Something about NFTs

So you might have heard about this recent trend of "NFTs" over the past few weeks. In the event you haven't, it's the latest craze being pushed by crypto enthusiasts that is starting to make actual headlines. In this post, I hope to enlighten people about what NFTs are being promoted as, what they actually are and why honestly, you really shouldn't be involving yourself unless you see no problems with the ethics of profiting from the gullible with more money than the sawdust that makes up their brain matter or ruining nature.

What are NFTs?
Okay, so an NFT stands in it's entirely for a "Non-Fungible Token". That is a complex word for something really simple. To explain it, get a bank note, or look one up. As you can see on the note, there is a serial code on it. That serial code makes that specific note uniquely identifiable. You can purchase something with the note, you can exchange it for another note, the serial won't change and a central bank is able to identify when and where that note was given out. (This is also how bank robbers are usually identified: the note is serialized so if they steal paper money, it will be instantly noticable by law enforcement where the money is being sold).

NFTs are the exact same concept, but on the Ethereum blockchain. Practically, they're implementations of something called "smart contracts", a feature of Ethereum that is mostly used to run automated Ponzi schemes.

Okay but what is this thing about digitzed art sale?
Good question, imaginary person I made up to lead into the next subject. Well, that is how it's being marketed. NFTs are being marketed as the way artists can "sell their art to buyers who have an exclusive copy of it". The phrasing differs often, but this is what the promotion thing usually tries to say. In reality, almost none of this is true. In fact, I want to go as far and say that NFTs are not even close to being that. So, let's take this promotion line and pick it apart.

There are two statements here that we need to unpack.
  1. Artists can sell their art with NFTs
  2. Buyers of NFTs have exclusive copies of that art.
Okay, so for the first one, we need to question what is being actually sold. In practice, when it comes to digital creations, the only relevant concept we have to talk about is copyright. Copyright is the right to control the creation of modified works and reproductions of a creative work (which is honestly almost everything more complex than a straight line).

While copyright has a bunch of country specific exemptions and tweaks in each country, typically this is assigned to the author of the work. This means that they have full control about how that work is used.

Okay, so, logically following from this, an NFT would mean that the artist would be selling the copyright to their work (this is possible by contract in something called "copyright assignment", which means that you are relinquishing your own copyright to someone else)? Well, no. None of the current marketplaces for NFTs that I could find say that this is what an NFT does. In fact, most of them have explicit lines in their TOS that state that the artist maintains full copyright ownership.

So what is being sold then? Well, to get into this, let's dig in the technical parts, which also explains why the second statement is bullshit.

How do NFTs work technically speaking?
Okay, so technically speaking, an NFT is nothing but a relatively short string (for non-programmers: a string is a bit of text). Since NFTs are build on-top of what might just be the most inefficient and stupidest technology ever designed (I'll spare the blockchain rant for the end), the contents of an NFT have to be simple. In the case of most NFTs, all that the NFT contains is a link to a metadata file on the "InterPlanetary FileSystem" (more on that in a bit). This file is just a simple json file and contains all the fancy text surrounding the NFT, including the author, tags, descrpition and title of the work, as well as a list of more IPFS URLs that list the images/videos/whatever else that is used to display this stuff on NFT marketplaces.

So all that's really being sold to people is a string to a metadata file that anyone can read because the blockchain is completely transparent. This is what shoots the second statement full of holes. Buyers don't have any exclusive rights to their NFTs. Anyone with only a slight amount of knowledge on how to look at these things is fully capable of extracting the "contents" of an NFT and sharing them for the world to see and it's pretty much fully legal since these URLs are unprotected. Which leads us into the final question:

So why are NFTs bad?
Okay, so let's answer this question. The first reason is that these files are all being hosted on the InterPlanetary FileSystem (IPFS). While I'll spare you the boring parts, the IPFS is like torrents except there are no trackers, everyone is using DHT and that it solves a few of the other problems that torrents have. The most useful thing to know here is that web gateways to the IPFS exist, which is how most marketplaces are retrieving the relevant json files and download links. Most just host their own although I've seen a few which use the IPFS gateway that is made by the developers of the IPFS.

What this means is that if nobody is (to borrow from torrents) "seeding" your NFTs metadata and files, it might as well not exist. Sounds like it isn't an issue? Well, a literal shitton of "NFTs" have disappeared because the marketplaces setting these up are disappearing and with them, the "seeds" of the NFT and because the people using them don't know how it works, they dont "seed" their own art.

