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NFTs Are a Dangerous Trap

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Re: NFTs Are a Dangerous Trap

#91

Post by JPKab »

chadcmulligan wrote: post #81

Hitchhikers guide to the galaxy: Earth - a small planet in the outer reaches of spiral galaxy M7529, so far the only planet on record that the semi-intelligent biped inhabitants managed to overheat so badly that they became extinct. Overheating has happened before, of course, however the method of overheating is unique - the inhabitants invented a method of identifying uniqueness by making large calculations and atta…

This was hilarious and well-written.

I've become extremely alarmed at the number of completely non-technical people who don't know anything about how cryptocurrency works getting extremely into it via YouTube click holes. It's obvious that these NFTs are capitalizing on it.

A guy I ran into at the hardware store today was talking to me and he didn't understand the concept of a cryptocurrency that has a stable value so that it can be used as a means of exchange.

He's an airline pilot and he just has tens of thousands of dollars invested in various crypto things that he heard about on YouTube and he's made a ton of money on it.. It was eerily reminiscent of conversations I had with people flipping houses in 2006.

Re: NFTs Are a Dangerous Trap

#92

Post by tasogare »

berberous wrote: post #79
jamesgreenleaf wrote: post #37

NFTs make perfect sense for representing a claim on things that can be used, like event tickets or in-game virtual goods. But as certificates layered on top of collectibles... I'm not so sure. With something like CryptoKitties, you can do something with the tokens (play a virtual pet game). But with something like CryptoPunks you're essentially paying for digital beanie babies, which are worse than real ones since an…

CryptoPunks will be in the MoMA one day. They are a pioneer — and will be valued as such. Derivative works and obvious cash grabs are a bubble and low effort art will trend back to $0.

> low effort art will trend back to $0

This is being continuously disproved since decades by contemporary art.

Re: NFTs Are a Dangerous Trap

#93

Post by jrmg »

ajiang wrote: post #23

Regardless of what you think of NFTs, you have to recognize that the author's only counterargument against NFTs is that they're bad for the "rest of us" due to externalities that everyone else has to pay. The "rest of us" don't pay for the electricity use. The ETH miners are paying for it directly. And creators and buyers are paying for it indirectly through ETH usage. It isn't an externality. That's like saying the…

The "rest of us" don't pay for the electricity use. The ETH miners are paying for it directly. And creators and buyers are paying for it indirectly through ETH usage. It isn't an externality. That's like saying the physical art world shouldn't exist because it uses physical real estate, electricity, and raw materials to be made on -- and the rest of us pay for those things.

Negative environmental consequences with costs imposed upon society are literally externalities. All the things you list are textbook examples.

Re: NFTs Are a Dangerous Trap

#94

Post by TheColorYellow »

Pretty bad take on NFTs.

There are numerous configurations, networks, and commercial structures that can be created for NFT offerings that can mitigate "problems" described in the OP and accommodate for different tradeoffs.

A simple retort would point to the many alternative NFT networks that don't use POW-based consensus algorithms or the NFT offerings that enable value add offerings very differently than purchasing art or baseball cards.

Evaluating the capabilities of NFTs against the value offerings of something like rare art is an apples to oranges comparison. Of course the market for digital assets offered via NFT is immature and speculative; this is a new market, based on an alternative technology paradigm, that has a long way to go before it settles into a more usable and valuable structure.

Ultimately, the idea of using key-pairs pegged to widely accessible peer-to-peer public networks as a mechanism for tracking ownership of digital (or near digital or at times even physical) assets is incredibly novel. It turns the conventional model of third-party hosted digital assets on its head and enables really interesting mechanisms of distribution, ownership, access, and value consumption and creation that does not compare well with traditional mechanisms. And in saying it doesn't compare well I mean to acknowledge its limitations and its potential at the same time. However, the critique in the OP is pretty bland and doesn't seem to acknowledge the full scope of the situation.

Re: NFTs Are a Dangerous Trap

#95

Post by AgentME »

>CREATORS may rush to start minting NFTs as a way to get paid for what they’ve created. Unlike alternative digital currencies which are relatively complicated to invent and sell, it’s recently become super easy to ‘mint’ an NFT. [...] The more time and passion that creators devote to chasing the NFT, the more time they’ll spend trying to create the appearance of scarcity and hustling people to believe that the tokens will go up in value. They’ll become promoters of digital tokens more than they are creators. [...]

>BUYERS of NFTs may be blind to the fact that there’s no limit on the supply. In the case of baseball cards, there are only so many rookies a year. In the case of art, there’s a limited number of famous paintings and a limited amount of shelf space at Sotheby’s.

How do these make NFTs signficantly different from the art trade and collectibles market? In both cases, creators could fall prey to focusing too much on selling things, and in both cases, the creators at any time could decide to put out a ton more. (I don't get why the case of baseball cards is treated differently: nothing stops them from suddenly deciding to print many more cards.)

