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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" fo

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.
- robcohen 5y ago
  No, you do prove that you own a digital asset. Now whether that asset is blessed by some third party, and whether that blessing is considered valuable, is largely unrelated. I never said that you own an image or anything the NFT references. I said you own a digital asset, which in this case is the ability to trade the NFT. You can certainly have someone sign an NFT, or issue a certificate, and that may be valuable to someone. But whether or not this occurs, if you own a digital asset, then you can easily prove it. That's the novel invention.
  - deleted 5y ago
    [deleted]
  - root_axis 5y ago
    > Now whether that asset is blessed by some third party, and whether that blessing is considered valuable, is largely unrelated It seems pretty directly related, in fact, it seems to be the only distinguishing factor between one NFT and another, without the blessing of the central authority the NFT is fundamentally interchangeable with any other ublessed NFT... making it quite fungible.
    - robcohen 5y ago
      So I think we're talking past each other. For NFTs, there is the minter and the current owner. You can have third parties sign NFTs or validate their provenance, but ultimately the NFT's value is determine by the market (offers from buyers). Typically these buyers will value an NFT due to the rarity of the NFT. An NFT cannot exist without a minter. If this is the authority that you are referencing, then they only have authority at the moment of the minting. Past that point, more NFTs of the same type cannot be created. Even if the exact same parameters were used to create a new set by the same minter, it would be a different set of NFTs. No central authority is needed after the minting.
      - BoorishBears 5y ago
        So you're trying to imply: > Typically these buyers will value an NFT due to the rarity of the NFT This is burying the lede, rarity of the NFT matters once the 3rd party is tying something to it. Think about this for a second, what is an NFT allowing? Allowing you to prove you own the NFT. When do you prove you own the NFT? ... when someone 3rd party that asks to check it. And why do they ask to check it? Because they've added some sort of meaning to it by tying it to a non-NFT asset. If a 3rd party does not assign some value to it... who's going to check you own the NFT? To what end will they check you own the NFT? An NFT with no 3rd party value is essentially a non-fungible cryptocurrency, and what good is a non-fungible currency? > this is the authority that you are referencing You know it's not. You're replying to an article about how the centralized agency that maps NFTs to non-NFT assets held by 3rd parties is now valued at 13 billion dollars.
PragmaticPulp 5y ago
> It's nice that I could trade the game license to someone else without having the game developer approve it. These concepts break down extremely quickly in practice. For the above to work, the game developer would have to support all of this and code it into the game. There's nothing inherent to NFTs that makes a game license automatically transferable, nor does the game developer have to code their game such that the NFT-ed license continues working after it has been sold to someone else (all transaction history is part of the blockchain). What would really happen, in practice, is that the game developers would almost certainly require the NFT contract to involve some kickbacks to them. For example, you can trade the NFT license, but the contract requires sending X dollars to the game developer. Do you really think game developers are eager to leave money on the table? Not to mention, NFT transactions are bonkers expensive right now, at least on Ethereum. It's fun to think about trading game licenses on the blockchain, but if the transaction is going to set you back $50-100 USD just to make the contract go, you're not going to be trading anything on the blockchain that can be bought new for $10-$50.
- robcohen 5y ago
  > game developers would almost certainly require the NFT contract to involve some kickbacks Perhaps. But I think you may be jumping to conclusions there. The truth is that licenses have not been easily transferable in the past. So there's the effect here that the value of transferring the license can be accounted for by the user. If one platform (Steam/GOG) begins to utilize NFTs, then it's very possible that could cause market expectations to rapidly change. Imagine if cars were not transferable easily, then one day they were. What do you think would happen to the car market? Certainly, I'm sure if car manufacturers could have their way, they would make it impossible to transfer used cars because it artificially constricts supply. Yet under this hypothetical I don't believe that would occur. Instead, the car makers would need to adapt to having a secondary market.
hippich 5y ago
I think the main confusion is about "ownership". In the analog world ownership means enforcement if someone takes it from you. In digital world such things are not quite possible. We have a history of law enforcement enforcing some digital ownership (fighting piracy and such), but we do not have any experience law enforcement enforcing ownership of NFTs, simply because it is very young tech and it remains to be seen how it will interact with analog world.

