11 ms·

Lets talk about how NFTs are a giant scam

119 points by amin 5y ago

danpalmer 5y ago
The NFT ecosystem is people with bad engineering skills, poor social skills, and no understanding of economics, attempting to create a new economy of social contracts based on technology they have created.
mathrall 5y ago
There's this something that I have read that he randomly created NFT just for the memes, and yet he made a fortune out of it. Also, many NFTs are powered by pumps and dumps. Have you seen the scandal of one of the OpenSea executives?
villasv 5y ago
People keep talking about using NFTs for laundering but as a criminal I’d be very wary and just go with the traditional ways. Has there been any actual studies on money laundering through crypto?
- supermatt 5y ago
  its for laundering cryptocurrencies, not "money". e.g.ransomware bitcoin payments.
  - Tenoke 5y ago
    Any evidence that a significant fraction come from those? It'd be incredibly easy to prove if that's the case and I only ever see guesswork rather than Blockchain analysis behind those claims. Moreover, most of the big NFT investors seem to have a long history and as far as I can tell are often just collectors who are already rich from crypto.
    - supermatt 5y ago
      no idea, just clarifying what the article inferred
  - villasv 5y ago
    Right, but there are mixing wallets and private coins so why bother with NFT?
    - rrrrro 5y ago
      When money laundering, you're not only hiding the origin of the money, you also want to have a good explanation why you have it.
- NicoJuicy 5y ago
  Just lookup any crypto mixing service - https://en.wikipedia.org/wiki/Cryptocurrency_tumbler https://en.wikipedia.org/wiki/Cryptocurrency_tumbler Eg. from a week ago: https://portswigger.net/daily-swig/founder-of-bitcoin-money-laundering-service-admits-300-million-racket https://portswigger.net/daily-swig/founder-of-bitcoin-money-...
  - villasv 5y ago
    But this isn’t NFT? I was hoping for an analysis on methods and volumes in the whole ecosystem.
- leppr 5y ago
  It's hard to do a quantitative study on something that has inherent deniability. The ones who could map the flows (centralized exchanges, which are de-facto tumblers), will obviously not publish public studies on this.
Andrew_nenakhov 5y ago
It was obvious from the start that all this NFT market is pure nonsense, but it is nice that someone takes time to clearly explain why. Maybe it'll save some innocent souls from losing their money.
- vertis 5y ago
  The maxim "The market can stay irrational longer than you can stay solvent" applies (sort of). Just because it's nonsense doesn't mean that a bunch of people aren't going to make significant amounts of money before it fades away.
  - UncleMeat 5y ago
    Of course. And a lot of people will lose a lot of money. And it is tricky to ensure you are in the former group.
  - Andrew_nenakhov 5y ago
    That bunch of people is not going to make significant amounts of money, they will take significant amounts of money from other people, giving nothing in return. I believe that in English language fraud is an appropriate word for such enterprises.
account-5 5y ago
This is a great explanation. I know people who "bought"/"named" stars. Never understood it. And NFTs are this. You don't own the thing you think you do.
- chrisseaton 5y ago
  > Never understood it. It’s clearly just a joke gift. I’m sure nobody is actually confused that they’ve really bought some legal right. It’s like criticising a ‘kiss me quick’ t-shirt by asking if people realise the t-shirt actually has no legal power to compete people to kiss you. They already know. It’s a joke. Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it. I feel like people are working so hard to not see the joke.
  - smcl 5y ago
    If NFTs are just a joke, then there's a surprisingly large number of people who are playing along. Like, far more than I could believe could actually keep a joke like this going with a straight face.
  - gjulianm 5y ago
    From what I've been reading in quite a lot of comments, people are indeed confused that an NFT is or can be some kind of legal ownership title. If people thought it was a joke, you wouldn't see so many people thinking that it's going to revolutionize X (whatever X is, apparently everything can be disrupted with NFTs).
  - abcd_f 5y ago
    Wait till you hear about companies selling plots of the Moon surface and people buying them with a straight face as a high-risk investment.
  - meheleventyone 5y ago
    > Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it. Except people are getting scammed out of large amounts of money. For example the Evolved Ape scam that broke last week. Or artists that have their work minted and sold without permission. People pumping the value of their assets through wash trading. And so on.
theragra 5y ago
While I agree NFTs are dumb, argument that they are scum is weak. People pay for all kinds of dumb things, like penny stocks or collectibles. I am sure there can be people that pay for database entry and are happy with their purchase.
- Jensson 5y ago
  Then why have I never seen anyone talk about the cool NFT's they own and instead everyone talks about them making quick bucks on NFT's? Look at youtube search results, not a single person talks about the cool NFT's he has, just a lot of people trying to sell their NFT's for a quick buck. https://www.youtube.com/results?search_query=nft https://www.youtube.com/results?search_query=nft Compare with stamps, I see some people talk about making a quick buck on stamps but also a lot of people talking about their stamp collections. There is a huge difference here, the nft case you see 99% scum and 1% calling out the rest of them as scum, and not a single enthusiast who cares about the NFT. Stamps I see mostly enthusiasts and a few scum posts. https://www.youtube.com/results?search_query=stamps https://www.youtube.com/results?search_query=stamps So until you can find me all these "enthusiast NFT collectors", I'll assume that they don't exist. They could exist in theory, but I have seen no evidence that a single NFT collector actually exists in this world.
  - CyrusL 5y ago
    Hi, I’m an NFT collector. A bunch of my friends are too.
    - Jensson 5y ago
      Problem is that calling yourself an NFT collector is a way to raise the value of NFT's and therefore something an NFT scammer would do, so you doing that doesn't prove anything. Similarly buying an NFT from yourself for a million dollars is a good way to trick people into a buying frenzy buying all your other NFT's. So until I see evidence that these eccentric billionaires who pays a lot of money for these actually exists and aren't just parts of the scam I can't trust you on this. But at least you are a data point, now I have seen one person claiming to buy NFT's to keep rather than resell, even if I don't necessarily trust you. So thanks!
JofArnold 5y ago
