Hello again! Hope you are having a good weekend.
Your first argument is this: "People want to buy these right now [obviously true], so they must have intrinsic, long-term value.”
But this is not true, because of tulips, South Sea Bubble, and the endless list of manias in the past. Indeed, my whole claim is that this is yet another bubble.
So again, am I getting scammed when I decide to purchase a piece of digital art for $100 (with an NFT attached to it so I can actually resell it later if I want)?
Not if the art is worth $100 to you. This second argument doesn’t prove that NFTs have any intrinsic value.
In fact, you again described your usage of the NFT as entirely being in selling it to some later buyer for a greater price. The question is not “Can I possible bundle NFTs with something of value”, but “What actual value does an NFT add to a work of art, other than ‘a hash code’ or the hope of selling it again for a greater value”?
It’s ownership, provenance, something that can be traded on marketplaces, etc.
No, no, and yes. :-)
NFTs do not intrinsically give any ownership of the original work at all! This is how in the example above you can sell the NFT and keep the work.
It is the law that conveys ownership.
Imagine this scenario — a painting is hanging in a gallery and two people claim ownership of it. One person has a legal contract; the other has an NFT. Who goes home with the painting?
Of course, it’s the guy with the law on his side. If the human with the NFT takes it, he will be charged with theft, and if he persists, other armed humans will take the painting away by force by put him in jail.
Now, let’s look at provenance. Provenance is established by evidence of the construction of the work of art, through documents which have legal value, as well as historical records, newspapers and the like.
Suppose I emit an NFT claiming provenance for the Mona Lisa. What value does this have? Obviously none.
Now let’s suppose that an artist provides one provenance for their own work on an NFT, and another one in a legal provenance document, and it goes to court. Which one wins? The legal document, of course.
More, and more important yet, even if you want to establish provenance and ownership of an item purely digitally, there is absolutely no need for a blockchain.
I, the artist, already have a digital signature based on a public/private key pair; I sign the ownership or provenance document with this digital signature; you get a copy, I get a copy, our lawyers get a copy, maybe the State gets a copy; we are done.
You and I can choose exactly who knows about this transaction — we can do it privately without anyone else knowing, or we can tell the whole world, or somewhere in between. And you can do all this now, instantly, with boring old tools that have been on almost every computer for two decades now.
Attaching a blockchain makes things at least thousands of times more expensive and often hundreds of thousands of times. That’s because the blockchain solves a very hard problem called the Consensus Problem. This is the simplest explanation I could find, and it isn’t so simple.
But if you don’t have a Consensus Problem, you don’t need the incredible power — and cost and difficult — of a blockchain. It’s like buying a steam roller as a nutcracker.
A lot of my skepticism comes from the fact that people don’t seem to understand any of this. People are like, “I’m going to get a steamroller and keep birds in it! I’m getting a steamroller so my papers don’t blow around the room! I’m getting steamroller to prop this door open!” I’m like, “Get a bird cage; get a paper weight; get a door stop.”
