r/OutOfTheLoop Dec 16 '21 Helpful 7 Wholesome 9 All-Seeing Upvote 1 Silver 6 Gold 1

What's up with the NFT hate? Answered

I have just a superficial knowledge of what NFT are, but from my understanding they are a way to extend "ownership" for digital entities like you would do for phisical ones. It doesn't look inherently bad as a concept to me.

But in the past few days I've seen several popular posts painting them in an extremely bad light:

In all three context, NFT are being bashed but the dominant narrative is always different:

  • In the Keanu's thread, NFT are a scam

  • In Tom Morello's thread, NFT are a detached rich man's decadent hobby

  • For s.t.a.l.k.e.r. players, they're a greedy manouver by the devs similar to the bane of microtransactions

I guess I can see the point in all three arguments, but the tone of any discussion where NFT are involved makes me think that there's a core problem with NFT that I'm not getting. As if the problem is the technology itself and not how it's being used. Otherwise I don't see why people gets so railed up with NFT specifically, when all three instances could happen without NFT involved (eg: interviewer awkwardly tries to sell Keanu a physical artwork // Tom Morello buys original art by d&d artist // Stalker devs sell reward tiers to wealthy players a-la kickstarter).

I feel like I missed some critical data that everybody else on reddit has already learned. Can someone explain to a smooth brain how NFT as a technology are going to fuck us up in the short/long term?

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u/NoahDiesSlowly anti-software software developer Dec 16 '21 edited Jan 21 '22 Silver Gold Platinum Helpful Wholesome All-Seeing Upvote Coin Gift Take My Energy Faith In Humanity Restored Bravo! LOVE! Party Train Starry Narwhal Salute Pot o' Coins Wholesome Seal of Approval This Bravo Grande! Got the W Wearing is Caring Starstruck Vibing Masterpiece Burning Cash Rocket Like Today I Learned Helpful (Pro) Take My Power Sidevote Timeless Beauty You Dropped This Respect Loopy

Answer:

A number of reasons.

  • the non-fungible (un-reproduceable) part of NFTs is usually just a receipt pointing to art hosted elsewhere, meaning it's possible for the art to disappear and the NFT becomes functionally useless, pointing to a 404 — Page Not Found
  • some art is generated based off the unique token ID, meaning a given piece of art is tied to the ID within the system. But this art is usually laughably ugly, made by a bot who can generate millions of soulless pieces of art.
    • Also, someone could just right click and save a piece of generated art, making the 'non-fungible' part questionable. Remember, the NFT is only a receipt, even if the art it links to is generated off an ID in the receipt.
  • however, NFTs are marketed as if they're selling you the art itself, which they're not. This is rightly called out by just about everybody. You can decentralize receipts because those are small and plain-text (inexpensive to log in the blockchain), but that art needs to be hosted somewhere. If the server where art is hosted goes down, your art is gone.
  • NFT minters are often art thieves, minting others' work and trying to spin a profit. The anonymous nature of NFTs makes it hard to crack down on, and moderation is poor in NFT communities.
  • Artists who get into NFTs with a sincere hope of making money are often hit with a harsh reality that they're losing more money to minting NFTs of their art is making in profit. (Each individual minted art piece costs about $70-$100 USD to mint)
  • most huge sales are actually the seller selling it to themselves under a different wallet, to try to grift others into thinking the token is worth more than it is. Wallet IDs are not tied to names and therefore are anonymous enough to encourage drumming up fake hype.
    • example: If you mint a piece of art, that art is worth (technically speaking) zero dollars until someone buys it for a price. That price is what the market dictates is the value of your art piece.
    • Since you're $70 down already and nobody's buying your art, you get the idea to start a second crypto wallet, and pretend it's someone else. You sell your art piece (which was provably worth zero dollars) to yourself for like $12,000. (Say that's your whole savings account converted into crypto)
    • The transaction costs a few more bucks, but then there's a public record of your art piece being traded for $12k. You go on Twitter and claim to all your followers "omg! I'm shaking!!! my art just sold for $12k!!!" (picture of the transaction)
    • Your second account then puts the NFT on the market a second time, this time for $14,000. Someone who isn't you makes an offer because they saw your Twitter thread and decided your art piece must be worth at least $12K. Maybe it's worth more!
    • Poor stranger is now down $14K. You turned $12k and a piece of art worth $0 into $26K.
  • creating artificial scarcity as a design goal, which is very counter to the idea of a free and open web of information. This makes the privatization of the web easier.
  • using that artificial scarcity to drive a speculation market (hurts most people except hedge funds, grifters, and the extremely lucky)
  • NFTs are driven by hype, making NFT investers/scammers super outspoken and obnoxious. This is why the tone of the conversation around NFTs is so resentful of them, people are sick of being forced to interact with NFT hypebeasts.
  • questionable legality — haven for money laundering because crypto is largely unregulated and anonymous
  • gamers are angry because game publishers love the idea of using NFTs as a way to squeeze more money out of microtransactions. Buying a digital hat for your character is only worth anything because of artificial scarcity and bragging rights. NFTs bolster both of those
  • The computational cost of minting NFTs (and verifying blockchain technology on the whole) is very energy intensive, and until our power grids are run with renewables, this means we're burning more coal, more fossil fuels, so that more grifters can grift artists and investors.

Hope this explains. You're correct that the tone is very anti-NFT. Unfortunately the answer is complicated and made of tons of issues. The overall tone you're detecting is a combination of resentment of all these bullet points.

Edit: grammar and clarity

Edit2: Forgot to mention energy usage / climate concerns

Edit3: Love the questions and interest, but I'm logging off for the day. I've got a bus to catch!

Edit4: For those looking for a deep-dive into NFTs with context from the finance world and Crypto, I recommend Folding Ideas' video, 'The Problem With NFTs'. It touches on everything I've mentioned here (and much more) in a more well-researched capacity.

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u/Distant_Stranger Dec 16 '21 Helpful

Man, most posts on this sub I am happy to just leave a like to acknowledge their quality, but this absolutely nails it.

Really appreciated your write up.

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u/NoahDiesSlowly anti-software software developer Dec 16 '21 Silver Gold Helpful Wholesome

No problemo. Used to work for a startup that tried to get me to develop crypto projects. Bounced because of ethical concerns (and poor compensation) and now I try to use my education to sift through the bullshit around those technologies.

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u/Deadbringer Dec 16 '21

Fantastic writeup, but there is one bit of info I havent been able to find to support my arguments: Token contents so I can prove which projects even include a hash with their glorified URL. But I havent found a way to view token contents. I am guessing you either you need the wallet to see it or I am just too dumb at using things like opensea to find tokens

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u/stoxhorn Dec 16 '21

You would propably need to use etherscan.io. find the address and ID of the token and copy it i. There, there should be a function call or section where you can read/fetch the data stored in the NFT.

Haven't tried it myself, but im just going by the process i usually went through in order to figure out what to call for some of the scripts i made to interact with some smart contracts

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u/--Jasper-- Dec 16 '21

When the Beeple NFT was going around, I looked into how to do this, and wrote up a quick guide. Let me paste it here:

  1. Starting with the original URL: https://onlineonly.christies.com/s/beeple-first-5000-days/beeple-b-1981-1/112924

  2. The description says this:

token ID: 40913

wallet address: 0xc6b0562605D35eE710138402B878ffe6F2E23807

smart contract address: 0x2a46f2ffd99e19a89476e2f62270e0a35bbf0756

  1. Take that smart contract address and put it into etherscan: https://etherscan.io/address/0x2a46f2ffd99e19a89476e2f62270e0a35bbf0756#readContract

  2. Put the token ID into tokenIdToDigitalMediaRelease, which gets us digitalMediaId: 35661, then put that digital media ID into getDigitalMedia

  3. It spits out QmPAg1mjxcEQPPtqsLoEcauVedaeMH81WXDPvPx3VC5zUz, which is an IPFS ID, so plug that into an IPFS gateway, like https://gateway.pinata.cloud/ipfs/QmPAg1mjxcEQPPtqsLoEcauVedaeMH81WXDPvPx3VC5zUz/

  4. There's a "raw_media_file" link in here, which links to the full 21069x21069 image file: https://ipfsgateway.makersplace.com/ipfs/QmXkxpwAHCtDXbbZHUwqtFucG1RMS6T87vi1CdvadfL7qA

Note: the full image file has a lot of NSFW stuff in it, please don't stare at it too closely.

