Most criticisms about NFTs are only valid criticisms of the current market, not the concept of NFTs itself
I've spent hours on Twitter arguing with critics of NFTs and read countless blog posts explaining why it's all a massive Ponzi scheme waiting to collapse. At this point, I would be surprised to hear a new criticism against NFTs that I haven't heard yet.
Most arguments on Twitter didn't go anywhere and I was left wondering why people were so pissed off by something I found amazing. It seemed like we were arguing about different things. Which is exactly what was going on.
Most arguments against NFTs are not actually against the concept of an NFT but against the current market and ecosystem. Those are 2 different things and a distinction needs to be made.
Most NFTs are basically just a way to track "ownership" over a piece of metadata. That's it.
Common criticisms.
The "Ownership" terms over the metadata are defined by the creator. For example, you have commercial rights to your bored ape
The metadata's storage is different for every NFT. It could be stored on google drive, decentralized storage (IPFS, arweave), or directly on the blockchain (Nouns DAO).
Where the "Value" comes from is not a valid criticism against the concept of NFTs. An NFT could represent ownership over a gold bar or absolutely nothing. Valuing an NFT of "Art" is a completely different topic and it's one that has no right answers since the value is completely subjective.
The Environmental Impact is caused by Proof of Work blockchains, not NFTs. There are many blockchains that use other consensus algorithms that use a negligent amount of energy.
Art Theft has always been an issue and it's nothing new. Are people criticizing Instagram, because someone stole their post? Theft is only common in NFTs since it's financially incentivized as of now.
I believe NFTs allow artists to capture some of the value of their digital art without having to give up rights or rely on a central platform that often takes a cut.
No. NFT are useless.
You can sell or license your digital art without using the blockchain. It is a solution looking for a problem. And that is just in theory, in actual practice it is a market filled with peddlers, scammers, thieves and similar scumbags.
Everything that can be done on a blockchain, can be done on a centralized platform. The question is, what is the better option?
Why rely on a platform that takes a big cut if you could be sovereign and fully in control?
😂
You can store anything in S3 for next to nothing and “be sovereign” and have way more control than you do on a blockchain. Blockchains with so-called smart contracts are 1000x more expensive to use and they ultimately end up storing the asset on a centralised and paid platform anyway. 🤦♂️
So what’s the point? To see who owns the NFT? No one cares actually who owns it, except people who are trying to sell/are invested in blockchain tech.
If you think that NFTs for things such as concert tickets are a solid use case then you haven’t been paying attention to the lack of stability and throughput of transactions on “high performance” chains. Not only that, but this problem is already solved adequately. Time to move along…
Go right ahead and keep flogging that dead horse, but it’s not going to run. 🙂
Storing objects in S3 does nothing to enable transparency on the lifecycle of those objects (whether or not they were tampered, their origin, etc). There are use cases where this transparency matters.
Not all blockchains are expensive to use, it depends on which blockchain is being used. And as OP mentioned, the assets can be stored in existing decentralized storage files such as IPFS; they do not necessarily need to stored in centralized servers.
The stability of many of these blockchains is indeed concerning. Newer technologies are rarely ever stable in their infancy though, and I expect them to improve in a few years. In the meantime, hybrid platforms are a viable alternative that combine the pros of decentralized and centralized solutions.
I also do not agree that the problem is already solved as far as concert tickets are concerned. Blockchains are not only about the technical side of the equation, but also the organizational. Concert goers have no visibility on the lifecycle of tickets and thus cannot hold the responsible parties accountable for rampant fraud and scalping.
Companies can develop centralized technical solutions to existing problems, but the underlying question is: do you trust them to act faithfully? Ticketmaster can say they're tackling scalping and fraud, and certainly this is possible with centralized solutions. Do you trust them?
Such as? Are they imaginary or real production use cases, implemented now?
Sure, they don’t need to be, but they often will be.
Yeah, I do. Is there reason not to?
“Such as? Are they imaginary or real production use cases, implemented now?”
Concert tickets. People have full visibility into the lifecycle of NFT tickets, from mint to scan. Ticket issuers can lock resale prices under a certain amount (completely up to them what that amount is) to prevent scalping and even include a small royalty percentage on every resale. There are several projects offering NFT ticketing solutions in production right now. GET Protocol is the largest one; they have sold millions of NFT tickets, including well-known international acts. All of their tickets are visible to everyone on their explorer (https://explorer.get-protocol.io/). Ticket issuers using centralized solutions can claim they are solving ticket scalping, and that is obviously possible, but under the hood they are likely setting aside a supply of tickets and selling them to brokers with special privileges who later resell them at extravagant prices on secondary marketplaces.