> You're buying an expensive entry in someone else's database Nope, you're buying a non-fungible token on a public ledger where the data and association with a specific address (or addresses) can be read without permission. This ownership and permission can then be moved around (potentially for large sums - potentially for near-zero amounts) by means that are independent of the client used. So for instance an NFT could give me access to an exclusive Discord channel (the client here being a Discord bot) and I could potentially sell or otherwise pass that onto someone else who wants access. The ownership of that token could also afford me access to, for instance, buying another token on another smart contract (the client here being another smart contract). That they are commonly linked to metadata associated with JPEGs is really missing the opportunity here. Furthermore, since everything's on a public ledger the much-stated money laundering is surprisingly difficult. And in fact multiple people have been caught out by this (a simple example being one of OpenSea's PM's wallets showing that they were frontrunning; another is VCs front-running their portfolio companies' air drops). That NFTs are often exchanged between bot accounts and multiple wallets (often tracked back to known individuals) to pump prices is also well-known and visible on the blockchain. Whether or not you think expensive JPEGs are 2020s' Beanie Babies, it's hard to imagine a programmer on HN not being able to think of interesting non-JPEG things to do with an open source, public and permissionless ledger/database. EDIT: disclosure - I have some JPEG NFTs. They weren't super expensive to me but I bought them so I had skin in the game that forced me to investigate this market rather than shouting "but money laundering!" from the sidelines. I'm glad I did this. Via getting into the weeds I've discovered a vibrant and super interesting ecosystem of developers, entrepreneurs, cryptographers and opportunities I'd never have known about otherwise. Are my JPEGs worth it? Doubt it. But the experience has been super interesting so far.
- schnebbau 5y ago
  You just used 4 paragraphs to say the same thing as the text you quoted.
  - JofArnold 5y ago
    How is this "someone else's database"? It's literally a 100% public permissionless ledger. If I store an NFT in Facebook's database is that not "someone else's database" by definition.
anonymoushn 5y ago
When you buy an expensive piece of art, you often never physically see it, and a warehouse just notes that it belongs to you instead of the previous owner.
- brk 5y ago
  Maybe, I've never bought expensive art. But I know people who have, and I've sat around their kitchen surrounded by 10's of millions of dollars worth of art. It was mostly kept covered up from sunlight, but it was not in a warehouse.
- scyzoryk_xyz 5y ago
  Before the 20th century technological advancements, when you bought a piece of art you not only owned it, you were in control of who gets to actually see it.
- meheleventyone 5y ago
  In these cases though people are buying the art not for the sake of actually owning the art but for another use that it's high value provides them. Which is an apt comparison to NFTs because they mostly seem to be used for speculation.
- deleted 5y ago
  [deleted]
- robjan 5y ago
  With NFTs, another warehouse can also note that the art belongs to you and you have equal legal rights to enjoy and sell the art as the original owner.
- 1270018080 5y ago
  You're missing the point. When you buy a piece of art, you own the piece of art. When you buy an NFT, you own a row in a fundamentally meaningless database that points to some image on the internet. The database has no value, no one recognizes it, you don't own the image. There is a fundamental difference there.
infide1castr0 5y ago
This was an insightful thread, but I think these arguments miss the "bigger picture" that NFTs carry with them. Yes the popular use case right now of expensive art and "selling a JPG" is rather silly, just like the art world always has been. What I see in the space however is a lot of opportunities to grow community-building tools - POAPs for example are rarely sold for profit (some still try to) and are a great way to encourage participation and attendance of events, with added functionality of rewarding said participation after an event for example. A lot of media coverage is on the absurd art market use cases, and though the possible profits make it a loud use case, it is just one sliver of potential of Blockchain technology. I am excited to see NFTs move beyond these cases, and I see that happening quite often.
- dTal 5y ago
  What exactly does the blockchain contribute, that could not be accomplished in a superior way with an SQL database?
  - osigurdson 5y ago
    The primary advantage is increased trust. With a SQL database, it is necessary to trust the organization that hosts the database. With blockchain it is necessary to trust a distributed network of organizations (or more precisely their computational power).
    - Jensson 5y ago
      If you think that NFT issuers are more trustworthy than banks or big companies then I have bad news for you. The NFT you get is as trustworthy as the paper you bought saying you own the golden gate bridge. Nobody can take that paper from you, but they sure can take the bridge.
      - osigurdson 5y ago
        The question was (paraphrased) "what value does blockchain add over SQL database table with a unique index?" - not whether NFT issuers are more trustworthy than trusted organizations or if NFTs are a valid asset class.
raesene9 5y ago
Another Interesting NFT thread from today https://twitter.com/moxie/status/1448066579611234305 https://twitter.com/moxie/status/1448066579611234305 .
- leppr 5y ago
  The fact that this kind of art NFT (direct link to a centralized resource without a hash) is so widespread, at least proves that a huge portion of the NFT ecosystem is indeed a scam.
throw_m239339 5y ago
I mean people literally buy "property" and space ships in virtual game worlds. NFT are no different, it's microtransactions but for rich people. Is it a scam? well it depends whether the elite values NFT or not... it certainly is a speculative "asset" by nature. It's not a scam provided people know what they are exactly buying. It's more of yet another "get rich quick" scheme for some. However, beyond the speculative aspect of NFT, artists need to know that putting their art in a virtual gallery as NFT WILL COST THEM money, so the business model for the middle man is to make artist believe that they will make money from NFT. The house always wins...
- Traubenfuchs 5y ago
  Space ships and virtual property is virtual property, at least you got something. Something to look at maybe, something that distinguishes you in game? NFTs give you NOTHING. They don't give you the right to anything. All you own is a (hopefully) unique cryptographic sequence.
  - Tenoke 5y ago
    If you think of Cryptopunks (or whatever) as a game then buying one gives you as much or more in the context of the game as buying a skin or a plot of land in the context of another game. >Something to look at maybe, something that distinguishes you in game? You pretty obviously get that here, too. I honestly don't see why you'd think it gives you less other than out of general dislike for NFTs.
- superrad 5y ago
  There's more of tangeable value from buying property in virtual game worlds in the sense people get to use those property or items when normally in the game they would not be able to. For things like ship preorders on Star Citizen it's much more of a risk that the value will ever be delivered but it's still offers more than just a note of ownership of an abstract token on a blockchain sequence. If someone decides to honor these tokens as proof of ownership of property/items in the real world/ a virtual world then they may offer some value but there's a very great risk that will never happen.
JumpCrisscross 5y ago