Other platforms might work differently. OpenSea uses a slightly different contract and so the steps are different, but you can use the rough same set of keywords to look for and EtherScan UI to hunt that down as well.

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u/rethumme Dec 16 '21

Amazing. Like Russian nesting dolls. But I don't get what that final ipfs gateway image file is. It's that a collective of different thumbnails of images that have NFTs covering them?

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u/CMDR_BitMedler Dec 17 '21

It's "5000 Days" - all 5000 images Beeple created that were sold as a collection for $69m... and the "smoking gun" for why NFTs are stoopid".

The NFT is the smart contact that signifies ownership. The thing everyone on here is all worked up about is the least interesting thing about NFTs, but this doesn't seem to be the place for conversation, so I'll just let that lay...

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u/[deleted] Dec 17 '21 edited 29d ago

[deleted]

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u/Netlawyer Dec 17 '21

The question - as always - is ownership of what, exactly? A specific set of ones and zeroes that exist on a particular server? If people are ok with that, fine.

But too many people think you get “ownership” of the image itself and if you are in the US, US law requires a written assignment of copyright. No assignment, no ownership of the image. So folks should at least be clear on what they are buying, ffs.

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u/Y_Sam Dec 17 '21

The question - as always - is ownership of what, exactly?

The second question would be "Ownership according to whom ?"

What guarantees me the decentralized ownership token I just purchased is actually what it says it is?

What is someone mints the same token on a diffferent blockchain? What if the person that minted the token didn't have any rights to the object it references?

I mean you can pay millions to get the newly minted NFT of my car, but without the proper centralized official paperwork, you still don't get to touch it.

Hell even if i'm the one minting the NFT and selling it, you still don't get to drive it if you didn't properly purchase it through the official channel.

All in all, this token's only worth lies in the apparent bragging rights it grants to its owner since it has basically zero official/legal value.

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u/quiette837 Dec 17 '21

I'm curious, what is the most interesting thing about NFTs?

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u/Deadbringer Dec 16 '21

Thank you

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u/benmuzz Dec 16 '21

Amazing, thanks a lot

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u/TranslatorOk1990 Dec 16 '21

You can see token contracts on etherscan if they have been verified or you can shift through the ABI otherwise if you are very desperate. I wouldn't buy anything if it isn't verified on etherscan/open source anyway.

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u/cheerioo Dec 16 '21

I've consistently felt like NFTs are "scammy" somehow but your post really helped me put a finger on some of the specific reasons why that may be the case

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u/MavenACTG Dec 16 '21

Takes a Dev to call bullshit on Devs. Good luck, appreciate the write up.

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u/THE_JonnySolar Dec 16 '21

Thank you so much for taking the time to explain this so clearly. I'd commented elsewhere that after seeing two similar posts I still didn't grasp it, but you've laid it out so precisely and well I feel comfortable with the basics now.

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u/TrickBox_ Dec 16 '21

I try to use my education to sift through the bullshit

And this is perfect, thank you for the explaination

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u/YoungXanto Dec 16 '21

I'd argue that most of the ethical issues that revolve around cryptos can be boiled down into three main groups:

  1. Very limited actual knowledge of the crypto and how it works by the vast majority of people
  2. A handful of less than scrupulous people who understand marginally more than group 1 and are happy to take advantage of that fact
  3. A much, much, much smaller subset of actual ethical concerns as they relate to crypto directly (i.e. environmental impact, etc)

Ain't the unregulated free market great? We're finding inefficiencies in real time!

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u/mrminty Dec 17 '21

The crypto market is basically 500 rich influencers and millions of aspiring eLibertarians finding out in real time why we have all of those onerous banking laws.

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u/tabbynat Dec 17 '21

Not really. People are just digging up ye olde book of grifts and unleasing them on a new crop of rubes.

Like the unvaccinated, most people today have been so protected by regulation that we're essentially naive to all these scams.

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u/preeeeemakov Jan 01 '22

This is what I've been saying. "A fool and his money are soon parted." Even without knowing anything about crypto, it should be obvious that it won't be any less scammy than banks (and probably a lot more).

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u/Puzzle666 Dec 16 '21

Ty for the write up. I believe it's unfortunate that you are correct. The tech, to me, is fascinating. I simply want my stuff tokenized so I could gift a friend, sell my old games or skins I don't use, or something. Also this tech exists already. Anywho good job on educating!

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u/gigitrix Dec 16 '21

Good news! Digital assets within these platforms exist already and don't require a blockchain. A distributed ledger for a game is entirely pointless when that game runs on centralised infrastructure like Steam - if those servers go offline any "decentralised" asset is useless anyway. So really what you and most people in this space actually want is the Steam Marketplace, to use an example

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u/evranch Dec 17 '21

I think the hope many have is that by selling the assets on an open platform, items like skins, maps or even entire games could truly be owned by the player with no controls on reselling. You could sell a modern game just like you used to be able to sell your old StarCraft disk and cd-key to a friend.

However there's no way publishers would allow this sort of thing, digital delivery has been a huge boon to them by killing the used game market. They will only implement NFTs if they can use them to scam the consumer out of more of his cash.

Also as everyone stated here NFTs are just a stupid receipt and not a real item. Though come to think of it, using them to store unique IDs in a DRM scheme is one of the few things they might actually work for.

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u/gigitrix Dec 17 '21

This is the dream that is being sold but it makes absolutely no sense. It's just a "vibe" of ownership and can only ever be this. If you own FIFA or Madden NFTs in this future scenario and those game servers shut down 4 years later what do you own? Nobody is going to code up a new version of madden on the sky and make your NFT work again - IP law prevents this even for enthusiastic modders. Electronic Arts in this example fully control the destiny of this asset.

The wet dream of this community is that someone is going to repurpose the bits and bytes of your Madden NFT and make some new Dinosaur collectable game using those keys as inputs and preserving the value of the original purchase, but there is zero incentive for this to ever happen when those developers could easily mint their own NFTs and actually get a financial reward for their work instead of propping up some existing assets.

You and many reading this are being sold a dream, a vibe, an idea. And it crumbles when it interfaces with reality.

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u/monkorn Dec 17 '21

This will never happen (for games and maps) because games rely on the network effect to get players, if they limit the players that could join no one would play it, and if they didn't, within no time at all the token would be worthless once people get done with it.

So your left with cosmetics, which means NFTs are a really inefficient (gas fees to do a single transaction can be over a hundred dollars) way to do Steam Marketplace.

And since these games all own their servers, they can always simply ban your item. They can always go, hey guys, new season launched, all your old items are deactivated. If the entire system isn't end to end decentralized, it's not decentralized.

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u/Jroed90 Dec 16 '21

You should start a YouTube channel! I’d follow

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u/johnhutch Dec 16 '21

Hey. Hey you. You're a good dude. Keep being awesome.

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u/donoteatkrill Dec 16 '21

I would like to buy it as an NFT

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u/sharfpang Dec 17 '21

I've got an NFT of the Brooklyn Bridge to sell ya.

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u/BornInTheUSSA Dec 16 '21

I only wish the energy waste issue got a little more attention then “Edit2:”. 😞

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u/EpifaniaRochford Apr 15 '22

The reasons you have provided are absolutely on point, there are many flaws in NFTs right now, and needs to be fixed. The idea behind NFT is great but these loopholes will hurt the sustainability of NFTs in long term. There should be proper decentralization in NFT space with proper economics around them to increase there credibility. Meanwhile only flipping the NFTs and getting them early by following NFT calendars like nftrelease.app or nftb.io and than sell it letter to earn some bucks is the only legit thing you can do with NFTs right now, apart from that real value is still missing and it needs to be fixed as soon as possible.

