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NFTs Are a Dangerous Trap

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Re: NFTs Are a Dangerous Trap

#641

Post by stevebmark »

When cryptocurrency became popular, it was hard to imagine a more poorly designed system. Generating random numbers, continuous guessing, to verify a ledger? That’s the culmination of decades of algorithm and performance knowledge?

Then smart contracts took the stage, and we realized they were an even worse idea than cryptocurrency. Permanently lose access to your money by locking it into a buggy computer program? How could we lose?

And now NFTs are the new worst idea. It’s somehow made the fundamentally terrible random number generation idea of cryptocurrency worse.

The collapse can’t come soon enough.

Re: NFTs Are a Dangerous Trap

#642

Post by m0netize »

The author is confused about what an NFT is. It's simply a verifiable digital claim about 'anything'. It also happens to be a token that is easy to transact with, i.e., buy and sell.

I think the author is just complaining what someone is willing to pay (and is paying) for NFTs. This argument comes up all the time, especially regarding items that have mostly status value.

The answer to that is simple, anyone can pay whatever it's worth to them. It's none of the authors business. Stop complaining.

There are artists and creators who have worked for years and never made a dime from their art. NFTs have changed their lives. NFTs create instant markets for any digital item, giving them value. And there are no middlemen.

The author is missing the beauty of this creative explosion and opportunity. Look into it for yourself and you'll see. Either that or stay poor.

Re: NFTs Are a Dangerous Trap

#643

Post by theptip »

tablespoon wrote: post #592
fredfoobar wrote: post #571

Earlier quoted context omitted.

What's the other proof of ownership? NFTs are the digital equivalent of a vehicle title, that's the strongest usecase (proof of ownership), IMO. I'm not too keen on the collectibles/art usecases, they're probably the easiest/low-effort ones.

> NFTs are the digital equivalent of a vehicle title, that's the strongest usecase (proof of ownership) No they aren't, and least not until they're recognized by law as such.

It is already possible to write legal contracts which say “whoever controls token with public key X, hereforth ‘Owner’” for many asset classes.

I’m sure there are many asset classes where you can’t write such a contract but I don’t think your categorical rejection is correct.

Re: NFTs Are a Dangerous Trap

#644

Post by knowaveragejoe »

lottin wrote: post #610
cachvico wrote: post #553

Earlier quoted context omitted.

It certifies two things: 1. That you paid a certain amount for the certificate. 2. That there will never be another certificate for the same thing, from the same brand of certificates (e.g. "Valuables BY CENT"). Pretty much exactly like owning a baseball card, then.

But when you buy a baseball card you get a card. Here it seems that you only get a receipt stating that you have paid (aka the certificate) AND NOTHING ELSE.

If I understand it correctly, that receipt in conjunction with your keys allows you to prove you own the NFT and can control it on the blockchain(sell it, trade it, etc).

Re: NFTs Are a Dangerous Trap

#645

Post by baobabKoodaa »

fredfoobar wrote: post #598
tablespoon wrote: post #592

Earlier quoted context omitted.

> NFTs are the digital equivalent of a vehicle title, that's the strongest usecase (proof of ownership) No they aren't, and least not until they're recognized by law as such.

I'm not sure what a "usecase" has to do with laws, a usecase can exist outside of the law. Are you implying that laws should come before inventions/ideas?

> a usecase can exist outside of the law

So, let me get this straight: you have an NFT that represents the deed for a vehicle, but the law does not recognize the NFT as the deed for the vehicle... if you don't see any problems with that, boy do I have a bridge to sell you.

Re: NFTs Are a Dangerous Trap

#646

Post by theptip »

roywiggins wrote: post #600
berenza wrote: post #583

Earlier quoted context omitted.

there is work being done on bridging smart contracts with contract law and it may be further along than you think. https://www.lawsociety.org.uk/topics/research/blockchain-leg... https://www.lawtechnologytoday.org/2020/12/how-smart-contrac... https://www.ikigailaw.com/how-have-different-states-in-the-u...

It seems to me that there's going to be an unbridgeable gap when it comes to physical property. If someone hacks my wallet containing my "house NFT" and transfers it to themselves and I can't hunt them down and force them to return it, who owns the house? How do I sell it, if I don't have the NFT? Can I go get another NFT minted, and who from? How does the buyer know that this newly minted NFT represents the true own…

One easy way to resolve all of these problems is to build an escape hatch in the contract so that in the case of theft, loss, or other special circumstance you can invoke arbitration and mint a new token if needed.

