diff options
Diffstat (limited to 'src/_posts/2021-05-02-nfts.md')
| -rw-r--r-- | src/_posts/2021-05-02-nfts.md | 349 |
1 files changed, 0 insertions, 349 deletions
diff --git a/src/_posts/2021-05-02-nfts.md b/src/_posts/2021-05-02-nfts.md deleted file mode 100644 index a3871b1..0000000 --- a/src/_posts/2021-05-02-nfts.md +++ /dev/null @@ -1,349 +0,0 @@ ---- -title: >- - NFTs -description: >- - Some thoughts about. -tags: tech crypto ---- - -NFT stands for "non-fungible token". The "token" part refers to an NFT being a -token whose ownership is recorded on a blockchain. Pretty much all -cryptocurrencies, from bitcoin to your favorite shitcoin, could be called tokens -in this sense. Each token has exactly one owner, and ownership of the token can -be transferred from one wallet to another via a transaction on the blockchain. - -What sets an NFT apart from a cryptocurrency is the "non-fungible" part. -Cryptocurrency tokens are fungible; one bitcoin is the same as any other bitoin -(according to the protocol, at least), in the same way as one US dollar holds as -much value as any other US dollar. Fungibility is the property of two units of -something being exactly interchangeable. - -NFTs are _not_ fungible. One is not the same as any other. Each has some piece -of data attached to it, and each is recorded separately on a blockchain as an -individual token. You can think of an NFT as a unique cryptocurrency which has a -supply of 1 and can't be divided. - -Depending on the protocol used to produce an NFT, the data attached to it might -be completely independent of its identity, even. It may be possible to produce -two NFTs with the exact same data attached to them (again, depending on the -protocol used), but even so those two NFTs will be independent and not -interchangeable. - -## FUD - -Before getting into why NFTs are interesting, I want to first address some -common criticism I see of them online (aka, in my twitter feed). The most -common, and unfortunately least legitimate, criticism has to do with the -environmental impact of NFTs. While the impact on energy usage and the -environment when talking about bitcoin is a topic worth going into, bitcoin -doesn't support hosting NFTs and therefore that topic is irrelevant here. - -Most NFTs are hosted on ethereum, which does have a comparable energy footprint -to bitcoin (it's somewhat less than half, according to the internet). _However_, -ethereum is taking actual, concrete steps towards changing its consensus -mechanism from proof-of-work (PoW) to proof-of-stake (PoS), which will cut the -energy usage of the network down to essentially nothing. The rollout plan for -Ethereum PoS covers the next couple of years, and after that we don't really -have to worry about the energy usage of NFTs any longer. - -The other big criticism I hear is about the value and nature of art and what the -impact of NFTs are in that area. I'm going to talk more about this in this post, -but, simply put, I don't think that the value and nature of art are immutable, -anymore than the form of art is immutable. Perhaps NFTs _will_ change art, but -change isn't bad in itself, and furthermore I don't think they will actually -change it all that much. People will still produce art, it's only the -distribution mechanism that might change. - -## Real, Useful, Boring Things - -Most of the coverage around NFTs has to do with using them to represent -collectibles and art. I'd like to start by talking about other use-cases, those -where NFTs are actually "useful" (in the dull, practical sense). - -Each NFT can carry some piece of data along with it. This data can be anything, -but for a practical use-case it needs to be something which indicates ownership -of some internet good. It _cannot_ be the good itself. For example, an NFT which -contains an image does not really convey the ownership of that image; anyone can -copy the image data and own that image as well (intellectual property rights be -damned!). - -A real use-case for NFTs which I'm already, if accidentally, taking advantage -of, is domain name registration. I am the proud owner of the -[mediocregopher.eth][ens] domain name (the `.eth` TLD is not yet in wide usage -in browsers, but one day!). The domain name's ownership is indicated by an NFT: -whoever holds that NFT, which I currently do, has the right to change all -information attached to the `mediocregopher.eth` domain. If I want to sell the -domain all I need to do is sell the NFT, which can be done via an ethereum -transaction. - -Domain names work well for NFTs because knowing the data attached to the NFT -doesn't actually do anything for you. It's the actual _ownership_ of the NFT -which unlocks value. And I think this is the key rule for where to look to apply -NFTs to practical use-cases: the ownership of the NFT has to unlock some -functionality, not the data attached to it. The functionality has to be digital -in nature, as well, as anything related to the physical world is not as easily -guaranteed. - -I haven't thought of many further practical use-cases of NFTs, but we're still -in early stages and I'm sure more will come up. In any case, the practical stuff -is boring, let's talk about art. - -[ens]: https://nfton.me/nft/0x57f1887a8bf19b14fc0df6fd9b2acc9af147ea85/7558304748055753202351203668187280010336475031529884349040105080320604507070 - -## Art, Memes, and All Wonderful Things - -For many the most baffling aspect of NFTs is their use as collectibles. Indeed, -their use as collectibles is their _primary_ use right now, even though these -collectibles procur no practical value for their owner; at best they are -speculative goods, small gambles, and at worst just a complete waste of money. -How can this be? - -The curmudgeons of the world would have you believe that money is only worth -spending on goods which offer practical value. If the good is neither consumable -in a way which meets a basic need, nor produces other goods of further value, -then it is