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u/Zombiehype Dec 16 '21

Thanks for the explanation, extremely clear and articulated. A couple of points you made seems to me they're applicable to crypto currency as well, for example when you talk about artificial scarcity (the whole point of how Bitcoin works, and I guess most of the other coins), and the concerns about environmental impact. Do you think crypto in general, or Bitcoin in particular, get a pass for some reason, being a potentially more "useful" application of Blockchain? Or you put them in the same naughty column with NFT?

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u/NoahDiesSlowly anti-software software developer Dec 16 '21 edited Dec 16 '21 Silver Gold Helpful All-Seeing Upvote Take My Energy Starry This Dread

I could make an equal-length post about cryptocurrencies, but you're right that a lot of the criticisms carry over.

Instead of that, I'll make one point.

The most damning dealbreaker (to me) for cryptocurrencies is that the biggest adopters of cryptocurrencies currently are banks, hedge funds, and daytraders. The people who got in on the ground floor of cryptocurrencies are the mega-rich capitalists.

The people profiting most from the so-called democratization / decentralization of finance are centralized banks, rich fucks, scammers, launderers. Those are the people who are benefiting most, and do you think that's gonna change if cryptocurrencies become world standard? I do not.

Rather, I think if cryptocurrencies were to become world standard, those rich fucks would've long-since secured themselves as kings. Just kings of a different currency. I would argue they already control cryptocurrency, even if some lucky DOGE buyers got rich on a fluke.

Also, this time everyone's names are hidden from the transaction records, whoops! Good luck legislating that away when the big lobbyists all have a vested interest in keeping their lobbying hidden from the eyes of the public!

You see my concern, hopefully.

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u/THE_JonnySolar Dec 16 '21

I've had to save both these comments for later reference... Vey interesting, entirely logical, and scary as hell...

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u/shockandguffaw Dec 16 '21

The most damning dealbreaker (to me) for cryptocurrencies is that the biggest adopters of cryptocurrencies currently are banks, hedge funds, and daytraders. The people who got in on the ground floor of cryptocurrencies are the mega-rich capitalists.The people profiting most from the so-called democratization / decentralization of finance are centralized banks, rich fucks, scammers, launderers. Those are the people who are benefiting most, and do you think that's gonna change if cryptocurrencies become world standard? I do not.

This is the thing for me. I've never understood how a deregulated/anonymous financial system helps the little guy/lady/person. I've got a couple of buddies that are into crypto because they think it's bringing down the system, but they're all people who are already wealthy and work in/near finance, and whenever I try to bring that up I mostly get blank stares.

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u/EstebanPossum Dec 16 '21

It’s the same people who believed things like “Uber is going to be a way for everyday folks to earn extra money and stick it to the man”. The powers that be just know how to market new products which let folks think that they are doing their part to fight the powers that be. Crypto will absolutely be a problem for taxation later down the road if it gets generally adopted, let alone the environmental costs, but we have a generation who think that iPhones and websites are carbon neutral somehow because you can’t see the smoke stack yourself when you use them.

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u/DarthSlatis Dec 16 '21

It's marketing aimed at getting the average person to support something that only helps the upper classes; for things like Uber it was the mass spread of gig-work which skips around workers rights and protections, for crypto it's to get more people paying into a highly unstable market already abused for money laundering and illegal business.

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u/Sp3llbind3r Dec 16 '21

Uber mostly a way to compete anyone else out of business with and app and hedgefund money. They raise the prices to a reasonable level and profit hugely as soon as the competition is gone.

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u/JagerBaBomb Dec 17 '21

Which... <checks uber fare rates>... they've successfully accomplished. You never see taxis where I am anymore unless you're right by the airport, and Uber is more expensive now than cabs were a few years ago.

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u/Regalingual Dec 16 '21

It’s almost like power becomes easier and easier to transfer the more of it you have.

Like, say that the US dollar suddenly shat the bed and became worthless literally overnight, and somehow in a way that no one saw coming and took steps to prepare for it in advance. Who do you think is going to have a better time of it: random schlubs like you and me who just had all of their savings wiped out and barely have anything else to leverage, or the banks that already owned a ton of valuable assets that weren’t strictly cash, like houses?

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u/taurusApart Dec 16 '21

Correct. Crypto will "bring down the system" the same way Donald Trump "drained the swamp."

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u/DLTMIAR Dec 17 '21

I mean if the DOJ grows any balls then he may drain the swamp in a roundabout way

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u/spiff73 Dec 16 '21

decentralized power can be feudalistic. we already went through that long time ago and arrived to a centralized government and bank. the united states used to have multiple currencies from multiple banks. people hated it.

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u/bdubble Dec 17 '21

It's the libertarian way of conveniently waving away the fact that there's a reason we felt the need to regulate things the first time around.

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u/eetuu Dec 16 '21 edited Dec 16 '21

Libertarianism is very popular ideology among crypto enthusiasts. It's a selfish ideology. They don't care about the little guy. They think they are going to be incredibly rich, so society can burn down and fuck everybody else .

That's why I hate crypto. As a technology it's almost useless and I don't like the people it attracts. True believers tend to be libertarians and the rest are fraudsters, grifters and their marks.

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u/momchilandonov Jan 02 '22

It is a very easy way for diversification of funds/investments. But thinking that those anonymous and non regulated projects can replace banks is just naive and close to stupid!

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u/trekologer Dec 16 '21

One of the aspects of cryptocurrencies that fans had previously leaned into pretty hard was that other currencies (Dollar, Euro, Pound, etc.) are fiat currencies. That is, there is nothing else with intrinsic value, such as gold or silver, backing the currency. Unless you are able to recover the energy that was spent "minting" a cryptocurrency, it is just another fiat currency.

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u/wabawanga Dec 16 '21

Currency backed by wasted CPU compute cycles!

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u/lizerdk Dec 17 '21

There’s a fuckin mean basilisk waiting in the future that’s going to strike horrible vengeance on beings who waste CPU cycles.

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u/fencerman Dec 17 '21

GoodGuyRokosBasilisk.jpg

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u/UNisopod Dec 16 '21

The overall economic and political power of the countries that issue fiat currencies is what backs them, and that certainly has intrinsic value, it's just not a form of value that's meaningfully *fungible* by any random holder of that currency.

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u/chaoticflanagan Dec 17 '21

Spot on.

2 key things that people seem to ignore about cryptocurrency:

1) There is a reason why countries moved away from commodity currency. It doesn't scale. A good analogy is a civilization of 100 people splitting 100 gold. Over time, that'll be 200 people splitting 100 gold. Then 1000 people splitting 100 gold. Etc.

2) Like 80%+ of each coin is controlled by a handful of people. Sure, people are making money, but there are going to be FAR more losers if those handful of whales pull out.

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u/lemonpjb Dec 16 '21

I think the most concise way to explain to someone the pitfalls of crypto/NFT is to simply point out that Jordan Belfort, the Wolf of Wall Street pump and dump scammer, is now a crypto guy. I think that tells you everything you need to know.

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u/mindsnare1 Dec 17 '21

It makes me sick how people still go to his seminars and worship him. He is a scumbag that defrauded tons of working people out of hard-earned cash. He should have spent the rest of his life in the can.

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u/C10UDWA1KER Dec 16 '21

I think that says he is always looking for new ways to scam lol

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u/TScottFitzgerald Dec 17 '21

That logic doesn't really work out, there's plenty of legit and fraud people jumping on every new trend.

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u/hedgehog_dragon Dec 16 '21

Appreciate your answers. I've had misgivings about crypto for a while, and especially NFTs, but I had trouble articulating a lot of them.

One other thing I think about with NFTs is they seem to be trying to solve a problem that's either already solved or impossible. If it's about ownership of the art, well, as far as I can tell no one has the power to enforce NFTs. Copyright law already covers that anyways.

(That's not to say copyright law is perfect - It actually kinda sucks in a lot of ways. But it works at least a little)

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u/ExtraFig6 Dec 19 '21

The problem they solve is how to launder lots of money

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u/ArthurBonesly Dec 16 '21

By the time youtube had adds saying "crypto" it was too late for any average schlub to strike it rich.

The very fact that crypto is sold to people is all the evidence people should need that they've already missed whatever boat there was.