It’s important to understand that these tokens aren’t going to replace the existing legal system (much though the anarchist/libertarian wing of the crypto community might wish it). They just enable certain transactions to occur with lower overhead and time delay. This is about improving friction in the happy path, not providing new solutions for every conflict case.

Personally I don’t think there is a reason to put your primary residence one the blockchain (you don’t trade it that often). But it’s interesting for places where you might want to trade assets at higher frequency (eg micro loans, supply chain finance, etc) and maybe there is a real-estate trust angle too.

Re: NFTs Are a Dangerous Trap

#647

Post by baobabKoodaa »

knowaveragejoe wrote: post #644
lottin wrote: post #610

Earlier quoted context omitted.

But when you buy a baseball card you get a card. Here it seems that you only get a receipt stating that you have paid (aka the certificate) AND NOTHING ELSE.

If I understand it correctly, that receipt in conjunction with your keys allows you to prove you own the NFT and can control it on the blockchain(sell it, trade it, etc).

> If I understand it correctly, that receipt in conjunction with your keys allows you to prove you own the NFT and can control it on the blockchain(sell it, trade it, etc).

And one should be happy to control the receipt of their purchase of imaginary goods? Ok.

Re: NFTs Are a Dangerous Trap

#648

Post by tshaddox »

roywiggins wrote: post #568
theptip wrote: post #566

Earlier quoted context omitted.

Worth noting that NFTs aren’t just cryptokitties; there is a lot more you can do with them. ETH NFT refers to the smart contracts that you would use to digitize ownership of a house or any other (physical or financial) unique asset that you might trade. You can nest an NFT under an ERC20 token, too, so that you can sell partial ownership tokens in your NFT. Of all the use-cases in crypto, I think digitizing ownership…

What happens when a judge says "no, the person who the NFT says owns the house doesn't, it's Bob over there"? When it comes down to it, the entry on the local tax rolls or property registration office is going to be the one that counts.

I don’t really get your point. What happens when a judge says “you don’t own your house any more, the government owns it now”? Well, what happens is you lose your house. The fact that the government can circumvent any notion of property ownership isn’t really a criticism of any particular notion of property ownership.

Re: NFTs Are a Dangerous Trap

#649

Post by anonporridge »

lottin wrote: post #305
anonporridge wrote: post #282

Earlier quoted context omitted.

Because if I'm a rich person wanting to spend stupid amounts of money on some 'original' work of digital art, I don't want to trust a third party store the ownership records that could easily be corrupted. The ownership record in a public blockchain can't be corrupted.

Rich people entrust their entire wealth to third parties to manage it for them. Why wouldn't they trust a third party to keep some ridiculous record of ownership?

Because the entire ethos of the cryptocurrency space is about dematerializing trust from large, complex networks of humans with various carrot/stick incentives keeping them honest to trust based on cryptography and game theory dynamics of open distributed systems that can't be successfully cheated without a massive accumulation of power.

Re: NFTs Are a Dangerous Trap

#650

Post by iudqnolq »

Dylan16807 wrote: post #635
iudqnolq wrote: post #619

Earlier quoted context omitted.

Suppose I own a game on steam. I pay a friend to write me a certificate saying whoever owns the certificate owns the game. I sell you the certificate. You pirate the game. Do you own it? If the NFT doesn't come with conventional legal rights, you don't own the thing the NFT points to in the real legal system. If it does, it's redundant.

If first sale doctrine is ever fixed, your friend could sell you their copy that way. I don't know why all your examples involve third parties stamping sweet nothings onto a piece of paper. Of course something made by a non-author and with no ownership is useless. I said that in my first comment. > If the NFT doesn't come with conventional legal rights, you don't own the thing the NFT points to in the real legal syst…

> If first sale doctrine is ever fixed, your friend could sell you their copy that way.

Yes, but NFTs claim to get similar effects without changing the law.

> I don't know why all your examples involve third parties stamping sweet nothings onto a piece of paper.

The third party is the blockchain. Because the blockchain can't enforce that you actually hand over real ownership rights to correspond with the NFT ownership.

> An NFT needs to have some kind of rights in the contract or it's a scam. Notably you at least need exclusivity!

If I own a piece of paper my country's legal system will accept as meaning I own something, why would I also want a piece of virtual paper that a bunch of people on the internet will accept as meaning I own some sort of rights to something.

> But that doesn't make it "redundant". It's a way of making a contract, not a replacement for contracts.

What NFT can I use to make a contract that any real legal system will accept?

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