The second problem is the far simpler problem of art theft that has predated the internet. People creating NFTs that link to work that they don't own. It's not legal, and while a lot of NFT marketplaces claim they process DMCAs and take down "stolen" NFTs, anyone with the technical know-how can keep trading them anyway, which means the DMCA process is liquified poop. It's purely a website block and in the event that the metadata and files aren't being removed from the IPFS, they will keep working.

Finally, of course there is the ecological argument. NFTs are using the Ethereum cryptocurrency blockchain, a technology that if nothing else is incredibly costly on the environments. Recent estimates put the total cost of cryptocurrencies at half the total amount of green energy we produce and at costing more energy a year than the entirety of Ireland. I should point out that currently, people who sell NFTs are trying to downplay this, but it's unfortunately a cold hard truth. Ethereum transactions are extremely wasteful, no matter the type of mining used (Ethereum uses proof of stake, not proof of work, but it's still really bad for the environment. Just because it's not using easy attack angle A doesn't mean that they're not using just-as-terrible tech B) and there's just no way you can downplay it; it's borderline climate change denial.

For a quick estimate, the average NFT costs about 155kg of CO2. I would link you a site that would give estimates of how much this translates to, but the owner of the site that would let me show you this has drunk the crypto kool-aid and has taken it down when people tried to hold artists accountable for trying to sell NFTs to losers. I unfortunately can't find an alternative for you that works.

So yeah that's what NFTs are, and to make it incredibly clear: DO NOT BUY NFTS. THEY AREN'T WHAT THEY THINK YOU ARE AND YOU ARE DESTROYING NATURE BYING USING THEM.
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BlueFox gui
annoying orange tried to sell the remaster of the first episode as an NFT, but the download link had no protection now everybody owns it : )
 
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FAST6191
Going to have to disagree with the premise of some of this.

I see it as little more than an authenticity token for a work on what is theoretically a distributed database that is hard to hack and will probably outlive whatever insurer, artist, auctioneer, expert... that people otherwise use for authentication and respond in a more timely manner, theoretically a more reliable one as well.

Roughly then a high tech way of selling signed print copies of works like many artists have done for a while. You can't necessarily photocopy it to sell on those legally but you could sell the original signed print at a later date. Or more generally I can't copy and burn 10 copies of my favourite DVD but I could sell it to a friend quite legally. Being online changes little here.
Dead urls is a bit of an issue but far from insurmountable, especially with the whole thing functioning as an authentication and ownership token which is arguably the bigger function of it all anyway (and people trade ownership certificates all day, every day -- see gold bonds for but one of them).

If it claimed to solve fraudulent copies then it would be a failure unless combined with say the artist original pgp key or address or equivalent and originating/traceable to that.

URLs being reverse engineered. If it was claimed to be an only viewable in my private gallery/vault then sure that would be an issue. If it is not billed as that and instead some kind of big supporter/donator/patron affair (similar to those that normally get signed copies of things as a token of thanks or whatever) then seems there is a value proposition in there, both as something for the artist to raise some cash (maybe with less of a cut and censorship worry than paypal/patreon/...) and for the supporter set to donate some as well as gain something to sell for the silly money after they are dead and gone.

The energy usage debate may have some merit if you fancy rolling that way but that is all those that wish to roll that way.
 
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Ev1l0rd
I see it as little more than an authenticity token for a work on what is theoretically a distributed database that is hard to hack and will probably outlive whatever insurer, artist, auctioneer, expert... that people otherwise use for authentication and respond in a more timely manner, theoretically a more reliable one as well.
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It well, isn't. There's no "authenticity token" here. It's just a fancy string with art/video as set dressing that's being traded around.

Roughly then a high tech way of selling signed print copies of works like many artists have done for a while. You can't necessarily photocopy it to sell on those legally but you could sell the original signed print at a later date. Or more generally I can't copy and burn 10 copies of my favourite DVD but I could sell it to a friend quite legally. Being online changes little here.
Dead urls is a bit of an issue but far from insurmountable, especially with the whole thing functioning as an authentication and ownership token which is arguably the bigger function of it all anyway (and people trade ownership certificates all day, every day -- see gold bonds for but one of them).
Click to expand...
There's no signing involved. Dead URLs are an issue when the entire thing is p2p so you have no absolutes about the uptime.

If it claimed to solve fraudulent copies then it would be a failure unless combined with say the artist original pgp key or address or equivalent and originating/traceable to that.
Click to expand...
Doesn't match up with what I said.

