on the network where they live have that.
There's no energy cost to spawning a million algorithmic penguins. They have no inherent cost or value.
The sunk costs of obtaining something rare or difficult to get (like titanium) is a factor only for the next person who desires titanium.
Since there is no cost to see or copy a jpg, there is no "extra value" added in an NFT. Not even energy costs. The end product still has zero value.
A simple corrolary is wine. Swill stored expensively doesn't acquire new use values from the storage. The expense of storage doesn't accumulate to the value of the NFT. Whereas the expense of obtaining real goods like metals is exactly what sets their value.
When you have a baseball card, the first sale doctrine means that you at least have the legal right to display and transfer that card. With NFTs, even that is not necessarily the case because displaying the content of the NFT is making a copy, and you may not have a license to do that.
If you own an NFT, you have the ability to write someone else’s address on a socially recognized ledger of ownership. That is all that matters. If the NFT and the ledger have wide interest, this ability to transfer ownership has value regardless of any legal subtleties.
We already have a concept of ‘ownership’ in the real world.
If an artist wants to sell a digital work to someone they can do so - just write up a contract, sign it, exchange some value, and you’re done. Selling things is a well understood concept. We have a legal framework for it.
If an NFT represents a transferable sellable set of rights, then those rights have to be expressed in a sale agreement of some sort (implied or explicit).
Sure, the blockchain gives you an easy way to handle the ‘transfer of ownership’ portion of a subsequent sale, but items not some radical new form of ownership - it rests on an underlying legal framework that is indistinguishable from selling deeds to acres on the moon or selling numbered prints of an artwork with a certificate of authenticity.
Either there remains interest and social consensus around this ledger, in which case it can be rebooted on a different network, for example, or even by a centralized party; or maybe you are the only one with an interest in your NFT collection, in which case you can keep a copy of the ledger yourself.
Sure you can do that right now. But my point was more: physical objects can be traded easily in the far future.
We can hardly rebuild stuff from source after 20years time, so I'm pretty sure you will not be able to revive long dead blockchains as easy as renting a space to trade physical objects of collectible value.
My point here was more akin to saying: Sure, if no one cares about your NFT, or the chain it is on, then yes, it's worthless. If you want to be the last one to care, keep a copy of the chain.
The physical equivalent is a worthless painting that no one cares about and your grandchildren throw out.
Exactly, you own a ledger entry. Stop saying that is like baseball cards. I can frame and hang a real baseball card on my wall because I own it and it is real. I can hang a digital frame on the wall and point it at your NFT and have the "real" thing even though I don't own it. It is simply a pyramid scheme. Some people will make a lot of money and some will lose a lot. I do see people who are so convinced that NFTs will be around 20 years from putting their entire net worth into NFTs and planning to HODL.
This is a great explanation. I’ve understood NFTs slightly differently, where they are akin to an _autographed_ baseball card. In that case, regardless of how many copies of that card exist in the world, you have a rendition of that card authorized by a special party (the autographer) that causes it to be unique.
Where any number of digital copies of an asset may exist, the NFT is the “autograph” atop that asset that is unique and therefore adds the value.
(It’s worth noting that anyone can autograph any baseball card. So it’s not the autograph that makes it valuable, but _who_ autographed it. It’s the same with who minted the NFT.)
There's another aspect to this analogy - It's like an autographed baseball card + the person / entity autographing the card has declared (by code) that there won't be another one of these autographed series ever (eg - 10k CryptoPunks series).
They're nothing at all like baseball cards. Very few baseball cards are worth anything at all, and the ones that are don't promise to be rare in some hypothetical future. They're cards that were created decades ago and are actually rare and can't possibly be recreated. If you have a rookie Willie Mays in mint condition, it took half a century for that to become valuable, as all but maybe one or two in the world disappeared and you have the only one left. Nobody mints a brand new baseball card right now, pinky swears it will remain the only of its kind forever, and then sells it for millions immediately.
Baseball cards are exactly what they are and baseball cards were historically viewed as worthless until a craze in the 80’s that in turn caused over production and has made them a pretty poor investment.
