Fine, I'll play. What's an NFT?
A Non Fungible Token. "Non fungible" means every NFT is unique, unlike, say, a bitcoin, in which every coin is identical to every other coin. "Token" means it's an entry in a digital blockchain.
Uh huh. And what does it do for me?
It grants you ownership of a digital work of art. Or anything digital, for that matter. But mostly works of art.
That sounds reasonable. So what does that get me?
Nothing much. In theory it means you can stop other people from replicating the artwork all over the internet, but obviously that's not really possible.
Anything else?
Sure. You're designated as the official owner. Every NFT grants different rights beyond that, but mostly they're kind of trivial. What's more, in some cases the seller of the NFT doesn't even own the rights he's allegedly selling. An IP lawyer explains:
The rights granted by an NFT seller depend on the rights transferred via a license or assignment, and these can vary with every NFT. You may own a particular video clip or photo of a LeBron James dunk in NFT form, but the underlying rights belong to the NBA. In the context of copyright, ownership of the underlying rights will only transfer if the author of the original work expressly agrees to transfer those rights to the NFT owner. Generally, without such an agreement, ownership of an NFT will not grant ownership of the underlying content or any associated intellectual property rights. As a result, an NFT owner may not be permitted to reproduce, distribute copies, publicly perform, display, or make derivative works of the original work. Instead, the copyright owner retains the exclusive rights.
In other words...
Read the fine print. And maybe have a good IP lawyer examine it too.
Yikes! But at least NFTs should put an end to ownership fights.
Not really. An NFT is just an agreement between two people, after all. The initial NFT for an artwork is between a buyer and a seller who claims to be the creator of the artwork. If someone else comes along and claims fraud, the NFT doesn't help. You still have to go back to the real world and hash it out in court.
Help me out here. An NFT conveys "ownership" of a digital artwork—according to the two people who make the deal, anyway—but ownership doesn't really mean anything. So what does it get you?
The ability to sell your "ownership" to someone else, hopefully at a higher price.
Um.
Yeah, um.
It's the digital version of buying or selling the Brooklyn Bridge.
+10
I have some property in Florida that NFT owners might be interested in. High potential for it to be waterfront in a few years.
I agree with all of this except "In theory it means you can stop other people from replicating the artwork all over the internet". I don't know of any way even in theory an NFT would or could stop replication of any digital artwork or other asset. I'm not clear on whether NFTs actually convey any legally enforceable ownership or rights, and it they do what entity would choose to actually do the enforcement.
Indeed.
NFTs of cool art are often copy/pasted. It's not hard to do...
But as to everyone here (including Kevin) suggesting this is really dumb... Well, would you like to have the Mona Lisa (replace with any piece of unique art you like)? if not really, do you at least agree it's expensive/would fetch a high price if the Louvres was ever to sell it?
OK. Now go and check how much it'd cost you to get a perfect replica. I've heard around $50K. So the original might go for $500M but a perfect replica, hard or impossible to distinguish without either a magnifying glass or paint analysis, goes for a fraction...
Why? Would you be interested in such a replica? If you're theoretically interested in the original and not the replica, can you explain your own logic?
You have nailed it. A physical painting is, to a first approximation, unique. There are some edge cases like those Gilbert Stuart portraits of George Washington, but the first approximation works pretty well. What about prints? An artist produces one hundred prints with serial numbers, then destroys the plate. Each print is still unique in that it has a unique serial number, but all else being equal those prints are interchangeable. But wait! Print number 34 belonged to another artist, the two of them had a torrid love affair, then a spectacular breakup. Is number 34 worth more due to its provenance? Maybe? Probably? Almost certainly. You get to tell that story, while you don't if it is number 35, which belonged to an anonymous collector. That has to be worth something, though I have no idea how much. How about a photographic print? Is one print of a photograph worth more than a different print of the same photo? Maybe? Perhaps the photographer made that print himself, ensuring it is exactly right. How about if it was made under his supervision? How about if it was made from the original negative? The difference in valuation is getting tenuous.
Finally we get to a digital photo. At this point the concept of an original versus a copy is largely meaningless, and copies can be made essentially for free. So how do you monetize this? An NFT is an attempt to do this. The NFT is unique, so if you associate it with a digital photo then maybe people will regard it as a thing of value in the same way that an original painting has more value than does a copy.
This is not obviously inherently more bogus than a lot of what goes into the valuation of collectables. A first edition book is worth more than a second edition. The first printing of the first edition is worth more than the later printings, where they fixed that typo on page 34. Why is this? Just because. Book collectors arbitrarily agree to these valuations, so they affect what a buyer is willing to pay. There you go. This is not really any less ridiculous than collectors agreeing on the value of an NFT.
That being said, I think the NFT crowd overplayed their hand, the roll-out being to scammy and money grabbing. I strongly suspect that the stories about NFTs selling for big numbers are all pump-and-dumps. This can bring in some stupid money in the short term, but it doesn't make for a sustainable market.