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.

robcohen 5y ago
No, you do prove that you own a digital asset. Now whether that asset is blessed by some third party, and whether that blessing is considered valuable, is largely unrelated. I never said that you own an image or anything the NFT references. I said you own a digital asset, which in this case is the ability to trade the NFT. You can certainly have someone sign an NFT, or issue a certificate, and that may be valuable to someone. But whether or not this occurs, if you own a digital asset, then you can easily prove it. That's the novel invention.
- deleted 5y ago
  [deleted]
- root_axis 5y ago
  > Now whether that asset is blessed by some third party, and whether that blessing is considered valuable, is largely unrelated It seems pretty directly related, in fact, it seems to be the only distinguishing factor between one NFT and another, without the blessing of the central authority the NFT is fundamentally interchangeable with any other ublessed NFT... making it quite fungible.
  - robcohen 5y ago
    So I think we're talking past each other. For NFTs, there is the minter and the current owner. You can have third parties sign NFTs or validate their provenance, but ultimately the NFT's value is determine by the market (offers from buyers). Typically these buyers will value an NFT due to the rarity of the NFT. An NFT cannot exist without a minter. If this is the authority that you are referencing, then they only have authority at the moment of the minting. Past that point, more NFTs of the same type cannot be created. Even if the exact same parameters were used to create a new set by the same minter, it would be a different set of NFTs. No central authority is needed after the minting.
    - BoorishBears 5y ago
      So you're trying to imply: > Typically these buyers will value an NFT due to the rarity of the NFT This is burying the lede, rarity of the NFT matters once the 3rd party is tying something to it. Think about this for a second, what is an NFT allowing? Allowing you to prove you own the NFT. When do you prove you own the NFT? ... when someone 3rd party that asks to check it. And why do they ask to check it? Because they've added some sort of meaning to it by tying it to a non-NFT asset. If a 3rd party does not assign some value to it... who's going to check you own the NFT? To what end will they check you own the NFT? An NFT with no 3rd party value is essentially a non-fungible cryptocurrency, and what good is a non-fungible currency? > this is the authority that you are referencing You know it's not. You're replying to an article about how the centralized agency that maps NFTs to non-NFT assets held by 3rd parties is now valued at 13 billion dollars.

PragmaticPulp 5y ago

> It's nice that I could trade the game license to someone else without having the game developer approve it. These concepts break down extremely quickly in practice. For the above to work, the game developer would have to support all of this and code it into the game. There's nothing inherent to NFTs that makes a game license automatically transferable, nor does the game developer have to code their game such that the NFT-ed license continues working after it has been sold to someone else (all transaction history is part of the blockchain). What would really happen, in practice, is that the game developers would almost certainly require the NFT contract to involve some kickbacks to them. For example, you can trade the NFT license, but the contract requires sending X dollars to the game developer. Do you really think game developers are eager to leave money on the table? Not to mention, NFT transactions are bonkers expensive right now, at least on Ethereum. It's fun to think about trading game licenses on the blockchain, but if the transaction is going to set you back $50-100 USD just to make the contract go, you're not going to be trading anything on the blockchain that can be bought new for $10-$50.

robcohen 5y ago
> game developers would almost certainly require the NFT contract to involve some kickbacks Perhaps. But I think you may be jumping to conclusions there. The truth is that licenses have not been easily transferable in the past. So there's the effect here that the value of transferring the license can be accounted for by the user. If one platform (Steam/GOG) begins to utilize NFTs, then it's very possible that could cause market expectations to rapidly change. Imagine if cars were not transferable easily, then one day they were. What do you think would happen to the car market? Certainly, I'm sure if car manufacturers could have their way, they would make it impossible to transfer used cars because it artificially constricts supply. Yet under this hypothetical I don't believe that would occur. Instead, the car makers would need to adapt to having a secondary market.

hippich 5y ago

I think the main confusion is about "ownership". In the analog world ownership means enforcement if someone takes it from you. In digital world such things are not quite possible. We have a history of law enforcement enforcing some digital ownership (fighting piracy and such), but we do not have any experience law enforcement enforcing ownership of NFTs, simply because it is very young tech and it remains to be seen how it will interact with analog world.