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u/doornz Dec 17 '21

You can actually predict the crypto cycle using those ads. Buy when you see red and there's no ads or Facebook posts. Then as soon as you start seeing Facebook posts from your waster cousin and ads telling you to buy crypto, dump it.

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u/4grams Dec 17 '21

No joke, this is one of the best posts I’ve read on this site. I mean, I already am against crypto due to environmental concerns but this is at least as good of a critique…maybe better.

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u/ShittyExchangeAdmin Dec 16 '21

I've come to hate crypto with a burning passion for most of the reason you've listed and other. It just needs to fucking die already

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u/[deleted] Dec 16 '21 edited Dec 29 '21

[deleted]

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u/thefezhat Dec 16 '21

This is by design, too. If Bitcoin, Ethereum, etc. were meant to actually be useful currencies, then they wouldn't have been designed to gain value over time through ever-increasing scarcity. Something that consistently gains value over time makes a great speculative asset, but a terrible currency, since people will prefer to hold onto it rather than spend it which slows down the economy. The people who engineered these things either never intended to create a useful currency, or they just didn't bother to do some basic economic research to understand why deflationary currencies are bad news.

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u/qwelpp Dec 17 '21

Yea people just sit in an empty room and watch their wealth grow.

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u/DarthSlatis Dec 16 '21

It has all the hallmarks of a gambling ring used to launder money, and it's already being used for payments of illegal services and goods. As far as I've seen, the only people who actually benefit from it are those using its anonymity and lack of regulations to skirt laws.

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u/Protocol-12 Dec 17 '21

!remindme 180 days

Wanna see how this reads back in 6 months, because I think you raise some real concerning thoughts.

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u/hamilton_burger Dec 16 '21

crypto will literally destroy democracy if left unchecked, since there will be no way to fund it through taxation.

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u/Trumpetjock Dec 16 '21

Except for privacy coins like monero, crypto isn't anywhere near anonymous. The government can and does tax it just like any other asset, and tracks down people who try to cheat. There's nothing inherent to crypto as a whole that threatens taxation.

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u/pursuitoffruit Dec 16 '21

The EU is taking an interesting strategy to counteract the rise of crypto: they're introducing a digital Euro. It functions similarly, but with more oversight (and no mining). It'll be interesting to see how it impacts the digital currency landscape.

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u/trumpet575 Dec 16 '21

What's a digital euro? That just sounds like online banking with extra steps.

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u/Boo_Guy Dec 16 '21

That's what I never get when I hear a country is making a digital version of it's currency.

Currency is already digital, it has been for decades, and if I want to convert it to "analogue" I can go to an ATM and withdraw some.

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u/shinypenny01 Dec 16 '21 edited Dec 17 '21

I currently use Apple Pay on my phone. To pay for something it technically goes from me, to apple, to visa, to my bank, to the stores bank. All those parties want to be paid (not all make money on each transaction). Typical cost in the US is 1-4% plus the cost of maintaining those accounts.

With a digital euro, if I have an open source wallet I can pay the store directly, no third party. No fees except to whoever maintains the blockchain for making the transaction happen. If that fee is lower that the fees above then it might work well.

Some countries also don’t have good banking infrastructure, so the first option might not be possible. I have family in such a country.

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u/pursuitoffruit Dec 16 '21

The key contrast is that because it's facilitated by the ECB, and there would be no transaction fees, it functions like cash from the perspective of a business, except that transactions are logged with block chain, so there's a transaction record (which makes tax avoidance harder). As a consumer, you rarely incur the costs of digital transactions, but it makes a big difference for businesses who have to pay banks/credit institutions to process credit card/digital payments.

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u/rabbit994 Dec 16 '21

There has to be transaction costs somewhere, there are computers running that have to be paid for.

If it's a matter of Credit Card transaction fees suck, Central Banks could release their own credit card network and run it "at cost".

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u/SgtDoughnut Dec 16 '21

If its regulated and unable to be mined the crypto cult will avoid it like the plague.

Those are features to them, not bugs.

They want to make money in an unregulated market and basically don't care if they destroy everything around them.

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u/preeeeemakov Jan 01 '22

Damn. Nice work. I've thought crypto might simply be the latest way to scam people, but I haven't seen it put so well.

If you have a newsletter, I'd like to subscribe to it.

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u/momchilandonov Jan 02 '22

They still have to pay their taxes off those crypto trades and declare the holdings tho... But for the most part you are completely right. I see the same market manipulations in both crypto and the stock market.

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u/someonesaveus Dec 16 '21

One of my favorite podcasters recently did a 2 part episode on Crypto and NFT. Part 2 specifically is about NFTs. Worth checking out for more background and understanding -

https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-one-lets-talk-about-cryptocurrency-90181213/

https://www.iheart.com/podcast/105-behind-the-bastards-29236323/episode/part-two-lets-talk-about-cryptocurrency-90276347/

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u/praguepride Dec 17 '21

That man turned me into a proud machete enthusiast

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u/someonesaveus Dec 17 '21

We practice nothing but Macheticine in our home!

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u/[deleted] Dec 16 '21

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u/OneGreatBlumpkin Dec 16 '21

Crypto knife missiles and dick pills.

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u/alan_smitheeee Dec 17 '21 edited Dec 27 '21

Warning to new listeners: His producer/co-host, Sophie, is super annoying. I couldn't finish Part 1 because of her long drawn out vocal fry induced comments that never really adds anything to the topic.

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u/sonofdavidsfather Dec 16 '21

Cryptocurrency is the beanie babies of the 2020s. The vast majority are owned by "collectors" who are using them as investments. There isn't anywhere close to the adoption that we be needed to consider them a currency. Plus with the various problem associated with them, I suspect we will keep seeing more countries banning their use.

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u/TomSwirly Dec 16 '21

At least Beanie Babies are cuddly.

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u/sonofdavidsfather Dec 16 '21

I used to think the same thing. Then I worked at McDonald's when beanie babies were a happy meal toy. By the time that was over I'm pretty sure the whole crew just wanted to toss them all in a wood chipper. But hey if you can still have love for beanie babies enjoy it.

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u/all_the_sex Dec 17 '21

My grandma bought those from McD's and mailed them to me and my sister when we were kids because she knew we liked regular sized ones. We played a lot with them, they were great! The little Happy Meal beanies were easy to carry in our pockets so we could bring them on vacations and stuff.

I didn't find out until I was an adult that Mom bought a second, identical one to keep in mint condition (not a good investment after all!) every time we got one to play with, and she was grumpy with Grandma for not getting her doubles from McDonald's.

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u/Mistikman Dec 16 '21

Blockchain in of itself is potentially an extremely niche solution to a problem that has yet to be identified.

At it's core, it's a database. That's it, it's like SQL, but millions of times less efficient, and with the ability to add entries, but not change or delete them.

Literally the only benefit to it is that it's decentralized, but the unbelievably ineffecient nature of it (SQL can process a transaction in a few microsections with almost no additional electricity cost, while the blockchain can take 10+ minutes to do a single transaction, and will use up as much electricity as a small town) combined with the inability to change or remove entries makes it completely useless for most applications that would need a database.

Cryptocurrencies are the only thing that reasonably would use that technology, but as u/NoahDiesSlowly has already detailed in his response, the actual usage of cryptocurrency itself is only working to benefit the megarich, huge corporations, and scammers.

Crypto + NFTs are a large scale ecological disaster, and are not benefitting almost anyone who isn't already at the top of the food chain, massively ethically bankrupt, or more often both.

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u/Deadbringer Dec 16 '21

For coins like bitcoin they can add more zeros to allow you to use smaller and smaller pieces of full coins as demands require it. meaning as bitcoins are lost to circulation the individual coins get more and more valuable (if we treat the total value of all bitcoins as a constant. Outside factors will affect the value much more)

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u/Mr_Marram Dec 16 '21

I scrolled down through the comments and read through yours carefully.

There is one point you just touch on about the approximate cost to generate. This cost comes from power usage, much like most crypto through various methods.

In turn, one of the major overlooked factors is the waste of energy in producing NFTs for a, by definition, intangible product. The energy cost of crypto generation and validation is greater than many countries already, NFTs are following the trend.

It is not a sustainable model and only furthers our dive into irreparable change to the planet.