If you’re buying NFTs with hopes of profiting from them, i.e. as assets, you’re an idiot. If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there. If you’re playing middleman, frankly, I think you’re wasting your life, but then I don’t see how you’re so different from an art dealer or auction house. At any rate, you’re probably a better allocator of those dollars than whoever gave them to you. (Exception: if you’re pitching NFTs as investments to unsophisticated investors, you deserve to be prosecuted.) All that said, NFTs do something similar to what much of fine art and religious prohibitions do: demonstrate group membership by submitting to arbitrary prohibition and sacrifice requirements [1] with the aim of accessing club goods [2], e.g. in-group access and standing. When someone calls NFTs a scam, they’re saying those club goods are worthless. Objectively, as a crypto sceptic, the wealth made by crypto insiders would appear to reject that hypothesis. (Whether buying an NFT or expensive painting alone confers those club goods is a separate question.) [1] https://www.nber.org/system/files/working_papers/w6715/w6715.pdf https://www.nber.org/system/files/working_papers/w6715/w6715... [2] https://en.m.wikipedia.org/wiki/Club_good https://en.m.wikipedia.org/wiki/Club_good
- danpalmer 5y ago
  > If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there. I think there's a significant group who are buying because under their understanding of what NFTs are, they're silly/funny/make them happy, but that they are mistaken about what NFTs are. Arguably if it's bringing them joy, who cares, but at some level this is still a scam.
- Uehreka 5y ago
  I feel like most people see the art dealing world for what it is: a clout-chasing game that’s basically a scam. And I hear some NFT people take the stance of “yeah art dealing is a scam, but it’s going to happen anyway, so I might as well make some money.” Which is all well and good in a sense, I’m not gonna cry over rich people spending their money on bs. But it’s also the case that if you take this position, you do abdicate any ability to advocate for NFTs as something other than a scam. And if you try and flip this around and argue that “art dealing is a legitimate business actually”, people will (correctly) look at you weird.
seanieb 5y ago
Same influencers that flog the grind culture, selling vitamins one minute and NFT’s the next.
adnzzzzZ 5y ago
>Like all crypto scams, the essence of the NFT grift is in recruiting new believers by convincing them a blessed database is an authoritative registrar of value. Just like star naming the grift isn't about utility it's simply a shared delusion in a get rich quick scheme. I think this gets to the core of why so many people (like the entirety of Hacker News) seem to irrationally hate NFTs, to the point of posting about it almost every day instead of just ignoring it. There are shared delusions that are useful as social coordinating forces. Religions are generally this. Social justice is this. And crypto is also this. I find that a lot of the irrational hatred for NFTs and crypto in general tends to come from people who hold certain shared delusions and who don't like that another competing one is so successful at coordinating behavior.
- Jensson 5y ago
  It is the "get rich quick scheme" part people don't like about NFT's, not the "shared delusion" part.
  - adnzzzzZ 5y ago
    There are plenty of NFT platforms that are not about getting rich quick yet no one talks about them because it doesn't fit their narrative. This leads me to believe that what I said is correct, rather than you said.
    - Jensson 5y ago
      Scam NFT's are talked about since NFT scammers posts about theme everywhere. Non-scam NFT's are not talked about since nobody cares about them. When non-scam NFT's gets popular then people will start to talk about them, but until then it is only natural that people talk about the more popular use case. If what you believe was true then we would see plenty of people talk about all those things, but as you said nobody talks about it so those communities doesn't exists. It is basically all scams and people talking about theoretical scenarios of people maybe caring about NFT's in the future.
      - 5y ago
nathias 5y ago
You too can use the classic fudster starterpack: -- it has no use -- it is used by criminals -- tulips
- deleted 5y ago
  [deleted]
davedx 5y ago
People are still saying this about cryptocurrencies too. Many people also say EVs and green energy are a scam. People also frequently accuse public companies of being scams or trash (there's a certain intersection between the previous sentence here). Healthy skepticism is a powerful weapon of thought. But you have to be able to acknowledge where skepticism ends and stubborn refusal to accept reality starts. Humans value certain things. They may not be the same things you value. That doesn't necessarily mean they're just "a giant scam".
- 40four 5y ago
  Yeah I’m totally with you. I think many of us had a similar reaction the first time NFTs were explained to us. But the not I learn about them, an see them in action, it’s definitely starting to make more sense. This (very uninteresting) Twitter rant doesn’t really make any good arguments. The comparison to ‘star naming’ services is very contrived & makes absolutely no sense.
- birtoise 5y ago
  Yeh but sometimes what people value and like is a scam. You know, some people do like certain MLM brands or even cults, that doesn’t mean those aren’t scams/cults. Stop trying to normalize predatory behavior and institutions under the banner of “people value different things”
  - davedx 5y ago
    How are NFT's "predatory behavior"? Some stuff is for sale. Nobody is being tricked into buying it. Everyone knows you click right click and save if you want.
    - birtoise 5y ago
      Sure, do you know anything about NFTs from the side of the artist and what they have to do to get a token for their pieces? Seems like you don't. Educate yourself first, young boy.
- omnicognate 5y ago
cameronh90 5y ago
Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts. Art also has no intrinsic value. Art is also used for money laundering. When you buy art, you don't own the copyright, you just own the original production. The copyright owner can continue to manufacture prints and reproductions, but they are worth a fraction of the original. If it were possible to create one, an exact atom-for-atom duplicate of a piece of art would likely also only be worth a small fraction of the "original". Even weirder, nowadays, much art doesn't really have an "original" as it was produced electronically in the first place - so what does owning the original even mean? Is it really an original, or is it just a blessed instance that everyone commonly understands as the one with value? Arguably NFTs distill the essence of art ownership into its core proposition: you become the owner of intangible that is commonly understood by all market participants to truly represent the artwork and is valued as such. The NFT market is odd, but the art market is odd in general.
- null_object 5y ago
  > Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts. But none of your arguments apply to 'art in general' at all, do they? Because when you "buy art" you are actually... buying a piece of art. The way we value 'art' obviously has culturally historical oddities attached to it. But none of them are comparable to what people are paying for when 'buying' NFTs (ie: their name in a database). Which was the entire point of the Twitter thread.