URLs being reverse engineered. If it was claimed to be an only viewable in my private gallery/vault then sure that would be an issue. If it is not billed as that and instead some kind of big supporter/donator/patron affair (similar to those that normally get signed copies of things as a token of thanks or whatever) then seems there is a value proposition in there, both as something for the artist to raise some cash (maybe with less of a cut and censorship worry than paypal/patreon/...) and for the supporter set to donate some as well as gain something to sell for the silly money after they are dead and gone.
Click to expand...
The claim is always "we sell this and only the buyer gets to see and keep it", only for people doing it to fall on their face when people easily extract the original art and the supposed motivation being "it supports artists". It's not reverse engineering when the string being traded is a literal link to where you're supposed to get it from.

The model is objectively worse than paypal/patreon because it's only sold once, whereas those donation sites generate basically perpetual money in exchange for art depending on how active you are in supporting it.

The energy usage debate may have some merit if you fancy rolling that way but that is all those that wish to roll that way.
Click to expand...
I'm not an environmentalist by any means, but it has insane amount of merits when almost all of our efforts at preventing climate change from completely wrecking society (it's already unstoppable at this point, but not entirely uncontrollable) are being wasted away because a bunch of libertarian Rand Paul fanboys thought it'd be a great fucking idea to waste computing power and energy on something that helps nobody but their own bank account in running scams.

That is of course assuming you're not a climate change denier, in which case I'd much rather prefer not interacting with you at all.
 
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BlueFox gui
i just remembered another thing, there is a site stealing art from random artists and selling as NFT, it seems to be a bot, since there is a bunch of them that does with tshirts, posters and things like that
 
tabzer
Boycott an idea because you don't like how you've seen it implemented. Of course there are terrible implementations.

Ignore all merits of the usefulness of an idea.

Sounds like FUD/investment advice from someone who, somehow, missed every single bull run in the cryptocurrency market.

"It's bad for the environment". Yeah, that's total lack of research--or maliciously intended misinformation. Implementation A uses PoW, implementation B uses PoS, and implementation C is a centralized database somehow calling itself a blockchain.

NFT is still new and experiencing growing pains. A better implementation of it is always welcome.
 
FAST6191
It well, isn't. There's no "authenticity token" here. It's just a fancy string with art/video as set dressing that's being traded around.
Click to expand...

And if the string can be sold on via the same distributed ledger and backed with all the crypto it functions as said token. Even has a few perks if it is not a physical item, though I suppose the holder could die in a fire and with it the passwords.

There's no signing involved. Dead URLs are an issue when the entire thing is p2p so you have no absolutes about the uptime.
Click to expand...
The signatures there are more the general first edition/high value versions of a copy that some seem to go in for concept than cryptographic in that. That said they still have cryptographic signatures as part of the ledger so the relevant parties involved agree on what went down, that being kind of the whole point of distributed ledger and smart contracts.


"If it claimed to solve fraudulent copies then it would be a failure unless combined with say the artist original pgp key or address or equivalent and originating/traceable to that."

Doesn't match up with what I said.
Click to expand...
Didn't need to match, was its own point or pondering of an expansion to the concept as the case may be.

The claim is always "we sell this and only the buyer gets to see and keep it", only for people doing it to fall on their face when people easily extract the original art and the supposed motivation being "it supports artists". It's not reverse engineering when the string being traded is a literal link to where you're supposed to get it from.
Click to expand...

In that case that would be a failure of service or external implementation. I would return to it being an ownership token rather than exclusive access as being the defining feature. If some fool sold it as exclusive/private access then on their head be it. Seems a bit like those claiming bitcoin was straight up anonymous where it really wasn't, though had some perks in that direction.
Some kind of external/out of band communications (I put a throwaway email or something as my initial contract offer and relevant payment, it goes to that, I acknowledge receipt or something) would also seem to mitigate that somewhat.

The model is objectively worse than paypal/patreon because it's only sold once, whereas those donation sites generate basically perpetual money in exchange for art depending on how active you are in supporting it.
Click to expand...

Non fungible means potentially non splitable (though I could see a path in this similar to ownership pools/trusts done as a sideline, possibly even done in the ledger itself), one is not the same as any other (which does make the serial number from money a flawed analogy in some ways as money is very fungible*) and said token is able to be resold then yeah.
Also I am not seeing the distinction as you have it there. Or if this has to be the sole means and not some kind of limited first 100 prints type deal and after that continue via other means. Or more like shares in a startup company that is growing in some of the ways they work. Or simply as it is now -- I set up a website for someone a while back that fired off a PDF to anybody that sent the money for the course my client was offering, rather than a nice email I don't see the functional difference in generating a NFT and might even be easier if the NFT does not have pitfalls of email in the modern world by virtue of being a contracts/communication network at its very heart.