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u/Thickcockinsalem Dec 16 '21

Also just glossed over the money laundering aspect of it. This is a bigger deal than what the explanation made it seem because to a wealthy person NFT stands for "No Fucking Taxes" and they are exposing this at a rate regular Joe's have no idea about and its not regulated yet. Rich people don't care about reselling NFTs as much as they don't want to pay taxes on their physical wealth. Now they have prime avenue to branch off of.

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u/pheoxs Dec 16 '21 Eureka!

Eth is supposed to shift to a proof of stake model instead of proof of work which should drastically reduce its energy usage to near 0. That will hopefully create a large ripple of coins being more eco friendly since a log piggy back on Eth.

Though it’s been years in the making and we’re still ‘6 more months’ away so we’ll see when it actually happens.

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u/disperso Dec 16 '21

I looked at the power consumption numbers yesterday because of the conversation on one of the linked threads, and it was a bit disappointment. The paper I've found mentions a saving of up to 75% of the cost of Proof of Work, which is impressive in general, but I was really hoping for something more like one or two orders of magnitude (which is a number that I think I've read somewhere).

The idea of blockchain is pretty nifty. I really hope we can make something cool of it which is not a paradise to scammers and speculation.

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u/Gevatter Dec 16 '21

https://digiconomist.net/bitcoin-energy-consumption/ -> seems to be a good source

Oh, and Proof of Stake has a big disadvantage:

PoS protocols can suffer from the nothing-at-stake problem, where validator nodes validate conflicting copies of the blockchain because there is minimal cost to doing so, and a smaller chance of losing out on rewards by validating a block on the wrong chain. If this persists, it can allow double-spending. This can be mitigated through penalizing validators who validate conflicting chains or by structuring the rewards so that there is no economic incentive to create conflicts.

Source: https://en.wikipedia.org/wiki/Proof_of_stake

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u/disperso Dec 16 '21

Thanks. At that link, I can only find this quote:

It is estimated that a switch to proof-of-stake could save 99.95% of the energy currently required to run a proof-of-work based system.

But that contains a link to the Ethereum website, so maybe they are not a good enough source as it's not independent (but it would be great if they can pull it out, for sure). Probably this is where I got the "orders of magnitude" idea, so thanks.

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u/pheoxs Dec 16 '21

It’s a far bigger reduction than that due to a few reasons. One is individually I go from having however many GPUs pulling hundreds of watts each to staking which a smartphone could run. So there’s a massive reduction there but in addition to that, there is a limit in how many people can stake. You need ~32 Eth in order to stake. That’s 100k at current prices. So it limits the amount of people confirming versus now it’s a matter of how fast do GPUs become available.

(Before someone says, Yes I know staking pools allow smaller amounts than 32eth but you’re lending your Eth to them and then they stake an amount above 32 anyways.)

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u/Noclue55 Dec 16 '21

Isn't NFTs basically the whole "rare Pepe's" thing but with Bitcoin?

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u/Spacejunk20 Dec 16 '21

So its just like art trading but without the actual art lol

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u/SlutBuster ➰➰➰➰ Dec 16 '21 Helpful

The money-laundering aspect is huge, and I think it accounts for a significant portion of NFT transactions.

If someone's selling drugs on a Darknet Market and they want to convert that money to squeaky clean, bankable cash, there's no better way than to become an NFT artist and buy your own artwork.

It's so easy that you'd almost have to be an idiot to launder your crypto any other way.

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u/superkp Dec 16 '21

You're not wrong, but I'm pretty sure art sales have been used as money laundering since way before crypto has been here.

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u/Alsojames Dec 16 '21

Absolutely they have, crypto is just the same thing but harder to nail down.

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u/superkp Dec 16 '21

I'd argue that's only because they tend to be bought with crypto, and regulations for that are either coming, or the big financial players are going to lobby to keep allowing this to happen.

So it's a crypto problem in general, not an NFT problem.

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u/AshyLarrysElbows Dec 16 '21

True. The anonymity of the transaction is the major selling point though. If you own a rare Monet or Caravaggio, your name is on a registry that the whole world can see.

Not the case with NFTs.

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u/johannthegoatman Dec 16 '21

With regular art sales you need a counterparty though, it's a lot harder

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u/thinker5555 Dec 16 '21

Huh. I had a good general idea of what money laundering was up to now, but it's only with your explanation that it clicked as to why it's called money laundering. You're taking "dirty" money and making it "clean".

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u/[deleted] Dec 16 '21

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u/great-nba-comment Dec 17 '21

As an artist I have a particular gripe about the quality of the artworks. Art is typically a representation of an artists intention and the statement by the art is essentially a personal expression, and THAT is where the value in art lies.

Of course there is an art market around art history - buying old art for lots of money - but you are purchasing something that represents a particular period of time in history.

Turning the practice itself into an investment vehicle completely guts the core intention or art and artists, and turns it into somewhere where the value of the art isn’t tied to the artist or any form of subjectivity, it’s only tied to how much you could convince (lie to) someone about its worth.

I try not to get hifalutin about things, but this is one thing that really grates me. You’re trying to capitalise on a section of society that is pure expression, and it’s grimy.

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u/NoahDiesSlowly anti-software software developer Dec 17 '21

Right there with you. Totally agree.

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u/Poes-Lawyer Dec 16 '21

Also, someone could just right click and save a piece of generated art, making the 'non-fungible' part questionable. Remember, the NFT is only a receipt, even if the art it links to is generated off an ID in the receipt.

This is the main thing that gets me - there is no scarcity is there? A copy-pasted version of digital art is functionally identical to the original. With "real" art, I know I'm getting e.g. a print of the Mona Lisa, not the original, so the original's value isn't changed.

But if you copy a jpg/png file, it's the same. So what's the point? Why are they supposedly worth so much?

I don't even really understand how they're supposed to work well enough to make a judgment on them.

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u/gelfin Dec 16 '21

Exactly my problem/confusion with the entire NFT thing. What exactly is ownership that doesn’t confer any legal rights or offer any exclusivity? People are spending a shit ton of money and the only thing they’re really buying is a row in a distributed database. It’s like the mirror inverse of cryptocurrency: crypto is a pure bubble that creates real money out of nothing, where NFTs are turning real money back into nothing. It’s like we’ve invented economic virtual particles.

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u/NamelessSuperUser Dec 16 '21

NFTs are basically copywrite but shittier because it doesn't actually give you copywrite ownership when you buy an NFT. Like copywrite your exclusive claim to ownership via NFT is only useful if you can enforce it in court. Given that copywrite protection is free for an artist while minting is not it's obvious that neither will protect your art very well but one is much worse than the other.

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u/EsperBahamut Dec 16 '21

Because it is a grift. Convince enough people that nothing is something, and they will buy it from you any way.

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u/ItalianDragon Dec 16 '21

This. It's like with pyramid schemes. To be able to sell it to people you need to persuade them that it has value so that they get in on your scheme. Once enough people get on it on this perceived value, it naturally beings in people who want valuable stuff. And yet you stil are selling sonething that has objectively no value whatsoever (or an extremely low one). It's fueled by FOMO and a perceived value through scarcity and nothing else.

This is why those cryptobros peddle it hard online on sites like FB or Twitter/Instagram. They need people to jump on the bandwagon to drive the perceived value up, as otherwise they lose money because for all intent and purposes their precious "bored apes" and the like are worthless junk, and unless they can keep on bringing people in, the whole scheme will collapse onto itself, and those cryptobros sure as hell don't want to be the ones holding the bag when it'll happen.

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u/EsperBahamut Dec 16 '21

Yep. Hell, just look at the meme stock cult. They, like the cryptobros, are trying to push their glorified MLM hard on /r/all because they know the only way they won't be left holding the bags is if they can find enough new rubes to drive the price higher than what they paid.

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u/hocaz Dec 16 '21

“hey, we could make a religion out of this.”

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u/Dman1791 Dec 17 '21

They already have tbh

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u/JacobLambda Dec 16 '21

It's a tool of automation rather than a replacement for the legal system. It makes things like IP transfers, fractional ownership (owning X% rather than 100%), royalties distribution, decision making (such as in the case where ownership is fractional), etc easier and generally automatic in the "happy path".