  - ben_w 5y ago
    Eh, I can see a difference between commissioning a new piece (or likewise attending a live performance or a cinema) and spending the cost of the average U.K. home on William Shatner’s prop phaser: https://www.today.com/popculture/william-shatners-star-trek-phaser-sells-231-000-auction-1C9255440 https://www.today.com/popculture/william-shatners-star-trek-...
  - Tenoke 5y ago
BiteCode_dev 5y ago
I'm so waiting for somebody selling pieces of the moon as NFT, like the good old 1900 scams. They already redid the million dollars home page, NFT edition.
cinntaile 5y ago
Stephen Diehl is unfortunately blinded by anti crypto hate, so his arguments on the subject usually don't make much sense. Which is weird, because he's obviously a smart guy. This is no different, I don't know why his posts keep ending up on HN.
- leppr 5y ago
  Crypto attracts blind love/hate ("shilling"/"FUD"). Very few express rational views about it in public. Our social fabric is not used to everyone having skin in the game. I predict this will calm down once the Ponzi-era fades out (whenever central banks finally decide to tapper), but it's still always going to be a problem which we need to find solutions to.
- acomms 5y ago
  For sure this thread of his is passionate, but I can't really refute any of his points. The current NFT market is hot potato.
- robjan 5y ago
  Attack the argument, not the person
  - cinntaile 5y ago
    I'm providing context based on his previous crypto opinions. Strong feelings don't make good arguments, they do tend to give rise to fallacies. A scam is something where you are being maliciously tricked. Yet nobody is claiming NFTs give you any legal rights. It's a non sequitur.
html5web 5y ago
Am I on Reddit?
coldcode 5y ago
As an artist I would love to sell something for $69M. But I have not yet put a single item up for sale as an NFT as it seems so silly, you are selling a node in a merkle/patricia/etc tree, not a piece of art. The NFT art that is actually generated when you pay for it (and lives entirely in the blockchain), such as the bored apes, etc, is mostly predrawn parts assembled randomly; i.e. digital Potato Head toys. Some are based on interesting algorithms, but that has nothing to do with blockchains or crypto (other than using the hash as the random seed). I would rather create art (I do generational art as part of my work) on my own time and with my own tools. I would also prefer to sell art that people can put on their walls. Some of what I see people selling for 10ETH are so unimaginative. But then again people in the past bought rocks as pets, so there is always someone with too much money and no sense... Art itself is often overpriced, but it has a long history of increasing in value over time (since generally it is only made once and the artist eventually dies), and is a legit investment (and often handy for money laundering but then so is real estate and even startups). But NFTs are mostly uninteresting art, can be made in huge quantities with no work by an artist, and have no useful value other than bragging rights I guess. Museums who want to display NFTs are seriously hilarious. Some NFTs are made by real artists who actually work hard on the works, but very few make any money at all (Beeple for example is a hard working real artist who got lucky) since NFT people seem to only gravitate to the auto-generated things like the apes.
- Uehreka 5y ago
  Yeah, I’ve noticed this too. I feel like a lot of people in the NFT space have a pretty nihilistic view of art (i.e. “all art is worthless, so these procedural mix-and-match apes are as good as anything else”). They’re correct that the value assigned to art is often arbitrary, but the thing is that once you acknowledge that, the correct response isn’t to start buying random crap for thousands of dollars, it’s to buy things you want in your life for hundreds of dollars. Like, would I pay $100 for a super high quality 2ftx2ft print of a diagonal gradient with two really well chosen colors? Yeah, possibly, if I thought it would look nice in my living room. Would I pay even $10 (let alone thousands) to “own” a PNG of that gradient in some abstract sense? Absolutely not.
- phponpcp 5y ago
koonsolo 5y ago
Can't NFT's be linked with copyright ownership? The whole story about "Charlie bit my finger" NFT suggests that there could be a legal link. If not now, maybe laws could be adapted to support it. So let's assume the law supports linking NTF's to copyright ownership. What would be the scammy part then?
- Jensson 5y ago
  If you manage to get legally accepted copyright contracts into a crypto then that has value, yes. But NFT's aren't that.
  - koonsolo 5y ago
    Are you sure? I'm not a lawyer, but it seems copyright is basically "whatever you can prove in court". The family of "Charlie Bit My Finger" sold that video through an NFT. So I wonder if the family would still use that video, and the NFT owner would sue them... who would win. I would actually think the NFT owner. See https://www.bbc.com/news/newsbeat-57227290 https://www.bbc.com/news/newsbeat-57227290
    - robjan 5y ago
      The owner of the NFT was allocated a license to display the NFT and sell it but not ownership rights of the underlying media. Based on the wording, if you sell it the rights are terminated and not transferred to the new owner. https://www.charliebitme.com/#/auction-terms https://www.charliebitme.com/#/auction-terms
    - Jensson 5y ago
      If the auction contract says they own the media then they own the media. It has nothing to do with the NFT, if the NFT buyer then gave away the NFT and the auction was seen as a valid purchase of the media the purchaser would still retain the media rights. My point was, if the media rights could really be tied to the NFT rather than the auction contract then you would have something of value, but right now it would just be "Here is an action for media rights. Oh and btw here is also an unrelated hash you get with the purchase". As is for the media rights to go with the NFT you'd need to write a similar contract for every trade. At which point the NFT is totally superfluous, why not just write normal contracts skipping the NFT?
ladyattis 5y ago
The saddest part is that the NFT concept has a practical use: ticket sales. But it seems just like with all the other practical uses the investor class keeps passing them by for the "to the moon!" nonsense schemes. Seriously, why are boring ventures that have solid business models baked in the thing that modern would-be investors avoid? Is it because there's not enough digits on the ROI? Sorry for the rant but I've seen this a trend across many other industries such as power generation. I read a comment of a CEO in a trade magazine years ago talked about how he had investors snub investing into utilities because they felt 5-7% a year was too low or pointless as a return.
IYasha 5y ago
As usual, selling something for inadequately high price is a standard money laundering scheme. Often, VERY often used on modern (or not) "works of art" auctions. It's just a way to transfer sometimes ridiculously high amounts of money in front of everyone's eyes and getting away with it.
1270018080 5y ago
The connection between pointless star registries and the NFT industry is exactly what I've been looking for. I could never put it into words.