> So what does it get you?
Bragging rights. I'm not going to buy Kevin's NFTs to sell them; I'm going to buy them just to be able to say that I bought them.
This reads like a mechanism for money laundering.
that's a good point. completely arbitrary pricing on digital assets with no way to determine a reasonable market value. basically what has already been done with art on steroids. "oh, that 10 million dollars of income transferred from some international account? that's not payment for drug smuggling. it's from the NFT of a squirrel i sold. check the blockchain, IRS!"
Of course it is, but not necessarily any more so than the "legitimate" art market.
So, as an online professional artist I've been following this over the past year or two. There are tons of areas of concern, but this is the most concerning right now with respect to copyright and ownership:
Anyone can mint an NFT for anything. As Kevin mentions, there is no LEGAL right to the artwork itself, not without an agreement transferring those rights, as per general copyright law. So right now it's been a scramble among my friend and peers to issue takedown notices to sites selling NFTs of stolen artwork, which has been a huge game of whack-a-mole with some sites being less open and helpful about it than others.
However, within the tech and crypto communities, the big idea is that -- as ever -- MACHINE LEARNING and A.I. will be able to "handle" supposed copyright infringement. Right now a few sites (like DeviantArt) are issuing notifications if a copyrighted piece of art appears as an NFT. Eventually, though, sites like Twitter, Facebook, etc. want to flip that around, and use AI to cite an NFT's ownership status to automatically take down "infringing" instances of artwork elsewhere.
Unfortunately, that means that EITHER artists are going to be blackmailed into minting and paying for an NFT for EVERY SINGLE PIECE OF ARTWORK they post online … or, someone else will steal and mint their artwork, and suddenly the AI on all the social sites will begin taking down all the artist's instances of their work being shared or posted. Legally, sure, the copyright is SUPPOSED to belong to the artist, but the system will by default give preference to the NFT holders, and the artists will have to go through a lengthy process and likely an expensive legal battle with art thieves and with tech giants who just want to automate everything.
So yeah, there's a reason most of the people shilling NFTs are either corporations looking to control everything and speculators looking to steal works and make money, while MOST of the actual creators are up in arms and don't want anything to do with it. Finding a way to avoid it is looking pretty bleak though. 🙁
This, as far as I can tell, is the only relevant response posted. Thanks for the education!
Very interesting
The costs are nuts. The gas fees seem absolutely ridiculous.
Can you spell Ponzi Scheme?
Let's put it slightly differently.
The modern world is based on ownership contracts. And ownership contract is basically a legal framework (the might of the state will support you in the event of a dispute) and various technology (registrations, signatures, entries in a computer database, ...) that state who has the ownership of a particular item, whether that item is a house, a car, or a bank account.
NFTs (in theory) are an addition on the technology side, one more way to connect "me" to "the thing I own". They don't change the set of things that can be owned, they don't change the fact that ownership is a bundle of rights, some of which I may own while the others are owned by someone else. (Anyone who's done much work in real estate or entertainment contact understands this -- I can own the the house, but not the mineral right or water rights of the land; I can own TV broadcast rights in the US but not streaming rights to Asia.)
So is there anything new in NFTs? Not that I see that is interesting. In *theory* because the ownership is more digital and mechanized, it can make sale easier, cheaper (and, possibly...) less liable to dispute -- compare the ease of selling stocks vs a car vs a house. BUT ownership technology is only half the equation the other half is the exact bundle of rights that is owned. To the extent that this is not standardized (as Kevin described above) you're not actually solving the real problem.
So NFT's are not "meaningless"; they are a technology with which to record contracts, and are as meaningful as contracts are.
They are not stupid, except insofar as owning anything is stupid. Are you willing to pay real money for some memorabilia from a movie? OK you're willing (for whatever reason) to pay to be "the owner" of something that's somewhat ephemeral, lightweight and part of our commons. An even more extreme version is if you're willing to pay for a unique avatar or clothing or whatever in a video game. NFTs can (depending on the exact details of the "ownership") give you that same degree of ownership of something, presumably with the same sort of psychological rewards that you felt in the movie memorabilia or video game case.
But are they a GOOD technology for ownership, is the cost and hassle better than the alternatives? This seems highly unlikely! Traditional databases (as power eg the NY Stock Exchange) seem capable of handling extremely rapid ownership changes in a way that's much more performant and at much lower energy. There's no obvious reason the NFT idea ("a way to record that I am the owner of something") couldn't be done on those same databases.
So bottom line:
(1) criticizing NFTs as a way to own digital objects is basically dumb
(2) criticizing the details of a particular NFT contract is legitimate, but uninteresting
(3) criticizing NFTs as a very stupid technology with much better alternatives available is absolutely legitimate.
Which means, of course, our media have latched onto (1), with a small amount of (2) and very little interest in (3). Exactly as you would expect given the history of our media over the past 50 years...
So why the hype?
