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> “In 2021, the world woke up to the potential of NFTs to unlock utility and economic empowerment across a vast set of industries, communities and creative cate

> “In 2021, the world woke up to the potential of NFTs to unlock utility and economic empowerment across a vast set of industries, communities and creative categories,” said Devin Finzer, one of the founders and the chief executive of OpenSea. Can anyone explain to me the utility of an NFT? I don't understand why it's anything other than some code (written on a blockchain) saying you own this. But people can just copy whatever you own (assuming it's digital like an image). And if it's a physical thing with an NFT attached to it, why is an NFT better than a certificate of ownership? I guess a better question is: what problem does an NFT solve?

animal_spirits 5y ago
The utility of an NFT is for the seller, and that utility is an opportunity to make money by selling it to someone. When you buy an NFT you gain the ability to sell it, and that's about it. People buy NFTs hoping that they can sell them for more money than they bought it.
dmingod666 5y ago
Value in price is whatever someone is willing to pay for the product. There is 0 requirement for it to be logical or make any sense. Any commodity can be valuable given a market demand for it. (I think Trading jpg files is stupid)
henvic 5y ago
To enrich the people selling digital tulips (or 256-colors GIFs, whatever you prefer). Just like Bitcoin... https://henvic.dev/posts/bitcoin/ https://henvic.dev/posts/bitcoin/
chizhik-pyzhik 5y ago
NFTs provide a way to "own" something digital, except unlike DRM, the asset is based on an open standard and easily transferable without any intermediary. It's easy to verify the creator and prove you're the owner. Combine that with speculative price discovery and you have a pretty fun way to bet on art online.
gopher_space 5y ago
> what problem does an NFT solve? It automates and simplifies the identification of Tusser opportunities.
robcohen 5y ago
I'm not a huge fan of NFTs, but they do actually solve a problem. They allow you to prove that you own a digital asset, without having to have anyone "vouch" for you. I can prove I own it myself. They also allow me to trade that digital asset without being encumbered by arbitrary or unclear rules. For example, an NFT could be a usable as a game license. It's nice that I could trade the game license to someone else without having the game developer approve it. Now the practical applications for this are pretty limited at the moment, largely due to the fact that the larger/more secure chains such as Ethereum are very limited in their transaction rate, and as a result transactions cost a lot. This restricts the use case to multi-thousand dollar digital assets, such as dumb rock jpegs or digital real estate. To most reasonable people, this looks dumb. I agree that it is. However, if the transaction rate goes up dramatically (which is currently possible on layer 2), then the use cases open up dramatically to things that normal people might actually be able to use. We aren't there yet (I do think we will get there, but really it's totally fair to criticize NFTs before we get there).
- bitexploder 5y ago
  Can someone prove they own it without a massive energy consuming network, though? That’s my main concern, the sustainability of blockchains in their current form just aren’t very sound.
  - robcohen 5y ago
    Yes, eventually I believe proof of work will be replaced by other protocols such as proof of stake. This is already the case on many chains. The cost for proof of stake is minimal, as in you can run a full node on a raspberry pi. Check out Tezos, Cardano, et al.
- stale2002 5y ago
  > They allow you to prove that you own a digital asset, without having to have anyone "vouch" for you. I can prove I own it myself. Well, no. They prove you own an NFT, but they don't prove you own anything other than the crypto asset. That NFT might be a fake NFT, that is not issued by the artist/game themselves. Instead, it is the central authority, of the artist themselves, that determines who actually owns the asset. Or, in other words, you do need someone to "vouch" that you actually own the real digital asset, and that the one you have is not just a fake.
chrisco255 5y ago
No, they can't just copy what you own. The double spend problem is one of the core problems solved by blockchain. You can't copy and paste a Bitcoin. A blockchain is a ledger. The ledger is validated by a network of thousands of nodes using deterministic logic and cryptographic signature verification. Likewise, NFTs are records in a smart contract that has been deployed to a Turing-complete blockchain. Following the ERC721 standard (which is the most popular but not the only example), the contract must implement an interface consisting of several methods that define how rules for ownership transfer are handled and what metadata defines the NFT. An NFT could be better than a certificate of ownership, due to the ease and universality of on-chain verification. You can observe the entire chain of ownership of something if it begun as an NFT. You can also use an NFT in software programs to provide token-gated content, or to customize the user experience. Another major benefit is worldwide markets with 24/7 liquidity. It's also trivial to fractionalize or place into the custody of a DAO (on-chain organization). By no means is this list exhaustive, but there is a few.
sunshinekitty 5y ago
assuming you trust the issuer (contract, in blockchain) there is a public and verifiable record of your ownership of an individual item paired with signing messages to prove your blockchain identity, you can prove to others your identity and assets in your control think if the contract was for movies from hbo, and by logging in you can view and download movies you own nfts of.. this is obviously not the case today, but may help highlight what the future may look like. you can of course think of and read about similar use cases for assets we ‘own’ today. a lot of the push in blockchain is for decentralizing authority and democratizing access, where the above example is only solving the former
- BoorishBears 5y ago
  > think if the contract was for movies from hbo, and by logging in you can view and download movies you own nfts of.. this is obviously not the case today No, it is the case today, at least for services that sell videos. Let's say today proof of ownership is your bank statement and an email from Amazon saying you bought a movie: You can buy a movie from Amazon Video. You can have proof of ownership. Amazon is not contending your proof of ownership. Amazon agrees you clicked "Buy" and paid money. Amazon reserves the right to pull the movie from their site. You still have your proof of ownership, Amazon just... doesn't care. Their servers will not serve you bits of data anymore. - Now let's replace your bank statement with an NFT: You can buy a movie from Amazon Video. You can have proof of ownership. Amazon is not contending your proof of ownership. Amazon agrees you clicked "Buy" and paid money. Amazon reserves the right to pull the movie from their site. You still have your proof of ownership, Amazon just... doesn't care. Their servers will not serve you bits of data anymore. - See the difference?
syntheweave 5y ago
It enables models of funding work that allow you to set the financing terms with less(not necessarily zero) oversight from an enforcing body. The main concepts of most NFT markets today are inherited from existing art markets, but done cheaper, with less human involvement. As a speculative instrument, art ownership has always been a bit detached from the physical art, with many works simply sitting in storage while a certificate is traded. Anyone can view a photo of a famous painting - access in a general sense usually is not the issue with the art world, today. Moving it on-chain is just a further move towards centering the finance of it. The net outcome is that you have more artwork being made than before, since there is additional financing opened through this channel, and with more complex terms made possible by using smart contracts. (At large scale, it's hard to engage with royalty payments, etc without automation) From there, the actual utility of the tech can be discussed. Because you can make these cheaply(Ethereum's current gas fees notwithstanding, other L1 chains like Tezos demonstrate that they can be made with truly "micro" payments), you can use them as giveaways, tickets, passes, incentives etc. So they can be multipurposed into something beyond a link to an image and turned into a form of access - they are just "unique identifiers" after all. And those parts are still developing in the background. Of course, we're still working through the hype cycle part of it. And the art makes for a good story.
disambiguation 5y ago
Money laundering Tax evasion Making tech bros richer
arrakis2021 5y ago
The purpose of an NFT is to launder money. Also, there is a small subset of folks who have been collecting them.

