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Advantages of NFTs: • Auctionable and sellable on the blockchain without any AML or KYC • Creates a paper trail that posits as a legitimate way to have accumu

by dannyw 6y ago

Advantages of NFTs: • Auctionable and sellable on the blockchain without any AML or KYC • Creates a paper trail that posits as a legitimate way to have accumulated wealth to the taxman and government • Round-trip costs of <2% as compared to traditional money laundering systems which can be an order of magnitude more expensive. • Plausible denialability as art. Basically, NFTs are a great way to launder money. Launders will likely also do some unrelated party transactions to counter anomaly detection, so even if you don't want to launder money, buying NFTs can give you the ability to capture some money laundering premium. You may find this description morally wrong, but don't doubt the ability for NFTs to grow in value. Money laundering is big money.

azinman2 6y ago
But how does any of that refute the idea of a tweet being sold with an NFT? How do you own someone else’s tweet? And what’s the real value here?
- vntok 6y ago
  It is a bit like owning a protected building, for example a French castle. You "own" it in the sense there's an immutable paper trail that proves you and you alone are the owner. However, the castle being protected as a national monument, you cannot bulldoze it or even change it in any way by law AND you are obliged by law to open it to the public. Basically you are buying bragging rights.
  - lottin 6y ago
    Imaginary rights.
    - ebcode 6y ago
      All rights are imaginary.
  - azinman2 6y ago
    But at least the same system that creates constrains also grants you explicit ownership, the castle can’t be duplicated, and it’s value is tangible. Here, Twitter isn’t selling the NFT — it’s a pledge of value from Dorsey on something that’s completely unrelated. For something that there isn’t one of… every person who views the tweet is looking at their own identical copy. This all feels very strange to me, probably because it is so intangible AND Twitter is still broadcasting the message just the same AND Twitter already has a concept of ownership which isn’t being honored here.
    - megameter 6y ago
      It's how this is, at its root, about the concept of credit, rather than the concept of property. If I grab something out of your hands and you say, "that's mine!" That would be property. But if I put up a painting and you ask, "who made that?" That would be credit. There is no scarcity of blockchain space - you can download Bitcoin right now and use less space than the newest "Call of Duty" collection. The property is very easy to acquire. But then if you ask "who made Call of Duty", you are forced to point to the system of IP law, which may or may not credit the individual creators properly. So, what NFTs are trading is a particular form of credit. This tears up some economic assumptions around what credit is "worth". A popular blockchain is one that allocates credit accurately and fairly.
      - azinman2 6y ago
        But credit isn’t the same as ownership. Here we can all go to Jack Dorsey’s profile and have the question answered “who made this tweet?”. This is more “who bought this tweet,” except because it’s not physical and infinitely copyable with zero degradation by just going to his twitter profile, I fail to see how this NFT carries meaningful value that will last in time. We’d need society to recognize the value, and when there’s no cost to the copies, it seems to go against most of signaling theory.
- bluesign 6y ago
  Actually you don’t own the tweet. In a basic sense, you own a signed ‘snapshot’ of the tweet. Basically it is kind of ‘only signed copy of the tweet’
  - ComputerGuru 6y ago
    Until I open my Lyft to their Uber and Dorsey sells the same tweet on my NFT marketplace.
    - azinman2 6y ago
      I suppose there are many baseballs with famous signatures on them.. how rare that is changes the value.
- deleted 6y ago
  [deleted]
lifeisstillgood 6y ago
I'm fascinated by this but would like to walk it through (and no, with London and NYC as two of worlds biggest money laundering centres I think this seems likely) I have millions of dollars in yuen in Guangdong - and I want to get it out of the country, or I have millions of dollars of cash from selling drugs in Mexico. Then, I buy a number of ASICS and plug them in? I doubt I will get millions that way but it's a start, maybe I ... hmm the on-ramp is complicated - getting from dollar bills to bitcoin already requires laundering. Ok, let's say I have my coins - transferred to me via the age old solution of handing cash to someone with bitcoins and they transfer them to my wallet. But of a giveaway but ok. Let's call that DirtyWallet. Now I find a NFT company - it makes digital photos of the sidewalk in NYC and sells each paving stone online. The idea is to hide money laundering. I buy half the paving stones on Broadway for a dollar each, from CleanWallet. Then I auction my paving stones, and amazingly they are all bought up by DirtyWallet for a million each. CleanWallet now has millions and is ready to off-ramp. I kind of get it but not really - it does nothing new - it still needs corrupt on ramp and off ramp people in corrupt places in the world (like London) - and that's where the real cost will come. The washing (transactions to hide origin) is the simple part - I would want to wash the money through family restaurants in MidWest (where the owner got in deep with low shark) or the other traditional approaches as well. It just looks like this will be a small part - and given it public traceability i suspect a small part - once someone gets traced through the blockchain this will be avoided
- leereeves 6y ago
  It's a lot easier if the dirty money is already crypto, from ransomware, dark web transactions, etc. Then the crypto is untraceable at both ends: one side leads to the victim, the other to someone with plausible deniability: "I was just selling art at market value. I didn't have anything to do with that crime, and I don't know the person who bought the art." In between, nothing but an anonymous wallet and an untraceable transfer of NFT.
  - nathancahill 6y ago
    This is the best explanation in the whole thread.
prawn 6y ago
For anyone else like me unfamiliar with AML and KYC in this context: Anti-Money Laundering Know-Your-Customer
jb775 6y ago
Could NFTs be used somehow to cheaply transfer money between different foreign currencies? Currency exchange charges have always been absurd for no obvious reason besides banks controlling access...I feel like that market needs to be disrupted.
qqii 6y ago
Art NFTs are a great way to launder money, but they're not unique in that aspect. There are plenty of ways to launder money with smart contacts and art NFTs aren't special. Not all NFTs are art NFTs either, it is becuase it is art and has "intangible value" that gives sales plausible deniability. Trading card NFTs, in game item NFTs and other NFTs that have tangible value don't suffer the same issue.