119 points by amin 5y ago

The NFT ecosystem is people with bad engineering skills, poor social skills, and no understanding of economics, attempting to create a new economy of social contracts based on technology they have created.

mathrall 5y ago

There's this something that I have read that he randomly created NFT just for the memes, and yet he made a fortune out of it. Also, many NFTs are powered by pumps and dumps. Have you seen the scandal of one of the OpenSea executives?

villasv 5y ago

People keep talking about using NFTs for laundering but as a criminal I’d be very wary and just go with the traditional ways. Has there been any actual studies on money laundering through crypto?

supermatt 5y ago
its for laundering cryptocurrencies, not "money". e.g.ransomware bitcoin payments.
- Tenoke 5y ago
  Any evidence that a significant fraction come from those? It'd be incredibly easy to prove if that's the case and I only ever see guesswork rather than Blockchain analysis behind those claims. Moreover, most of the big NFT investors seem to have a long history and as far as I can tell are often just collectors who are already rich from crypto.
  - supermatt 5y ago
    no idea, just clarifying what the article inferred
- villasv 5y ago
  Right, but there are mixing wallets and private coins so why bother with NFT?
  - rrrrro 5y ago
    When money laundering, you're not only hiding the origin of the money, you also want to have a good explanation why you have it.
NicoJuicy 5y ago
Just lookup any crypto mixing service - https://en.wikipedia.org/wiki/Cryptocurrency_tumbler https://en.wikipedia.org/wiki/Cryptocurrency_tumbler Eg. from a week ago: https://portswigger.net/daily-swig/founder-of-bitcoin-money-laundering-service-admits-300-million-racket https://portswigger.net/daily-swig/founder-of-bitcoin-money-...
- villasv 5y ago
  But this isn’t NFT? I was hoping for an analysis on methods and volumes in the whole ecosystem.
leppr 5y ago
It's hard to do a quantitative study on something that has inherent deniability. The ones who could map the flows (centralized exchanges, which are de-facto tumblers), will obviously not publish public studies on this.

Andrew_nenakhov 5y ago

It was obvious from the start that all this NFT market is pure nonsense, but it is nice that someone takes time to clearly explain why. Maybe it'll save some innocent souls from losing their money.

vertis 5y ago
The maxim "The market can stay irrational longer than you can stay solvent" applies (sort of). Just because it's nonsense doesn't mean that a bunch of people aren't going to make significant amounts of money before it fades away.
- UncleMeat 5y ago
  Of course. And a lot of people will lose a lot of money. And it is tricky to ensure you are in the former group.
- Andrew_nenakhov 5y ago
  That bunch of people is not going to make significant amounts of money, they will take significant amounts of money from other people, giving nothing in return. I believe that in English language fraud is an appropriate word for such enterprises.

account-5 5y ago

This is a great explanation. I know people who "bought"/"named" stars. Never understood it. And NFTs are this. You don't own the thing you think you do.

chrisseaton 5y ago
> Never understood it. It’s clearly just a joke gift. I’m sure nobody is actually confused that they’ve really bought some legal right. It’s like criticising a ‘kiss me quick’ t-shirt by asking if people realise the t-shirt actually has no legal power to compete people to kiss you. They already know. It’s a joke. Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it. I feel like people are working so hard to not see the joke.
- smcl 5y ago
  If NFTs are just a joke, then there's a surprisingly large number of people who are playing along. Like, far more than I could believe could actually keep a joke like this going with a straight face.
- gjulianm 5y ago
  From what I've been reading in quite a lot of comments, people are indeed confused that an NFT is or can be some kind of legal ownership title. If people thought it was a joke, you wouldn't see so many people thinking that it's going to revolutionize X (whatever X is, apparently everything can be disrupted with NFTs).
- abcd_f 5y ago
  Wait till you hear about companies selling plots of the Moon surface and people buying them with a straight face as a high-risk investment.
- meheleventyone 5y ago
  > Same with NFTs. It’s clearly a bit of a game and joke - I don’t think anyone is actually being scammed by it. Except people are getting scammed out of large amounts of money. For example the Evolved Ape scam that broke last week. Or artists that have their work minted and sold without permission. People pumping the value of their assets through wash trading. And so on.

theragra 5y ago

While I agree NFTs are dumb, argument that they are scum is weak. People pay for all kinds of dumb things, like penny stocks or collectibles. I am sure there can be people that pay for database entry and are happy with their purchase.

Jensson 5y ago
Then why have I never seen anyone talk about the cool NFT's they own and instead everyone talks about them making quick bucks on NFT's? Look at youtube search results, not a single person talks about the cool NFT's he has, just a lot of people trying to sell their NFT's for a quick buck. https://www.youtube.com/results?search_query=nft https://www.youtube.com/results?search_query=nft Compare with stamps, I see some people talk about making a quick buck on stamps but also a lot of people talking about their stamp collections. There is a huge difference here, the nft case you see 99% scum and 1% calling out the rest of them as scum, and not a single enthusiast who cares about the NFT. Stamps I see mostly enthusiasts and a few scum posts. https://www.youtube.com/results?search_query=stamps https://www.youtube.com/results?search_query=stamps So until you can find me all these "enthusiast NFT collectors", I'll assume that they don't exist. They could exist in theory, but I have seen no evidence that a single NFT collector actually exists in this world.
- CyrusL 5y ago
  Hi, I’m an NFT collector. A bunch of my friends are too.
  - Jensson 5y ago
    Problem is that calling yourself an NFT collector is a way to raise the value of NFT's and therefore something an NFT scammer would do, so you doing that doesn't prove anything. Similarly buying an NFT from yourself for a million dollars is a good way to trick people into a buying frenzy buying all your other NFT's. So until I see evidence that these eccentric billionaires who pays a lot of money for these actually exists and aren't just parts of the scam I can't trust you on this. But at least you are a data point, now I have seen one person claiming to buy NFT's to keep rather than resell, even if I don't necessarily trust you. So thanks!