animal_spirits 5y ago

The utility of an NFT is for the seller, and that utility is an opportunity to make money by selling it to someone. When you buy an NFT you gain the ability to sell it, and that's about it. People buy NFTs hoping that they can sell them for more money than they bought it.

dmingod666 5y ago

Value in price is whatever someone is willing to pay for the product. There is 0 requirement for it to be logical or make any sense. Any commodity can be valuable given a market demand for it. (I think Trading jpg files is stupid)

henvic 5y ago

To enrich the people selling digital tulips (or 256-colors GIFs, whatever you prefer). Just like Bitcoin... https://henvic.dev/posts/bitcoin/ https://henvic.dev/posts/bitcoin/

chizhik-pyzhik 5y ago

NFTs provide a way to "own" something digital, except unlike DRM, the asset is based on an open standard and easily transferable without any intermediary. It's easy to verify the creator and prove you're the owner. Combine that with speculative price discovery and you have a pretty fun way to bet on art online.

gopher_space 5y ago

> what problem does an NFT solve? It automates and simplifies the identification of Tusser opportunities.

robcohen 5y ago

I'm not a huge fan of NFTs, but they do actually solve a problem. They allow you to prove that you own a digital asset, without having to have anyone "vouch" for you. I can prove I own it myself. They also allow me to trade that digital asset without being encumbered by arbitrary or unclear rules. For example, an NFT could be a usable as a game license. It's nice that I could trade the game license to someone else without having the game developer approve it. Now the practical applications for this are pretty limited at the moment, largely due to the fact that the larger/more secure chains such as Ethereum are very limited in their transaction rate, and as a result transactions cost a lot. This restricts the use case to multi-thousand dollar digital assets, such as dumb rock jpegs or digital real estate. To most reasonable people, this looks dumb. I agree that it is. However, if the transaction rate goes up dramatically (which is currently possible on layer 2), then the use cases open up dramatically to things that normal people might actually be able to use. We aren't there yet (I do think we will get there, but really it's totally fair to criticize NFTs before we get there).