by dannyw 6y ago

azinman2 6y ago

But how does any of that refute the idea of a tweet being sold with an NFT? How do you own someone else’s tweet? And what’s the real value here?

vntok 6y ago
It is a bit like owning a protected building, for example a French castle. You "own" it in the sense there's an immutable paper trail that proves you and you alone are the owner. However, the castle being protected as a national monument, you cannot bulldoze it or even change it in any way by law AND you are obliged by law to open it to the public. Basically you are buying bragging rights.
- lottin 6y ago
  Imaginary rights.
  - ebcode 6y ago
    All rights are imaginary.
- azinman2 6y ago
  But at least the same system that creates constrains also grants you explicit ownership, the castle can’t be duplicated, and it’s value is tangible. Here, Twitter isn’t selling the NFT — it’s a pledge of value from Dorsey on something that’s completely unrelated. For something that there isn’t one of… every person who views the tweet is looking at their own identical copy. This all feels very strange to me, probably because it is so intangible AND Twitter is still broadcasting the message just the same AND Twitter already has a concept of ownership which isn’t being honored here.
  - megameter 6y ago
    It's how this is, at its root, about the concept of credit, rather than the concept of property. If I grab something out of your hands and you say, "that's mine!" That would be property. But if I put up a painting and you ask, "who made that?" That would be credit. There is no scarcity of blockchain space - you can download Bitcoin right now and use less space than the newest "Call of Duty" collection. The property is very easy to acquire. But then if you ask "who made Call of Duty", you are forced to point to the system of IP law, which may or may not credit the individual creators properly. So, what NFTs are trading is a particular form of credit. This tears up some economic assumptions around what credit is "worth". A popular blockchain is one that allocates credit accurately and fairly.
    - azinman2 6y ago
      But credit isn’t the same as ownership. Here we can all go to Jack Dorsey’s profile and have the question answered “who made this tweet?”. This is more “who bought this tweet,” except because it’s not physical and infinitely copyable with zero degradation by just going to his twitter profile, I fail to see how this NFT carries meaningful value that will last in time. We’d need society to recognize the value, and when there’s no cost to the copies, it seems to go against most of signaling theory.
bluesign 6y ago
Actually you don’t own the tweet. In a basic sense, you own a signed ‘snapshot’ of the tweet. Basically it is kind of ‘only signed copy of the tweet’
- ComputerGuru 6y ago
  Until I open my Lyft to their Uber and Dorsey sells the same tweet on my NFT marketplace.
  - azinman2 6y ago
    I suppose there are many baseballs with famous signatures on them.. how rare that is changes the value.
deleted 6y ago
[deleted]

lifeisstillgood 6y ago

I'm fascinated by this but would like to walk it through (and no, with London and NYC as two of worlds biggest money laundering centres I think this seems likely) I have millions of dollars in yuen in Guangdong - and I want to get it out of the country, or I have millions of dollars of cash from selling drugs in Mexico. Then, I buy a number of ASICS and plug them in? I doubt I will get millions that way but it's a start, maybe I ... hmm the on-ramp is complicated - getting from dollar bills to bitcoin already requires laundering. Ok, let's say I have my coins - transferred to me via the age old solution of handing cash to someone with bitcoins and they transfer them to my wallet. But of a giveaway but ok. Let's call that DirtyWallet. Now I find a NFT company - it makes digital photos of the sidewalk in NYC and sells each paving stone online. The idea is to hide money laundering. I buy half the paving stones on Broadway for a dollar each, from CleanWallet. Then I auction my paving stones, and amazingly they are all bought up by DirtyWallet for a million each. CleanWallet now has millions and is ready to off-ramp. I kind of get it but not really - it does nothing new - it still needs corrupt on ramp and off ramp people in corrupt places in the world (like London) - and that's where the real cost will come. The washing (transactions to hide origin) is the simple part - I would want to wash the money through family restaurants in MidWest (where the owner got in deep with low shark) or the other traditional approaches as well. It just looks like this will be a small part - and given it public traceability i suspect a small part - once someone gets traced through the blockchain this will be avoided

leereeves 6y ago
It's a lot easier if the dirty money is already crypto, from ransomware, dark web transactions, etc. Then the crypto is untraceable at both ends: one side leads to the victim, the other to someone with plausible deniability: "I was just selling art at market value. I didn't have anything to do with that crime, and I don't know the person who bought the art." In between, nothing but an anonymous wallet and an untraceable transfer of NFT.
- nathancahill 6y ago
  This is the best explanation in the whole thread.

prawn 6y ago

For anyone else like me unfamiliar with AML and KYC in this context: Anti-Money Laundering Know-Your-Customer

jb775 6y ago

Could NFTs be used somehow to cheaply transfer money between different foreign currencies? Currency exchange charges have always been absurd for no obvious reason besides banks controlling access...I feel like that market needs to be disrupted.

qqii 6y ago

Art NFTs are a great way to launder money, but they're not unique in that aspect. There are plenty of ways to launder money with smart contacts and art NFTs aren't special. Not all NFTs are art NFTs either, it is becuase it is art and has "intangible value" that gives sales plausible deniability. Trading card NFTs, in game item NFTs and other NFTs that have tangible value don't suffer the same issue.