JofArnold 5y ago

> You're buying an expensive entry in someone else's database Nope, you're buying a non-fungible token on a public ledger where the data and association with a specific address (or addresses) can be read without permission. This ownership and permission can then be moved around (potentially for large sums - potentially for near-zero amounts) by means that are independent of the client used. So for instance an NFT could give me access to an exclusive Discord channel (the client here being a Discord bot) and I could potentially sell or otherwise pass that onto someone else who wants access. The ownership of that token could also afford me access to, for instance, buying another token on another smart contract (the client here being another smart contract). That they are commonly linked to metadata associated with JPEGs is really missing the opportunity here. Furthermore, since everything's on a public ledger the much-stated money laundering is surprisingly difficult. And in fact multiple people have been caught out by this (a simple example being one of OpenSea's PM's wallets showing that they were frontrunning; another is VCs front-running their portfolio companies' air drops). That NFTs are often exchanged between bot accounts and multiple wallets (often tracked back to known individuals) to pump prices is also well-known and visible on the blockchain. Whether or not you think expensive JPEGs are 2020s' Beanie Babies, it's hard to imagine a programmer on HN not being able to think of interesting non-JPEG things to do with an open source, public and permissionless ledger/database. EDIT: disclosure - I have some JPEG NFTs. They weren't super expensive to me but I bought them so I had skin in the game that forced me to investigate this market rather than shouting "but money laundering!" from the sidelines. I'm glad I did this. Via getting into the weeds I've discovered a vibrant and super interesting ecosystem of developers, entrepreneurs, cryptographers and opportunities I'd never have known about otherwise. Are my JPEGs worth it? Doubt it. But the experience has been super interesting so far.

schnebbau 5y ago
You just used 4 paragraphs to say the same thing as the text you quoted.
- JofArnold 5y ago
  How is this "someone else's database"? It's literally a 100% public permissionless ledger. If I store an NFT in Facebook's database is that not "someone else's database" by definition.

anonymoushn 5y ago

When you buy an expensive piece of art, you often never physically see it, and a warehouse just notes that it belongs to you instead of the previous owner.

brk 5y ago
Maybe, I've never bought expensive art. But I know people who have, and I've sat around their kitchen surrounded by 10's of millions of dollars worth of art. It was mostly kept covered up from sunlight, but it was not in a warehouse.
scyzoryk_xyz 5y ago
Before the 20th century technological advancements, when you bought a piece of art you not only owned it, you were in control of who gets to actually see it.
meheleventyone 5y ago
In these cases though people are buying the art not for the sake of actually owning the art but for another use that it's high value provides them. Which is an apt comparison to NFTs because they mostly seem to be used for speculation.
deleted 5y ago
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robjan 5y ago
With NFTs, another warehouse can also note that the art belongs to you and you have equal legal rights to enjoy and sell the art as the original owner.
1270018080 5y ago
You're missing the point. When you buy a piece of art, you own the piece of art. When you buy an NFT, you own a row in a fundamentally meaningless database that points to some image on the internet. The database has no value, no one recognizes it, you don't own the image. There is a fundamental difference there.

infide1castr0 5y ago

This was an insightful thread, but I think these arguments miss the "bigger picture" that NFTs carry with them. Yes the popular use case right now of expensive art and "selling a JPG" is rather silly, just like the art world always has been. What I see in the space however is a lot of opportunities to grow community-building tools - POAPs for example are rarely sold for profit (some still try to) and are a great way to encourage participation and attendance of events, with added functionality of rewarding said participation after an event for example. A lot of media coverage is on the absurd art market use cases, and though the possible profits make it a loud use case, it is just one sliver of potential of Blockchain technology. I am excited to see NFTs move beyond these cases, and I see that happening quite often.

dTal 5y ago
What exactly does the blockchain contribute, that could not be accomplished in a superior way with an SQL database?
- osigurdson 5y ago
  The primary advantage is increased trust. With a SQL database, it is necessary to trust the organization that hosts the database. With blockchain it is necessary to trust a distributed network of organizations (or more precisely their computational power).
  - Jensson 5y ago
    If you think that NFT issuers are more trustworthy than banks or big companies then I have bad news for you. The NFT you get is as trustworthy as the paper you bought saying you own the golden gate bridge. Nobody can take that paper from you, but they sure can take the bridge.
    - osigurdson 5y ago
      The question was (paraphrased) "what value does blockchain add over SQL database table with a unique index?" - not whether NFT issuers are more trustworthy than trusted organizations or if NFTs are a valid asset class.

raesene9 5y ago

Another Interesting NFT thread from today https://twitter.com/moxie/status/1448066579611234305 https://twitter.com/moxie/status/1448066579611234305 .

leppr 5y ago
The fact that this kind of art NFT (direct link to a centralized resource without a hash) is so widespread, at least proves that a huge portion of the NFT ecosystem is indeed a scam.

throw_m239339 5y ago

I mean people literally buy "property" and space ships in virtual game worlds. NFT are no different, it's microtransactions but for rich people. Is it a scam? well it depends whether the elite values NFT or not... it certainly is a speculative "asset" by nature. It's not a scam provided people know what they are exactly buying. It's more of yet another "get rich quick" scheme for some. However, beyond the speculative aspect of NFT, artists need to know that putting their art in a virtual gallery as NFT WILL COST THEM money, so the business model for the middle man is to make artist believe that they will make money from NFT. The house always wins...

Traubenfuchs 5y ago
Space ships and virtual property is virtual property, at least you got something. Something to look at maybe, something that distinguishes you in game? NFTs give you NOTHING. They don't give you the right to anything. All you own is a (hopefully) unique cryptographic sequence.
- Tenoke 5y ago
  If you think of Cryptopunks (or whatever) as a game then buying one gives you as much or more in the context of the game as buying a skin or a plot of land in the context of another game. >Something to look at maybe, something that distinguishes you in game? You pretty obviously get that here, too. I honestly don't see why you'd think it gives you less other than out of general dislike for NFTs.
superrad 5y ago
There's more of tangeable value from buying property in virtual game worlds in the sense people get to use those property or items when normally in the game they would not be able to. For things like ship preorders on Star Citizen it's much more of a risk that the value will ever be delivered but it's still offers more than just a note of ownership of an abstract token on a blockchain sequence. If someone decides to honor these tokens as proof of ownership of property/items in the real world/ a virtual world then they may offer some value but there's a very great risk that will never happen.