This is partly true, but you are missing one important aspect:
While ownership can be enforced equally well with NFTs and baseball cards, the crucial difference is that with physical cards, owners have a unique way of experiencing the card. Anyone can look at an online reproduction of it, but only if you have a physical copy can you hold it in your hand.
This is not the case for NFTs, anyone can experience the image in exactly the same way.
I think your point on scarcity and attention are well put, but can't apply to NFTs in the way as physical commodities because I think there has to be some notion of originality intertwined.
Like for art pieces, sure people can make copies and put the copies on a wall - but only I have the original to hang up my wall. There is value to most people between having a copy vs the actual thing.
There is obviously a massive disconnect with this and NFTs because anyone can save a copy of a NFT (or the image a NFT represents) and not have its value diminished because all the "copies" of the NFT are the same - since "originally" doesn't apply to digital goods.
It doesn't matter if there is some hash on a blockchain out there saying so-and-so "owns an image", I can still copy the image and get the same value. That is not the case with say having a copy of the Mona Lisa vs the actual Mona Lisa.
NFTs are worthless to me for the above reason aside from the value that other people think they have.
The difference with baseball cards is that nobody ever had the option to just "buy the Barry Bonds card" out of the gate.
The value came from the rarity of people all over buying random packs of cards, collecting them, trading them and the established rarity that came from that massive distribution coupled with holding the cards for a decade or more to see how one of these players career played out. On the off chance that you held onto a rare card of a legendary player, then congratulation...you have something of value. More so if you took good care of it.
There's none of that with NFTs. It's akin to handing out flyers on the street and asking somebody to pay for them on the basis that..."Sir, that flyer belongs only to you now. Congratulations!"
NFT's are just digital proof of an old adage.
"A fool and his money are easily parted." - Thomas Tusser
# I bought the rights to the quote from an NFT
The difference between baseball cards and NFTs is that if I'm cold I can make a bonfire from baseball cards, whereas I certainly can't do the same with NFTs.
At this point, of you say crypto is involved with some new fad it's just a clear indicator that silicon snake oil is the real product.
It’s thought that something like 20% of BTC are “lost” (1) (ie, private key is lost). This will certainly happen to NFTs as well since people will inevitably fail to back-up their wallets.
NFT's are not like Baseball Cards, they are more like Pet Rocks.
A Baseball Card has some underlying value and fun, kids get baseball cards. They cannot be diluted as 'reprints' would never be accepted as substitutes.
If some people want to trade those things on the margins, fine.
A 'number' i.e. digital signature is not a collectible.
Digital signatures of any creative work are meaningless, nobody will derive satisfaction out of owning them and they'll probably just lose value over time.
It's an obvious money grab populist grift that really doesn't create net value for anyone.
If you buy a Barry Bonds baseball card for $1,000, you don’t own the artistic rights to the image on the card. All you own is the card itself, which has negligible manufacturing cost. It would be trivial for any card company to produce a million functionally equivalent Barry Bonds cards.
When you buy a Barry Bonds baseball card, you hope that the card company won’t dump a million more on the market. You also hope that if another baseball card company springs up and prints their own Barry Bonds cards, people won’t be as interested in that brand of cards. Attention and scarcity drive value; the nuance is that other speculators must care about scarcity along the same dimension that you possess it (in this case: the brand of the baseball card company and the year the card was made). There are a hundred tokens functionally equivalent to Bitcoin, but none approach Bitcoin’s value - purely because Bitcoin sustains more consumer and media attention. This position is fairly stable because attention has strong positive feedback loops.
There has always been interest in speculative collectibles. A purely digital collectible solves a lot of practical problems related to exchange: you don’t have to wait a week to receive the item in the mail, you don’t have to worry about its condition because it does not degrade with time or use, there is minimal counterparty risk due to online escrow contracts, and counterfeits are harder to fake (along the relevant dimension of scarcity, which is the origin address).
People have been speculating on collectibles for thousands of years. Crypto just makes it easier to trade them back and forth.