(a) the usual teenage-boy-mentality crowd thrilled by the idea of "no control, no government, no-one tells me what to do" who evangelize NFTs as the next step towards their utopia of no rules anywhere anytime ever. (This same crowd seem remarkably uninterested in moving to Somalia, but there you are...)
(b) the usual highly intelligent sociopath crowd who see in NFTs a way to work around various inconvenient financial control legislation for a few years, until the legislation catches up.
Obviously group (b) are massively scamming group (a), and will pull out just before the collapse. Obviously group (a) deserve everything that's coming to them.
The only real question for the rest of us is will anyone who's not part of groups (a) or (b) get caught in the cross-fire? Right now I don't see it; it really depends on whether someone manages to figure out a way to enroll gullible idiots (as opposed to group a, who deserve everything they get). So far I don't see that as having happened.
I’ll give it a shot:
It’s a digital signature that one person sells to another. The ownership is tracked in a public ledger and can be transferred to new owners by a new entry in the ledger, which may require consent by just the current owner or by it the current and original owners. Getting that consent usually involves exchange of money (government issued or digital*.)
So, just like any other signature, transfer of signature ownership depends on what it’s attached to. Babe Ruth’s signature may be valuable all on its own even if it’s written on toilet paper. Most peoples’ signatures are worthless unless attached to some legal document, but in the end they’re worth whatever someone else will pay. So if someone else will pay you for a signature that says “Kevin Drum’s picture,” regardless of whether the signature has any legal relationship to Kevin or his picture, it’s worth something, because ownership of that particular is publicly tracked. (Don’t get started on what it means to be public since anyone can also start their own record system…)
Most early NFTs are probably going to be valuable to someone just because they were early, like early coins are worth much more than their face value. Probably most of it is useless unless legal standards follow. Maybe it replaces some of the verification art houses do on signed works if an artist’s identity is verified in originating an NFT, but again it’s all worth whatever someone else thinks it is.
*One dispute with your fungibility of Bitcoins- yes when used as currency they’re equivalent, but just like printed currency has serial numbers each Bitcoin (or fraction thereof) has a unique ID. So a particular Bitcoin might have collection value because the entire history of its ownership can be tracked, just like someone might pay more for a dollar bill that can be proven to have been in Trump’s pocket when he left the White House for the final time.
Why do I keep thinking "timeshare"?
Seems to me like the newest form to easily part fools from their money.
End-state capitalism.
Thank you so many idiots vulnerable to the latest Ponzi.
Ever got that “gift” of a star named after you or one square meter of Scotland, with a framed certificate? Now, imagine it’s digital.
The way I view an NFT is like a copyright without the meddlesome ownership reversion provision. Of course the underlying contract would control all aspects of an ownership including right to copy but the point is that an NFT can be viewed as a painting except the medium is a screen and the paint consists of bytes.
New Financial Trickery
Novel Financial Tulip
New Fool's Treasure
Every time I read about cryptocurrency and these NFT things, I think we need to raise taxes on the rich by 50%.
Now you're talking! And no paying in Bitcoin, or Dodgycoin, or any other virtual "coin."
Good ideas for any NFT buyers:
https://quotefancy.com/quote/931657/Warren-Buffett-Investment-must-be-rational-if-you-can-t-understand-it-don-t-do-it
Remember Mr. Haney from Green Acres?
The entire art world is Mr. Haney.
It's part of the block chain ledger, so, there will always be proof of who "owns" a designated item sold via NFT.
It gives the artist greater power as the artist can dictate the terms including royalties from each time an NFT-based item is sold.
The problem remains the cost of power to support an NFT-item's sale.
Always? I’ve often though that the only reason our financial system hasn’t been hacked to death is that the hackers need it too. Their profit motive keeps it from being completely destroyed. Some day, though, someone won’t care. And then it will all go poof!
Well, that's the intent. There are ways to steal a wallet, to alter or allow fraudulent transactions in the ledger, but I'd be using NFTs if not for the massive power consumption problem.
Just a month or two ago, weren't you on team Tyler Cowen and the future of Blockchain?
Why not just sell the copyright? That confers actual rights and is a thing of actual value. But it's not "the blockchain" so I guess it's not very cool.
I find it difficult to read NF[x] as anything other than National Football [x].
The big misconception here is that most NFTs that are circulating lets you buy something like rights to the work of art. In most/all cases, the artist retains all rights to use, reproduce or sell the art. You still have to pay Beeple to license the work of art that he sold an NFT worth $65 million to. The NFT is a set of numbers that the artist has said is associated with the work of art. You own the rights to NFT #1, which is literally just a number.
I've heard it compared to owning a sequentially numbered trading card. The owner of the trading card can make infinite trading cards. They designate the order in which the cards was printed. Collectors want the early numbers because that's cool. Thus, an identical card that was printed first is worth more than the 10,000th card. Similar with original copies of Superman #1, which can be reprinted millions of times.
The NFT is like the sequentially numbered trading card, except that there's no actual trading card. Just a number. You own the #1 that the artist insists is related to the card.