JumpCrisscross 5y ago

If you’re buying NFTs with hopes of profiting from them, i.e. as assets, you’re an idiot. If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there. If you’re playing middleman, frankly, I think you’re wasting your life, but then I don’t see how you’re so different from an art dealer or auction house. At any rate, you’re probably a better allocator of those dollars than whoever gave them to you. (Exception: if you’re pitching NFTs as investments to unsophisticated investors, you deserve to be prosecuted.) All that said, NFTs do something similar to what much of fine art and religious prohibitions do: demonstrate group membership by submitting to arbitrary prohibition and sacrifice requirements [1] with the aim of accessing club goods [2], e.g. in-group access and standing. When someone calls NFTs a scam, they’re saying those club goods are worthless. Objectively, as a crypto sceptic, the wealth made by crypto insiders would appear to reject that hypothesis. (Whether buying an NFT or expensive painting alone confers those club goods is a separate question.) [1] https://www.nber.org/system/files/working_papers/w6715/w6715.pdf https://www.nber.org/system/files/working_papers/w6715/w6715... [2] https://en.m.wikipedia.org/wiki/Club_good https://en.m.wikipedia.org/wiki/Club_good

danpalmer 5y ago
> If you’re buying because it’s silly, funny or otherwise makes you happy, go for it. No scam there. I think there's a significant group who are buying because under their understanding of what NFTs are, they're silly/funny/make them happy, but that they are mistaken about what NFTs are. Arguably if it's bringing them joy, who cares, but at some level this is still a scam.
Uehreka 5y ago
I feel like most people see the art dealing world for what it is: a clout-chasing game that’s basically a scam. And I hear some NFT people take the stance of “yeah art dealing is a scam, but it’s going to happen anyway, so I might as well make some money.” Which is all well and good in a sense, I’m not gonna cry over rich people spending their money on bs. But it’s also the case that if you take this position, you do abdicate any ability to advocate for NFTs as something other than a scam. And if you try and flip this around and argue that “art dealing is a legitimate business actually”, people will (correctly) look at you weird.

seanieb 5y ago

Same influencers that flog the grind culture, selling vitamins one minute and NFT’s the next.

adnzzzzZ 5y ago

>Like all crypto scams, the essence of the NFT grift is in recruiting new believers by convincing them a blessed database is an authoritative registrar of value. Just like star naming the grift isn't about utility it's simply a shared delusion in a get rich quick scheme. I think this gets to the core of why so many people (like the entirety of Hacker News) seem to irrationally hate NFTs, to the point of posting about it almost every day instead of just ignoring it. There are shared delusions that are useful as social coordinating forces. Religions are generally this. Social justice is this. And crypto is also this. I find that a lot of the irrational hatred for NFTs and crypto in general tends to come from people who hold certain shared delusions and who don't like that another competing one is so successful at coordinating behavior.

Jensson 5y ago
It is the "get rich quick scheme" part people don't like about NFT's, not the "shared delusion" part.
- adnzzzzZ 5y ago
  There are plenty of NFT platforms that are not about getting rich quick yet no one talks about them because it doesn't fit their narrative. This leads me to believe that what I said is correct, rather than you said.
  - Jensson 5y ago
    Scam NFT's are talked about since NFT scammers posts about theme everywhere. Non-scam NFT's are not talked about since nobody cares about them. When non-scam NFT's gets popular then people will start to talk about them, but until then it is only natural that people talk about the more popular use case. If what you believe was true then we would see plenty of people talk about all those things, but as you said nobody talks about it so those communities doesn't exists. It is basically all scams and people talking about theoretical scenarios of people maybe caring about NFT's in the future.
    - 5y ago

nathias 5y ago

You too can use the classic fudster starterpack: -- it has no use -- it is used by criminals -- tulips

deleted 5y ago
[deleted]

davedx 5y ago

People are still saying this about cryptocurrencies too. Many people also say EVs and green energy are a scam. People also frequently accuse public companies of being scams or trash (there's a certain intersection between the previous sentence here). Healthy skepticism is a powerful weapon of thought. But you have to be able to acknowledge where skepticism ends and stubborn refusal to accept reality starts. Humans value certain things. They may not be the same things you value. That doesn't necessarily mean they're just "a giant scam".

40four 5y ago
Yeah I’m totally with you. I think many of us had a similar reaction the first time NFTs were explained to us. But the not I learn about them, an see them in action, it’s definitely starting to make more sense. This (very uninteresting) Twitter rant doesn’t really make any good arguments. The comparison to ‘star naming’ services is very contrived & makes absolutely no sense.
birtoise 5y ago
Yeh but sometimes what people value and like is a scam. You know, some people do like certain MLM brands or even cults, that doesn’t mean those aren’t scams/cults. Stop trying to normalize predatory behavior and institutions under the banner of “people value different things”
- davedx 5y ago
  How are NFT's "predatory behavior"? Some stuff is for sale. Nobody is being tricked into buying it. Everyone knows you click right click and save if you want.
  - birtoise 5y ago
    Sure, do you know anything about NFTs from the side of the artist and what they have to do to get a token for their pieces? Seems like you don't. Educate yourself first, young boy.
omnicognate 5y ago

cameronh90 5y ago

Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts. Art also has no intrinsic value. Art is also used for money laundering. When you buy art, you don't own the copyright, you just own the original production. The copyright owner can continue to manufacture prints and reproductions, but they are worth a fraction of the original. If it were possible to create one, an exact atom-for-atom duplicate of a piece of art would likely also only be worth a small fraction of the "original". Even weirder, nowadays, much art doesn't really have an "original" as it was produced electronically in the first place - so what does owning the original even mean? Is it really an original, or is it just a blessed instance that everyone commonly understands as the one with value? Arguably NFTs distill the essence of art ownership into its core proposition: you become the owner of intangible that is commonly understood by all market participants to truly represent the artwork and is valued as such. The NFT market is odd, but the art market is odd in general.

null_object 5y ago
> Most of these arguments apply to recently produced art in general, don't they? Historical art is a little different, being a kind of combination of antiques and arts. But none of your arguments apply to 'art in general' at all, do they? Because when you "buy art" you are actually... buying a piece of art. The way we value 'art' obviously has culturally historical oddities attached to it. But none of them are comparable to what people are paying for when 'buying' NFTs (ie: their name in a database). Which was the entire point of the Twitter thread.
- ben_w 5y ago
  Eh, I can see a difference between commissioning a new piece (or likewise attending a live performance or a cinema) and spending the cost of the average U.K. home on William Shatner’s prop phaser: https://www.today.com/popculture/william-shatners-star-trek-phaser-sells-231-000-auction-1C9255440 https://www.today.com/popculture/william-shatners-star-trek-...
- Tenoke 5y ago