bitexploder 5y ago
Can someone prove they own it without a massive energy consuming network, though? That’s my main concern, the sustainability of blockchains in their current form just aren’t very sound.
- robcohen 5y ago
  Yes, eventually I believe proof of work will be replaced by other protocols such as proof of stake. This is already the case on many chains. The cost for proof of stake is minimal, as in you can run a full node on a raspberry pi. Check out Tezos, Cardano, et al.
stale2002 5y ago
> They allow you to prove that you own a digital asset, without having to have anyone "vouch" for you. I can prove I own it myself. Well, no. They prove you own an NFT, but they don't prove you own anything other than the crypto asset. That NFT might be a fake NFT, that is not issued by the artist/game themselves. Instead, it is the central authority, of the artist themselves, that determines who actually owns the asset. Or, in other words, you do need someone to "vouch" that you actually own the real digital asset, and that the one you have is not just a fake.

chrisco255 5y ago

No, they can't just copy what you own. The double spend problem is one of the core problems solved by blockchain. You can't copy and paste a Bitcoin. A blockchain is a ledger. The ledger is validated by a network of thousands of nodes using deterministic logic and cryptographic signature verification. Likewise, NFTs are records in a smart contract that has been deployed to a Turing-complete blockchain. Following the ERC721 standard (which is the most popular but not the only example), the contract must implement an interface consisting of several methods that define how rules for ownership transfer are handled and what metadata defines the NFT. An NFT could be better than a certificate of ownership, due to the ease and universality of on-chain verification. You can observe the entire chain of ownership of something if it begun as an NFT. You can also use an NFT in software programs to provide token-gated content, or to customize the user experience. Another major benefit is worldwide markets with 24/7 liquidity. It's also trivial to fractionalize or place into the custody of a DAO (on-chain organization). By no means is this list exhaustive, but there is a few.

sunshinekitty 5y ago

assuming you trust the issuer (contract, in blockchain) there is a public and verifiable record of your ownership of an individual item paired with signing messages to prove your blockchain identity, you can prove to others your identity and assets in your control think if the contract was for movies from hbo, and by logging in you can view and download movies you own nfts of.. this is obviously not the case today, but may help highlight what the future may look like. you can of course think of and read about similar use cases for assets we ‘own’ today. a lot of the push in blockchain is for decentralizing authority and democratizing access, where the above example is only solving the former

BoorishBears 5y ago
> think if the contract was for movies from hbo, and by logging in you can view and download movies you own nfts of.. this is obviously not the case today No, it is the case today, at least for services that sell videos. Let's say today proof of ownership is your bank statement and an email from Amazon saying you bought a movie: You can buy a movie from Amazon Video. You can have proof of ownership. Amazon is not contending your proof of ownership. Amazon agrees you clicked "Buy" and paid money. Amazon reserves the right to pull the movie from their site. You still have your proof of ownership, Amazon just... doesn't care. Their servers will not serve you bits of data anymore. - Now let's replace your bank statement with an NFT: You can buy a movie from Amazon Video. You can have proof of ownership. Amazon is not contending your proof of ownership. Amazon agrees you clicked "Buy" and paid money. Amazon reserves the right to pull the movie from their site. You still have your proof of ownership, Amazon just... doesn't care. Their servers will not serve you bits of data anymore. - See the difference?

syntheweave 5y ago

It enables models of funding work that allow you to set the financing terms with less(not necessarily zero) oversight from an enforcing body. The main concepts of most NFT markets today are inherited from existing art markets, but done cheaper, with less human involvement. As a speculative instrument, art ownership has always been a bit detached from the physical art, with many works simply sitting in storage while a certificate is traded. Anyone can view a photo of a famous painting - access in a general sense usually is not the issue with the art world, today. Moving it on-chain is just a further move towards centering the finance of it. The net outcome is that you have more artwork being made than before, since there is additional financing opened through this channel, and with more complex terms made possible by using smart contracts. (At large scale, it's hard to engage with royalty payments, etc without automation) From there, the actual utility of the tech can be discussed. Because you can make these cheaply(Ethereum's current gas fees notwithstanding, other L1 chains like Tezos demonstrate that they can be made with truly "micro" payments), you can use them as giveaways, tickets, passes, incentives etc. So they can be multipurposed into something beyond a link to an image and turned into a form of access - they are just "unique identifiers" after all. And those parts are still developing in the background. Of course, we're still working through the hype cycle part of it. And the art makes for a good story.

disambiguation 5y ago

Money laundering Tax evasion Making tech bros richer

arrakis2021 5y ago

The purpose of an NFT is to launder money. Also, there is a small subset of folks who have been collecting them.