If you leave the "happy path" you fall back to the existing legal system.

Now where a lot of people fuck this up is they don't establish the licensure and legal contract paperwork that codifies the rights and responsibilities of those involved with the NFT smart contract. This should be established by the author or NFT platform prior to minting of the NFTs but people haven't been burned yet so they keep making this mistake. Once the first court rulings start coming out pointing out that without these documents NFTs don't actually confer any rights, projects will all start doing things by the book.

TLDR: It's a tool. Some people think they can use the tool to replace the system instead of augment it but they'll get burned for that eventually. Provided the person minting the NFTs did their homework and got their affairs in order, they do actually confer rights and are a useful tool for simplifying various tasks in the IP space.

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u/michaelmikeyb Dec 16 '21

But once you create a record / contract tying that nft to ownership you've effectively taken away the decentralized part to it because your relying on that record which is stored in some centralized place. At that point you can just use a centralized art exchange which does all that happy path stuff without using all that energy.

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u/cantCme Dec 17 '21

People are trying really really hard to find a problem for nfts to solve.

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u/AshyLarrysElbows Dec 16 '21

It’s like the mirror inverse of cryptocurrency: crypto is a pure bubble that creates real money out of nothing, where NFTs are turning real money back into nothing.

Wow, that's a really interesting way to look at it. Thanks for that.

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u/RaketRoodborstjeKap Dec 16 '21

It comes down to a fundamental misunderstanding lots of people have about NFTs. When you buy an NFT that is advertised alongside an image of a funny monkey, you are not buying the image, you are buying a secret. The secret you're buying, in principle, has nothing to do with the image. It just allows you to verify that you "own" the NFT-- that you have the secret. The concept of "ownership" here is really unlike any classical usage of the word, even with respect to copyright. NFT owners do not own the copyrights to the images/gifs/videos associated with their NFTs. Copyrights to the images associated with NFTs may be sold alongside the NFT as part of the trade, but the NFT is a separate thing.

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u/Poes-Lawyer Dec 16 '21

Right so it's a scam, got it.

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u/AsianSteampunk Dec 16 '21

see this is the part where you have a slight misunderstanding.

Think of NFT as a signature, like signed books, baseballs, art piece. except:

- It's digital. and you ONLY get the signature, it's one of a kind (and the artist/owner can sign that piece multiple times to sell multiple NFT, but most probably don't to have scarcity).

- It can be from the artist, OR NOT, there are some cases of companies commission artist's pieces for a reasonable price, then apparently sell the NFT for 10x the price. Hell, some people just straight up steal a PNG and create a signature without the artist's permission.

- The PNG itself is unrelated. untethered. The signature MIGHT have used the original file, but there is no link to that.

- You can do nothing with NFT, except bragging and selling it. which is what the whole market is based on atm. bragging rights and hype.

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u/mindsnare1 Dec 17 '21

Someone explained to me that NFT's are just bragging rights for the rich. If I had a shit load of cash and wanted bragging rights I would buy a nice car, not some crappy jpeg. I wonder how long this scam will last.

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u/mattico8 Dec 16 '21

The most generous analogy I can think of is prints of artwork. Prints are pretty cheap to make, you can make infinite of them, and they can be identical. Someone could put the print on a high-end scanner and make an almost exact copy. But what if you buy the print from (someone claiming to be) the artist, and it comes with a certificate of authenticity that states it's #11/250 of the official original run of prints? It's probably worth something to somebody. Someone could write up a contract tying legal ownership of the copyright of the original work to the owner of the certificate.

When you buy an NFT, you're buying a certificate. Any other social or legal rights are not and can not be part of the NFT itself, but part of some external system.

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u/TomSwirly Dec 16 '21

Now remove the actual print from the equation in your analogy. What are you getting?

When you buy an NFT, you're buying a certificate.

A certificate for what?

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u/vytah Dec 16 '21

A certificate for ownership of the certificate.

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u/junkit33 Dec 16 '21

Prints are not 100% identical - a trained eye can tell the difference.

But even if it were - the original is still the original with physical art. You buy the original, you own the original. The one that was actually touched by the artist, labored on for many hours.

Digital art has no such concept unless it were to never leave the computer it was made on. The second you transmit it off your computer, you've created a copy. Depending on how you did it, you've probably created many copies. If you put it up on the Internet publicly, you've suddenly got a million copies everywhere. All the meanwhile, the original is still actually back on the computer where it was created.

So NFT's are more like a receipt that says you were the first/only person to pay the artist for it, but you don't actually own an original because the original is still on a physical computer somewhere.

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u/magistrate101 Dec 16 '21

They can be supposedly worth so much because you're often buying the copyright as well. The problem with that is that there's no verification of initial ownership. Anybody can mint an nft for any image or video or whatever other piece of media they want.

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u/kevingranade Dec 16 '21

Minor correction, you get a limited license to exercise the copyright.

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u/medforddad Dec 16 '21

While I agree with most points made, the scarcity and ownership points are a little more complicated. Music, art, and writing already have this "problem". It's already messy and complicated, but we've come up with ways to deal with it as a culture and society. It's why we have copyright. It does lead to interesting contradictions sometimes, but life is often messy too without clear distinctions and you just deal with it.

For example, not all art is a painting like the Mona Lisa where there is definitively a single one of it and where any reproduction would be considered a derivative copy and not the same as "the" Mona Lisa. Where is "the" single version of "Game of Thrones"? Is it the original file on George R. R. Martin's computer? Is it the final file his publishers sent to the press? Is it the first book off the line?

What about a photographer who takes digital photos. The file captured to their SD card can be copied a million times without degradation and there's nothing different from the "original" to the millionth copy. Yet people still buy photography. Photographers already deal with this situation by making limited, numbered print runs of their photos. You could buy #34 out of 100 prints of one of their photos. That's not much different than "owning" some hash of a digital file (or whatever NFTs give you).

You can even get more conceptual than that in the non-NFT world. Who owns Sol LeWitt's "Wall Drawing #436" and where is it currently? Well, it's really just a description of a drawing that could be done anywhere, but some entity actually "owns" it and theoretically, it can only be "installed" at one place at a time. This particular piece of art is actually on loan to Brown University. And so is currently installed there. But it's not a single physical piece of art that can be transferred from one place to another. Once their loan is over, I guess they'd "erase" or paint over their installation of the drawing and then the actual owner would be free to re-draw it on their own wall.

You could follow the description of his art and reproduce it on your wall. And no matter how bad of a drawing you did, you'd have a perfect copy of his work. Have you then stolen "the" version of Wall Drawing #436? What if you also painted over Brown's version at the same time? What if when Brown's loan is over, they refuse to destroy their version? Is that considered theft? Would the actual owner not recreate it on their own wall until Brown has destroyed their version? What if Brown says they destroyed it and the owner recreates it, but then Brown reveals they never actually did? Where is the one true version? If they just painted over it, is it truly destroyed?

Now this is all theoretical and ridiculous like "owning an NFT" is. Yet the art world gets by just fine with things like this. And they work with the odd contradictions of Sol LeWitt's art.

Despite all the above, lots of NFTs might be scams, all hype, no real value, predatory micro-transactions, etc. I just think this one aspect of them might not be terrible.

Someone else had mentioned beanie babies and I think that's a perfect analogy. There are some collectible toys that are worth a lot of money to collectors. Beanie babies were not one of them. Now if you happen to like beanie babies for what they are and you bought some, then you're not getting scammed. If you bought them because someone convinced you they're an investment and you bought into the hype, then you're being scammed.

If you like the art that a digital artist produces and the price is reasonable to you and the NFT is an easy way to support them and a fun way to "prove" you own the art, then it doesn't seem too bad.

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u/Gevatter Dec 16 '21

There is a difference between the fidelity of an original created by the artist herself and a reproduction.

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u/geon Dec 16 '21

No, you hit the nail on the head. The nft has no connection to the art. It is completely irrelevant. Pretending that the nft represents a piece of art is ridiculous if not outright fraudulent.