Decentralized exchanges such as Uniswap use NFTs to prove that someone has provided liquidity to the exchange. Projects seeking to reward people who provide liquidity to their tokens can easily do so by seeing which wallets hold the corresponding NFTs.
More generally, there are also examples on hybrid and private blockchains demonstrating the need for transparency across several industries. A luxury casino recently announced that they are partnering with a hybrid blockchain provider to enable interoperability on the gambling industry (https://news.worldcasinodirectory.com/lto-network-incorporated-bringing-blockchain-to-les-ambassadeurs-casino-101124). Global shipping uses a private blockchain developed by IBM and Maersk to share data between large international partners (https://www.maersk.com/eur-tradelens).
These are all real production use cases. There are more that I either haven’t mentioned or are in varying stages of development. NFTs will play a vital role in many of these projects.
“Sure, they don’t need to be, but they often will be.”
Smart contracts deployed on the blockchain are fully visible to everyone, and by extension any link included in them. If you see that an NFT includes a link to a centralized storage, and you do not like having NFT images hosted centralize storage, then don’t buy it.
“Yeah, I do. Is there reason not to?”
There are many cases of corporations lying to the public, this isn’t anything new. Ticketmaster specifically has been sued several times for violating antitrust laws. You trust them to stop ticket scalping, really?
Thanks for providing such a detailed and informative reply. I really do appreciate it.
TBH scalping has never really been on my radar as it’s not an issue that’s affected me so I’m very much ignorant to the scale of the problem.
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Essentially the concept behind NFTs is that basically anything and everything is monetisable, if you have faith in the blockchain.
most things are already monetized at least in abstract terms. the issue lies in the unnecessary transaction costs and who gets to benefit without nfts it is unfortunately not always the party that SHOULD benefit
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In my understanding, the main criticism of NFTs is that they're useless - that has nothing to do with the current market. They're allowing you to pretend to own a link to an image (or whatever other asset).
And to the degree that they actually serve this purpose, their value is negative - they introduce artificial scarcity into a digital world, which doesn't need to have any.
the scarcity has always been present. (only one original post) but there was never a clean way to prove that or capture value. the problem is being solved.
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Sure, the concept might be ok. But what matters is how it works in practice. And in practice, they're crap IMO.
And yes, the market dictates what happens... but you can't separate the product from the market. They're intrinsically connected. Unless you just want to make your own NFT and look at it by yourself on a desert island or something.
For example, maybe NFTs could be ok for the environment. But the the fact is that they aren't. So....
Admittedly, I'm not a big NFT guy. I'm open to being proven wrong.
I think it's unfair to judge NFTs based on their current mainstream use case (JPEG images). They have enormous potential in several areas, including unlocking additional income streams and enabling transparency in industries where consumers have little visibility.
As for the environment, I agree that it's a concern. However, the environmental concern is largely focused on Ethereum L1, because L2s and other PoS L1s use very little energy. I don't have hard data to support my case, but I suspect only a small fraction of NFTs are minted on Ethereum L1 due to the high usage cost. Most NFTs should have a negligible impact on the environment.
Magic Eden [Solana NFT Marketplace] actually surpassed opensea in daily transactions.
https://cryptosnewss.com/magic-eden-surpasses-behemoth-opensea-in-daily-transactions-despite-half-the-users/
This is certainly interesting. To further illustrate my point, I should note that Opensea is not exclusively Ethereum L1. All NFTs minted on EVMs (such as BSC and Polygon) can be displayed on Opensea as well. The fact that even Solana specific NFT marketplaces can surpass Opensea is more evidence that only a few NFTs contribute to environmental damage.
For me, there are two issues with NFTs:
1- Most NFTs are actually assets hosted on a centralized platform. Unless NFT raw data is actually stored on chain, what is even the point?
2- Blockchain afficionados always invoke the argument that there is a "trust issue". But is there really? Blockchains allow users to not have to trust the entity that created the asset. That's great... on paper. But personally, I'd rather know exactly who is responsible for my stuff. Companies are made up of individuals, who for the most part, actually try to do good. And if they don't, I can sue them. Much better than having no recourse when things turn to shit (hello LUNA!).
Our world is based on our ability to trust other people. We don't need a solution to that problem. Because it works just fine that way IMHO.
i think the trust issue is more about “what they’re are doing” and less about “who is doing it”
we can see the code deployed to the chain.
every other business is a black box.
The entire problem with NFTs is due to a concept we are well aware of as human beings, and the thing that powers transactions worldwide: trust.
I am no lawyer and frankly know little to nothing about copyright law. But I know that if I sign off the rights on some piece of work to someone else, and we have a properly worked IP contract signifying a transfer of ownership, this agreement is enforceable by law.
I know that if I buy property and have found some squatters are staying at my property without my permission, I have a legal framework I can follow to fix the situation.