---

I think the externality of the power usage of proof-of-work blockchains is a significant issue though, and that maybe NFTs should be discouraged on that basis until we have NFTs working through environmentally-friendly solutions like proof-of-stake. I think this is way more of an issue than whatever possibility of a downside exists from artists maybe deciding to focus too much on making sellable tokens instead of art.

Re: NFTs Are a Dangerous Trap

#96

Post by detaro »

ajiang wrote: post #40
sollewitt wrote: post #35

Earlier quoted context omitted.

"This is bad because of externalities, the externalities are big and will grow" is exactly why we don't have general nuclear power, saying it's the only argument doesn't make it a weak argument.

When the cost is directly paid by the actor, it isn't an externality. It is the literal opposite of what externality means.

And pollution is usually not, or only partially, paid for by neither the energy producer nor the consumer. Thus it's an externality.

Re: NFTs Are a Dangerous Trap

#97

Post by megameter »

ajiang wrote: post #23

Regardless of what you think of NFTs, you have to recognize that the author's only counterargument against NFTs is that they're bad for the "rest of us" due to externalities that everyone else has to pay. The "rest of us" don't pay for the electricity use. The ETH miners are paying for it directly. And creators and buyers are paying for it indirectly through ETH usage. It isn't an externality. That's like saying the…

The electricity argument loses weight when you look at the world allocation of GPUs. Although mining has cut into supply, they're also being used for gaming, workstation, and cloud compute tasks. One way or another all of that chip supply would be sold, and then it is a case of benchmarking the social value, load and efficiency of the different uses to some utilitarian optimum.

Much easier to cut off the framing early and declare "all crypto is bad and has no value", which is what the contra side is leaning towards. It's easily embraced by authoritarian-left ideologues, since their inclination is to reject market solutions anyway.

My suspicion is that we'll all be surprised in eighteen months. The "boom" will be gone, but an unalterable trend will have taken hold regardless, and the platforms will have largely moved on to proof of stake, closing the environmental argument.

The thing of cryptocurrency is that at the end of the day, all you have is a file of a few hundred gigabytes that somehow represents hundreds of billions of dollars of market value. That value means that an absolutely huge number of eyeballs are scrutinizing it, looking for a way to protect their investment. They can't "turn off" the system and make sweeping changes. The hypotheses of anything-goes "assassination markets" have not panned out - crypto has become a sector with a civic outlook.

Re: NFTs Are a Dangerous Trap

#98

Post by mattigames »

ajiang wrote: post #23

Regardless of what you think of NFTs, you have to recognize that the author's only counterargument against NFTs is that they're bad for the "rest of us" due to externalities that everyone else has to pay. The "rest of us" don't pay for the electricity use. The ETH miners are paying for it directly. And creators and buyers are paying for it indirectly through ETH usage. It isn't an externality. That's like saying the…

>The "rest of us" don't pay for the electricity use;

No but the rest of are paying it with the overheating of the planet which is way way worse

Re: NFTs Are a Dangerous Trap

#99

Post by mtalantikite »

thinkingkong wrote: post #38

Maybe NFTs for collectibles isnt ideal but Im wondering if there are some more - lets say - utilitarian uses of this concept that we havent discussed yet. The other day I tried buying a bike. Id really like to know it wasnt stolen, and somehow being able to tie a real world representation into a virtual single item good would be somewhat useful.

This all assumes most people care about buying a stolen bike or not. Maybe you care, and maybe I care, but I’m sure there are plenty of people that really don’t give a shit and are thinking “it’s a cheap bike and I don’t have the luxury of money or time to care, I’ve got to get to work”.

Re: NFTs Are a Dangerous Trap

#100

Post by cloudking »

There seems to be a mix of legit use cases and mania going on with the NFT craze. I can see use cases like NBA Top Shot being legit, here you have essentially the digitization of trading cards (a proven collectable market) backed by a major sports league. The top shot "moments" have some unique advantages over traditional trading cards in that they can't be damaged/stolen/lost, can be traded instantly online, and may be more interesting to fans since they are videos vs pictures. You can see the transaction history of a moment, and in some cases NBA players themselves are trading them adding to the value for die hard fans. Being backed the NBA and unique content created specifically for the purpose of trading via NFT, I could see them having a long term value & market https://www.nbatopshot.com

Then there are ideas leaning more towards mania, essentially trying to make "NFT for X" by adding a token to every piece of digital data. For example, NFTs for tweets: https://v.cent.co/tweet/20 (current bid is 2.5 million for Jack Dorsey's first tweet). I suppose these tokens have value as long there is a market for them, but at certain price points I question if they can sustain long term and if they are more trying to cash in on the mania.

Debate on this topic here: https://news.ycombinator.com/item?id=26370866

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