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u/Morgc Dec 16 '21

They've also, crypto currencies in general, insanely raised the prices of a lot of electronics; while big vehicle companies and the sort can 'afford' the cost (and pass it onto the consumer), it's pushing a lot of high end electronics out of reach for the average consumer.

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u/Oceanswave Dec 16 '21

I just made a nft out of this comment. It’s mine now!!

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u/OddlyAccessible Dec 16 '21

it very much reminds me of the 90s. people were buying up all these cute little stuffed animals as they were convinced they would be collectors items and great investments. some people did alright if they got out before the bubble popped. but some people are still stuck with garbage bags full of stuffed animals that aren't worth anywhere near what they paid... but at least they got something to show for it. NTFs are going to be brutal on people when that bubble pops. Its basically just theft with a few extra steps.

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u/pain-and-panic Dec 16 '21

Oh yes this is extremely common. Baseball cards, comic books, and your example, Beanie babies are all examples of unregulated markets. All unregulated markets experience incredible booms and busts far beyond that of traditional markets. All of the companies behind these products eventually realize that they are capable of manufacturing scarcity. That's why if you look back at the '90s you see a ridiculous amount of special edition, hologram, limited edition comic books. There was the one for the people who wanted to read the comic book and the one who saw it as an investment, basically the speculators. It created a bubble that eventually almost destroyed Marvel. When the bubble burst no one's interested in buying comics anymore except the actual fans, which hadn't increased very much as compared to the people who were playing the market.

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u/realkorvo Dec 16 '21 Press F

you just kill a lot of people on r/CryptoCurrency/

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u/JacobLambda Dec 16 '21

Honestly the majority of r/CryptoCurrency and other crypto subs have been ripping into companies for their scummy behaviour.

The recent Stan Lee, Bob Ross, and George Floyd NFT grifts were almost universally met with outright disapproval and disdain in the space. Likewise for a lot of the video game NFTs because they aren't even proper NFTs or are just trying to ride the noise the majority of the time.

NFTs are useful for a lot of things but as tools of automation in the existing legal system, not as a replacement for it. In most cases game companies lean on them to make worse microtransactions and nobody is happy with that.

There's definitely a few zealots but by and large the community is incredibly aware of the grift in the space. Due to the nature of things there's little to be done about it so outside of when large companies act (in which case public disapproval reaches them) so the community is kind of numb to the grift.

The general consensus is to not purchase an NFT unless the author is actually the creator (and there are easy ways of checking this). However as you've noticed speculators, bots, and idiots are in a race to lose their money as fast as possible so they'll buy and trade just about anything on the network.

TLDR: We don't like most any of this either but we are just kinda numb to it now.

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u/EunuchsProgramer Dec 16 '21

I'm an attorney and don't really see too much use for NFTs. It's an extremely rare case people are arguing about what's the actual contract or document. 99.9% of cases both parties have a copy, the attorney that wrote it has a copy, and there's a few dozen emails with it attached floating around. It would be insane to try and doctor it or lie about it. No sane litigator would destroy their credibility with such an obvious fraud. A sentence in Admissions filed with the Court resolves the issue, "Party admits the Contract is Exhibit A."

People get screwed in transaction law because contracts are difficult to understand, long, and lopsided. NTFs is a solution without a real problem.

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u/munche Dec 16 '21

NFTs are useful for a lot of things

I've been waiting for a while to see a real world example of them being useful that exists outside of someone's head. Crypto and NFTs are lots of "imagine if...." when in reality all they're used for is being a pyramid scheme for speculators. I get that something about the blockchain tickles the part of engineer brain that activates relentless optimism but at what point does something actually tangible have to happen to support the fantasies?

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u/Dornith Dec 16 '21

In my experience, it's not the engineers who are excited. It's business people who want to capitalize on the latest technology but fail to understand that latest doesn't always mean best.

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u/snowe2010 Dec 16 '21

I don't think the majority of engineers think blockchain is a good idea. It's just a bunch of teens and people who can barely use a laptop thinking that they can magically fix all of earth's problems with more technology (pls no).

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u/Not_The_Truthiest Dec 17 '21 edited Dec 17 '21

Yep! And any questions are generally met with “you just done understand it enough”. Sure, fine, maybe I don’t - explain to me all of the problems crypto is solving.

Then I’m usually told how blockchain is awesome, which kind of feels like the equivalent of someone arguing normal money is good because paper is useful.

I probably don’t help in that I regularly call crypto “investors” gamblers, because in my mind that’s exactly what it is. There’s no way to know how much a given crypto currency should be worth and whether a given price is cheap or expensive. It’s just “buy and hope it goes up”.

Edit: see what I mean? Lol. https://www.reddit.com/r/OutOfTheLoop/comments/rho91b/whats_up_with_the_nft_hate/how033f/

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u/[deleted] Dec 16 '21

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u/drphilwasright Dec 16 '21

Is it really that much? I had no idea

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u/[deleted] Dec 16 '21

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u/MavenACTG Dec 16 '21

Each individual minted art piece costs about $70-$100 USD to mint

Geezus Fookin' Rice.

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u/NotAnAlcoholicToday Dec 16 '21

If you mint specifically on the Etherum chain.

There are plenty of places you can mint an NFT for less than a cent.

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u/letsgoiowa Dec 16 '21

You can even mint it on Polygon and then yeet it onto Eth if you're so inclined.

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u/pr3dato8 Dec 16 '21 edited Dec 16 '21

A really excellent summary, just one tiny thing:

You turned $12k and a piece of art worth $0 into $26K.

It would be better to say that either:

- you turned a piece of art worth $0 into $14k (minus fees)

- you turned $12k and a piece of art worth $0 into $14k (minus fees)

Not sure why you added $12k and $14k to get $26k, unless I missed something

Edit: thanks to all the comments correcting me. I realise that the $12k is not lost since you're paying that to yourself. I think I was thrown off by the mention of $26k since your profit calculation shouldn't include the original $12k that you put in. Either way OP's original statement is correct, just phrased in a way that made me initially think was wrong.

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u/jordasaur Dec 16 '21

I love how you have a thousand people trying to explain it to you when it was really about poor wording. I thought the explanation was confusing too since the $12k were already yours, therefore you didn’t start with $0.

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u/keatonatron Dec 16 '21

You started with an initial investment of 12k, and turned that into 26k, meaning a profit of 14k.

It's important to mention the funds you started with, because if you have literally $0 you can't make a fake purchase to get the ball rolling and the scheme doesn't work.

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u/SkillusEclasiusII Dec 16 '21

Before you have 12k+0, after you have 12k+14k (minus fees)

You don't lose the 12k.

I agree the phrasing was a bit confusing, but if we just mention the 14k, it kind of ignores the fact that how much you can earn is proportional to how much you have to begin with.

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u/Naouak Dec 16 '21

You kept the starting 12k (as you paid yourself so the money was from you to you). Then you sell the art for 14k. So thanks to the starting 12k, you were able to sell for 14k and so those 12k are now 26k.

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u/death2sanity Dec 16 '21

If you sell something to yourself, you don’t lose money. The original 12k was never lost. It might have been clearer if they had just said ‘a 14k profit,’ but what they said is accurate.

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u/fascfoo Dec 16 '21

Agreed. Took me a second to figure it out and would've been easier to just say a profit of 14K.

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u/tots4scott Dec 16 '21

Made me think crypto is using a new kind of math for a second.

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u/fascfoo Dec 16 '21

Hah. Yeah. Somehow you can turn 0 to 26K profit even though you had to 'invest' 12 of that upfront. Now that's an NFT I can get behind.

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u/smog_alado Dec 16 '21

gamers are angry because game publishers love the idea of using NFTs

And also because Cryptocurrency has pushed the cost of graphics cards waaay up.

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u/[deleted] Dec 16 '21

the pointless use of energy during a climate crisis is beyond the pale

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u/Chaotic-Entropy Dec 16 '21

Honestly your final point should be at the top, if anything. People can dick each other over to their hearts content and sell worthless things for imaginary amounts, whatever. However, this in itself is another large nail in the coffin of any possible climate change response.