BiteCode_dev 5y ago

I'm so waiting for somebody selling pieces of the moon as NFT, like the good old 1900 scams. They already redid the million dollars home page, NFT edition.

cinntaile 5y ago

Stephen Diehl is unfortunately blinded by anti crypto hate, so his arguments on the subject usually don't make much sense. Which is weird, because he's obviously a smart guy. This is no different, I don't know why his posts keep ending up on HN.

leppr 5y ago
Crypto attracts blind love/hate ("shilling"/"FUD"). Very few express rational views about it in public. Our social fabric is not used to everyone having skin in the game. I predict this will calm down once the Ponzi-era fades out (whenever central banks finally decide to tapper), but it's still always going to be a problem which we need to find solutions to.
acomms 5y ago
For sure this thread of his is passionate, but I can't really refute any of his points. The current NFT market is hot potato.
robjan 5y ago
Attack the argument, not the person
- cinntaile 5y ago
  I'm providing context based on his previous crypto opinions. Strong feelings don't make good arguments, they do tend to give rise to fallacies. A scam is something where you are being maliciously tricked. Yet nobody is claiming NFTs give you any legal rights. It's a non sequitur.

html5web 5y ago

Am I on Reddit?

coldcode 5y ago

As an artist I would love to sell something for $69M. But I have not yet put a single item up for sale as an NFT as it seems so silly, you are selling a node in a merkle/patricia/etc tree, not a piece of art. The NFT art that is actually generated when you pay for it (and lives entirely in the blockchain), such as the bored apes, etc, is mostly predrawn parts assembled randomly; i.e. digital Potato Head toys. Some are based on interesting algorithms, but that has nothing to do with blockchains or crypto (other than using the hash as the random seed). I would rather create art (I do generational art as part of my work) on my own time and with my own tools. I would also prefer to sell art that people can put on their walls. Some of what I see people selling for 10ETH are so unimaginative. But then again people in the past bought rocks as pets, so there is always someone with too much money and no sense... Art itself is often overpriced, but it has a long history of increasing in value over time (since generally it is only made once and the artist eventually dies), and is a legit investment (and often handy for money laundering but then so is real estate and even startups). But NFTs are mostly uninteresting art, can be made in huge quantities with no work by an artist, and have no useful value other than bragging rights I guess. Museums who want to display NFTs are seriously hilarious. Some NFTs are made by real artists who actually work hard on the works, but very few make any money at all (Beeple for example is a hard working real artist who got lucky) since NFT people seem to only gravitate to the auto-generated things like the apes.

Uehreka 5y ago
Yeah, I’ve noticed this too. I feel like a lot of people in the NFT space have a pretty nihilistic view of art (i.e. “all art is worthless, so these procedural mix-and-match apes are as good as anything else”). They’re correct that the value assigned to art is often arbitrary, but the thing is that once you acknowledge that, the correct response isn’t to start buying random crap for thousands of dollars, it’s to buy things you want in your life for hundreds of dollars. Like, would I pay $100 for a super high quality 2ftx2ft print of a diagonal gradient with two really well chosen colors? Yeah, possibly, if I thought it would look nice in my living room. Would I pay even $10 (let alone thousands) to “own” a PNG of that gradient in some abstract sense? Absolutely not.
phponpcp 5y ago

koonsolo 5y ago

Can't NFT's be linked with copyright ownership? The whole story about "Charlie bit my finger" NFT suggests that there could be a legal link. If not now, maybe laws could be adapted to support it. So let's assume the law supports linking NTF's to copyright ownership. What would be the scammy part then?

Jensson 5y ago
If you manage to get legally accepted copyright contracts into a crypto then that has value, yes. But NFT's aren't that.
- koonsolo 5y ago
  Are you sure? I'm not a lawyer, but it seems copyright is basically "whatever you can prove in court". The family of "Charlie Bit My Finger" sold that video through an NFT. So I wonder if the family would still use that video, and the NFT owner would sue them... who would win. I would actually think the NFT owner. See https://www.bbc.com/news/newsbeat-57227290 https://www.bbc.com/news/newsbeat-57227290
  - robjan 5y ago
    The owner of the NFT was allocated a license to display the NFT and sell it but not ownership rights of the underlying media. Based on the wording, if you sell it the rights are terminated and not transferred to the new owner. https://www.charliebitme.com/#/auction-terms https://www.charliebitme.com/#/auction-terms
  - Jensson 5y ago
    If the auction contract says they own the media then they own the media. It has nothing to do with the NFT, if the NFT buyer then gave away the NFT and the auction was seen as a valid purchase of the media the purchaser would still retain the media rights. My point was, if the media rights could really be tied to the NFT rather than the auction contract then you would have something of value, but right now it would just be "Here is an action for media rights. Oh and btw here is also an unrelated hash you get with the purchase". As is for the media rights to go with the NFT you'd need to write a similar contract for every trade. At which point the NFT is totally superfluous, why not just write normal contracts skipping the NFT?

ladyattis 5y ago

The saddest part is that the NFT concept has a practical use: ticket sales. But it seems just like with all the other practical uses the investor class keeps passing them by for the "to the moon!" nonsense schemes. Seriously, why are boring ventures that have solid business models baked in the thing that modern would-be investors avoid? Is it because there's not enough digits on the ROI? Sorry for the rant but I've seen this a trend across many other industries such as power generation. I read a comment of a CEO in a trade magazine years ago talked about how he had investors snub investing into utilities because they felt 5-7% a year was too low or pointless as a return.

IYasha 5y ago

As usual, selling something for inadequately high price is a standard money laundering scheme. Often, VERY often used on modern (or not) "works of art" auctions. It's just a way to transfer sometimes ridiculously high amounts of money in front of everyone's eyes and getting away with it.

1270018080 5y ago

The connection between pointless star registries and the NFT industry is exactly what I've been looking for. I could never put it into words.