I know that if I order a cashier's check from my bank to give to some other legal entity, that this cashiers check is a verified confirmation of funds by a trusted third party (my country's banking system).
As far as I'm aware, NFTs have no such luxury.
Maybe that will change in the future. I don't know. But as of right now, there is literally no value in something that can be easily duplicated without consequence. And that's the keyword: consequence.
I see this argument get brought up that people like to own an "original", and that this alone is enough to entice buyers to a marketplace. I see that as pure 100% copium. It's pure novelty. There may be some select folks who are actively interested in NFTs for this reason, but I do not think it's the majority. If anything, they are only captivated by the movement and being involved in it: not the "asset" that they now legally own. If anything, they are merely fellow people passionate about the concept behind NFTs and are actively investing to see the idea grow.
This does not mirror public sentiment.
I think the word NFT is now tainted, especially due to how much corporations are trying to push NFTs on people. People see it as just another corporate cash grab, they lose trust and thus interest.
I think NFTs have a long way to go. I respect the movement and love the blockchain algorithm. But selling JPEGs ain't it, chief.
you don’t actually own that land ser, you pay a subscription for the right to its equity. and in some states there’s squatters rights..
i’m not sure your “country” is a trusted third party to 99% of the world. ask russians how they feels knowing the US gov and press a button and freeze their assets…”trusted”
also any and all Ip law applies to that of jpegs.
all i’m saying is you’re leaving out key details that invalidate your arguments and support NFTs as a technology
One thing that bothers me is that NFTs are often presented as cutting the middleman and simplifying a lot of markets like: real estate, art, concert tickets, etc. I keep reading things like "you will see when real estate market get blockchained, one transaction and you can buy a house".
What is always overlooked is that there is usually not only one middleman, and that they are here for a very good reason.
Because not everything is just an entry in a ledger. One example with real estate (from my experience as a lawyer and real estate buyer in western Europe):
Apart from exchanging the house key for money here are some of the steps involved:
And I probably forgot half of what is required.
Then the sale is registered in an official ledger. Good candidate for a blockchain.
Good luck to blockchain all the rest and cut all the middleman...
all notary points are solved by the blockchain.
taxes and information flow can be programmatic such that gov gets their cut immediately after sale.
loans already exist on chain.
only thing that’s manual is inspections (store this info on chain) and the buyer actually touring that home.
so you eliminate 80-90% instead of 100%, how is that not an improvement?
People who believe NFTs are a scam don't understand the psychological itch that owning an "original" scratches. They also tend to ignore that NFTs have many other use cases beyond randomly generated jpegs, those projects are exploiting those who are essentially addicted to gambling.
You can own a print of the Mona Lisa or even a painted copy that is so well done professionals can't tell the difference. Still, its value is much different than the original painting.
Owning an NFT is having a verifiable club membership, you don't need to prove that your "Gucci" is real. You can verify it on the blockchain. This technology applies to much more than art. You can verify trust and deed ownership on the blockchain and not rely on corrupt bureaucrats. Don't trust, verify is the decentralized motto and a net positive to society as a whole. Just because it's in its infancy and people exploit it doesn't mean you should write off the technology. It was the same with crypto and scam ICOs or ponzi projects. Similar criticisms as well "bitcoin isn't real money", just as real as the paper USD.
Fortunately, nobody gets to decide whether something has value or not, the markets determine that. Overpriced or underpriced, the technology is available and I'm excited to see what builders do with it.
Thank you for that comment!
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so generate the image at mint (like most are) and boom it’s the OG.
you can find art that has discernible strokes from artists hand..art isn’t ONLY oil painted visuals…
That's a good point. I still think the original is determined by the artist, the one they "release" is the version they decided is the original. Yes, it's digital and not physical. But an NFT gives an artist the ability to determine what is an "original" of their digital art.
I still think the ability to have non-custodial licensing agreements tied into digital assets is the biggest benefit/bonus of the technology.
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but that token points to the OG so the only poor schmucks are all the noobs right click saving the image and walking away thinking “lol i copied that dudes image bro”. as you said, it’s not the original or even close.
What you're describing is a generic database. This is like some delusional reverse-strawman.
generic database that only a select few can read let alone write. wildly different from one we can all read and write.
Data storage is not the only feature of blockchains. Transparency of that data is really what sets blockchains apart from conventional databases. Both are viable solutions for different use cases.
Hmmm… I think this whole blockchain “transparency” thing will soon come up against privacy policies, which are getting stricter.
That depends on the data that the blockchain contains. For sensible private data, hybrid blockchains are an attractive option. There are already GDPR-compliant blockchains in production with real paying customers.
Well, that's what it is except on a blockchain.
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