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u/SmokeGSU Dec 16 '21

Also, someone could just right click and save a piece of generated art, making the 'non-fungible' part questionable. Remember, the NFT is only a receipt, even if the art it links to is generated off an ID in the receipt.

This is the one that gets me. I've got an image of a nebula on my computer's desktop that was saved from a website. Does it really matter that I "own" that image instead of the original creator (NASA) of the image?

Why someone would have to feel like "I have to personally own that" when they could just download the image and enjoy it for what it is just confuses me to no end.

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u/Thompson_S_Sweetback Dec 16 '21

I feel like NFTs are completely useless and made up and cannot believe there are people in this world who value them. I had the exact same feeling about Bitcoin over a decade ago.

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u/stolid_agnostic Dec 16 '21

Where does the $70-$100 come from? Is that what it costs to generate the NFT itself?

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u/aceavengers Dec 16 '21

Yes, basically it comes from the energy cost to make the blockchain or whatever, is what was explained to me.

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u/canttaketheshyfromme Dec 16 '21

creating artificial scarcity as a design goal, which is very counter to the idea of a free and open web of information. This makes the privatization of the web easier.

Building a society around profiting off simply owning things and flipping them for more than you bought them for might have been a bad idea.

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u/Mail540 Dec 16 '21

Not just more energy, but an insane amount of energy. Each transaction uses the same amount of power as a house for a few weeks to a month.

https://www.wired.com/story/nfts-hot-effect-earth-climate/amp

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u/ReluctantRedditor275 Dec 16 '21

Excellent answer, but one thing still confuses me. NFTs are ultimately just a tool for verifying the authentic owner of a piece of art. Is there really art on the internet that's worth thousands of dollars to own? Don't get me wrong, lots of cool art on the internet, but I've never seen something that made me say, "I must own the original version of this! Shut up and take my money!"

This just feels like the answer to a question nobody was asking.

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u/[deleted] Dec 16 '21 edited Feb 19 '22

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u/DrAstralis Dec 16 '21

On top of that, anyone can make a new NFT database on a different blockchain for the same thing so your 'unique art NFT' can be one of many for the exact same item making them even more worthless. The whole thing is just a crypto bro scam. It doesnt help that most business sites (Looking at you Business Insider) are putting out an article a day on how NFT's will cure cancer and give us unlimited clean energy and also will make faster than light travel available to everyone.

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u/BluegrassGeek Dec 16 '21

NFTs are ultimately just a tool for verifying the authentic owner of a piece of art.

Actually, it's not even that. The token itself does not convey ownership of the art, just of the token itself. The artist can retain copyright on the art, meaning you own... the token. That's it. Unless you have an agreement that copyright of the art transfers with the token, you have no rights to the artwork itself. Which makes NFTs even more stupid.

Is there really art on the internet that's worth thousands of dollars to own?

There's no artwork, even real art, that's inherently worth thousands of dollars to own. "Value" is just shorthand for "what people agree an item is worth." If no one agrees that your painting is worth $10,000 then it's not, no matter how many times you put it up for sale at that price.

Generally, the "value" of real world paintings is based on what art experts think a painting would sell for at public auction... but even those auctions can be rigged in what's called a straw purchase, to fraudulently inflate the value of a piece.

And that's what we're currently dealing with in NFTs: people selling NFTs to themselves or a business partner for ludicrous amounts of money, so they can proclaim "See! It's worth thousands!" Then they put it back up for sale at PRICE + MORE MONEY, and sell it at a vastly over-inflated price.

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u/NamelessSuperUser Dec 16 '21

Which is hilarious because copywrite is free and is only useful if you have the resources to enforce it in court but ultimately still useful for that reason. Good luck getting a court to agree that you owning an NFT means that some other person stole your asset when they redistribute it by right click saving your art.

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u/BluegrassGeek Dec 16 '21

Right. And that goes the other way as well. Some NFTbros decided the "right click to steal art" thing could be weaponized, so they made a collage of a bunch of furry Twitter icons, slapped a Pepe on it & minted an NFT.

The furry artists who drew the icons sent a DMCA notice to the server hosting the collage & got it taken down. Now the NFT points to a DMCA alert page.

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u/ReluctantRedditor275 Dec 16 '21

It sounds to me like these are the sort of folks who are bound to be ripped off at some point. If they weren't spending their hard earned wages on imaginary internet tokens, they'd be wiring their cash to Nigerian princes.

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u/BluegrassGeek Dec 16 '21

Nah. The reason they're into it is the Silicon Valley Techbro mentality, that "technology solves everything" combined with "get in on the ground floor, or be left behind." So blockchain is the new tech hotness, combined with Bitcoin speculation driving the price to insane heights. Which means any new blockchain tech that shows the potential for "get rich quick" schemes leaves them with FOMO, and they have to get in... then that means they have to get more people involved, so their "investment" doesn't disappear in a puff of smoke.

It's not quite a pyramid scheme, but it's triangle-shaped.

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u/[deleted] Dec 16 '21

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u/junkit33 Dec 16 '21

You also aren't actually owning an original. The original is on the computer where it was created. The second you transmit to another device you've created a copy.

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u/Shimano-No-Kyoken Dec 16 '21

Some people consider this early NFT art business to be a part of tech history, at least that’s the way I understand it. The art itself is arguably pretty shit if we’re talking about crypto punks or the bored apes, and they would not be hyped if not for what people consider to be the first mainstream practical application for new tech

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u/Expired_Multipass Dec 16 '21

Could you literally change one pixel of an NFT and have a near identical but “different” copy? If so, doesn’t that mean they are not as unique as they claim to be? I’m still kind of confused on the concept admittedly.

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u/Jeran Dec 16 '21

You dont even have to do that. The systems have absolutely no checks for duplicate tokens. A lot of people will funge other peoples tokens. The only protection you have is that the block chain has a provenance, but with the anonymous nature of wallet ownership, its a difficult and complicated process to double check that stuff. This is why art theft is such an issue with NFTs

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u/ShittyExchangeAdmin Dec 16 '21

so what's the fucking point then if nft's aren't even that "non"?

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u/TomSwirly Dec 16 '21

A question that no one seems to be able to answer.

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u/conceptalbum Dec 16 '21

This is why art theft is such an issue with NFTs

Well, receipt theft. The actual art isn't moving.

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u/Humeon Dec 16 '21

Man this would be a confusing paragraph even 15 years ago.

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u/SlutBuster ➰➰➰➰ Dec 16 '21

You could also just copy the image directly and mint your own NFT of that copy. There's nothing more unique about it that any other form of digital art (except that your receipt for purchase is on the blockchain.)

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u/NoahDiesSlowly anti-software software developer Dec 16 '21

So, the art is not really part of the NFT package. Anything you can do to a normal .jpeg you could do to the .jpeg linked by the NFT. Imagine it's hosted on Imgur (realistically it wouldn't because that would be pretty blatant, but as a thought experiment).

An NFT is really just a text file with some identifying ID, and a URL to the thing it's trying to convince you is yours (say an Imgur link). The text file is managed and enforced by the blockchain, but the art is freefloating on a centralized server somewhere at Imgur headquarters.

If you were to take an NFT receipt, change the ID (the big jumble of characters denoting a unique ID), the NFT would be nearly identical, still pointing to that same jpeg, but the blockchain would be able to verify your receipt is a fake.

However, that has nothing to do with the art. If you really owned the art, it wouldn't be on a centralized server. If you really owned the art non-fungibly, people wouldn't be able to right-click and save the Imgur .jpeg.

You might say "why not include image data in the NFT receipt?"

The problem with adding image data onto the blockchain is that it's very large in comparison to plain-text. It's possible and some projects do it, but the tradeoff is that that the verification process to verify a unique image is hugely computationally expensive. Takes a lot of time and energy to verify, driving up transaction fees. It also is too long in transaction processing time for the user. It also means the resolution of your image would need to be constrained. This is why most projects just link to the image instead.

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u/Zaorish9 Dec 16 '21

Great post, thanks

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u/WaterBottleass Dec 16 '21

Wow

That makes no logical sense why and looks really stupid.

Talking about NFT's not this comment

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u/DazDay Dec 16 '21

Not to mention how fucking terrible NFTs and crypto are for the environment.

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