*for others playing along the fungibility is usually taught with money as a concept. That being you are rich whatever that does not like abortion. Donate 1 million to a hospital for name on a wing or something under the restriction of. Hospital accountant (or charity in other examples) has allocated a pool of money to non specified uses. Your million goes to allow blind orphans to see, though in reality they always would have and the new womb vacuum is paid for by you where it might not have even your name is on a brass plaque on the side of the laser they are burning off small child cataracts with.

I'm not an environmentalist by any means, but it has insane amount of merits when almost all of our efforts at preventing climate change from completely wrecking society (it's already unstoppable at this point, but not entirely uncontrollable) are being wasted away because a bunch of libertarian Rand Paul fanboys thought it'd be a great fucking idea to waste computing power and energy on something that helps nobody but their own bank account in running scams.
Click to expand...

Distributed ledger sounds like a reasonable tech to have, and solves problems that are otherwise tricky to solve. Whether the cost is worth paying, worth spinning up some more nuclear, worth nailing it all into renewables and ancillary infrastructure or completely unacceptable is up for debate. I can't even get to it being some kind of "99% of people would not accept it" thing like we get when we venture in the more anarchic or nihilistic areas of philosophy.
If you want to play whale hugger and taking you number there as read though then
https://www.nationalnotary.org/notary-bulletin/blog/2017/10/2017-nna-census-notaries
4 million notaries, and also many lawyers, that could be chopped down massively and found something more useful to do with such a tech. Given most per capita stuff is measured in tonnes...


But anyway I am back to NFTs can function as the modern equivalent of a signed print/author's friends and family copy/... type deal with built in authentication (the original issuing address, maybe with nice pgp signature if deemed necessary, is the author or authorised agent thereof, this is part of the initial 10 works/only 10 works, here is the chain of ownership going back to the start). A sort of exclusive thing that some seem to assign quite considerable value to.
Alternatively a form of donation being made potentially less nebulous than many things are in this digital world by having a good attached to it, or indeed straight up payment for goods.

That seems like a useful trade/function. Right now it might seem akin to the classic stories of early internet/newsgroups/... where the nerds would waste bytes (which you wanted every one...) talking about Star Trek. Might become something else, might be horrendously inefficient. Plenty of failed tech in the past or tech ahead of its time.

If some fools are billing it as something it is not then that is on them, the use case though seems plain to me and something that is both done endlessly as it is and would also be quite useful for a whole bunch of other things. Even with those failures the NFT would still likely default to a known concept under the law that is still of some value/use.
If it truly is just a URL not entirely unlike some login credentials I might have for a defunct website then I guess a fool and his money... NFT as I understood it though was much akin to the single user license like we associated with bits of paper from computer companies, cartridges, DVDs, the covers of a book (and amusingly enough to bring it back to the money serials then those too -- destroy a bill but have the serial be readable and in most places that is what you need to get an exchange) and whatnot for decades now. I can't generate new copies of the IP but I can sell mine on, relinquishing it in the process, and have them act as ownership for the new holder. The unique thing is bizarre behaviour from where I sit, the largely digital nature of things making maybe slightly more so, but has long been documented people enjoy something unique/first edition/with some connection to the creator or historical figure and I don't expect that to stop any time soon.
 
VzUh
this blog was the best explanation i have read of nfts since "if it were any good for artists, the furries would have invented it years ago". thank you
 
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The Real Jdbye
Most of this seems to be correct, but I think you are a bit confused on what Proof of Stake is. First of all, Ethereum hasn't switched over to PoS yet, they're still using PoW. And PoS uses little to no power because all you are doing is staking the crypto you hold in a wallet and earning interest on it, just like how you earn interest on the money in your bank account (but higher interest)
 
FAST6191
Is crypto(currency) as a whole and in many implementations over valued? Probably.
Is crypto a scam? That is harder. There are some very real use cases that make it far more desirable to use than previous systems which are prone to failure, corruption, massive inefficiencies and the excessive costs associated with all of those which can be largely bypassed by such things. To that end seems like a tech that is outclassing the old in various ways, though having plenty of growing pains of its own and not particularly suited at present as a drop in replacement for a lot of otherwise entrenched systems.
 
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