worthless. Obviously NFTs fall into the "worthless" category. - -Unfortunately for them, the curmudgeons don't live in reality. People spend -their money on stupid, pointless shit all the time. I'm prepared to argue that -people almost exclusively spend their money on stupid, pointless shit. The -monetary value of a good has very little to do with its ability to meet a basic -necessity or its ability to produce value (whatever that even really means), and -more to do with how owning the shiny thing or doing the fun thing makes us -stupid monkeys very happy (for a time). - -Rather than bemoan NFTs, and our simple irrationality which makes them -desirable, let's embrace them as a new tool for expressing our irrationality to -the world, a tool which we have yet to fully explore. - -### A Moment Captured - -It's 1857 and Jean-François Millet reveals to the world what would become one of -his best known works: _The Gleaners_. - -{% include image.html dir="nfts" file="gleaners.jpg" width=5354 %} - -The painting depicts three peasants gleaning a field, the bulk of their harvest -already stacked high in the background. The [wikipedia entry][gleaners] has this -to say about the painting's eventual final sale: - -> In 1889, the painting, then owned by banker Ferdinand Bischoffsheim, sold for -> 300,000 francs at auction. The buyer remained anonymous, but rumours were -> that the painting was coveted by an American buyer. It was announced less than -> a week later that Champagne maker Jeanne-Alexandrine Louise Pommery had -> acquired the piece, which silenced gossip on her supposed financial issues -> after leaving her grapes on the vines weeks longer than her competitors. - -I think we can all breathe a sigh of relief for Jeanne-Alexandrine. - -I'd like to talk about _why_ this painting was worth 300k francs, and really -what makes art valuable at all (aside from the money laundering and tax evasion -that high-value art enables). Millet didn't merely take a picture using paints -and canvas, an exact replica of what his eyes could see. It's doubtful this -scene ever played out in reality, exactly as depicted, at all! It existed only -within Millet himself. - -In _The Gleaners_ Millet captured far more than an image: the image itself -conveys the struggle of a humble life, the joy of the harvest, the history of -the french peasantry (and therefore the other french societal classes as well), -the vastness of the world compared to our little selves, and surely many other -things, each dependant on the viewer. The image conveys emotions, and most -importantly it conveys emotions captured at a particular moment, a moment which -no longer exists and will never exist again. The capturing of such a moment by -an artist capable of doing it some justice, so others can experience it to any -significant degree far into the future, is a rare event. - -Access to that rare moment is what is being purchased for 300k francs. We refer -to the painting as the "original", but really the painting is only the -first-hand reproduction of the moment, which is the true original, and proximity -to the true original is what is being purchased. All other reproductions must be -based on this first-hand one (be they photographs or painted copies), and are -therefore second and third-hand. - -Consider the value of a concert ticket; it is based on both how much in demand -the performance is, how close to the performance the seating section is, and how -many seats in that section there are. When one purchases the "original" _The -Gleaners_, one is purchasing a front-row ticket to a world-class performance at -a venue with only one seat. That is why it was worth 300k francs. - -I have one final thing to say here and then I'll move onto the topic at hand: -the history of the work compounds its value as well. _The Gleaners_ conveys an -emotion, but knowing the critical reaction of the french elite at its first -unveiling can add to that emotion. - -Again, from the [wiki entry][gleaners]: - -> Millet's The Gleaners was also not perceived well due to its large size, 33 -> inches by 44 inches, or 84 by 112 centimetres. This was large for a painting -> depicting labor. Normally this size of a canvas was reserved for religious or -> mythological style paintings. Millet's work did not depict anything -> religiously affiliated, nor was there any reference to any mythological -> beliefs. The painting illustrated a realistic view of poverty and the working -> class. One critic commented that "his three gleaners have gigantic -> pretensions, they pose as the Three Fates of Poverty...their ugliness and -> their grossness unrelieved." - -Now scroll back up and see if you don't now have more affinity for the painting -than before you knew that. If so, then the face value just went up, just a -little bit. - -[gleaners]: https://en.wikipedia.org/wiki/The_Gleaners - -### The Value of an NFT - -With this acknowledgement of _why_ people desire art, we can understand why they -would want an NFT depicting an artwork. - -A few days ago an NFT of this image sold for almost $500k: - -{% include image.html dir="nfts" file="disaster-girl.jpg" width=2560 %} - -Most of the internet knows this image as _Disaster Girl_, a meme which has been -around since time immemorial (from the internet's perspective, anyway, in -reality it was taken in 2007). The moment captured is funny, the girl in the -image smiling as if she had set the fire which blazes in the background. But, as -with _The Gleaners_, the image itself isn't everything. The countless usages of -the image, the original and all of its remixes, all passed around as memes on -the internet for the past 14 years, have all worked to add to the image's -demand. _Disaster Girl_ is no longer just a funny picture or a versatile meme -format, it's a piece of human history and nostalgia. - -Unlike physical paintings, however, internet memes are imminently copyable. If -they weren't they could hardly function as memes! We can only have one -"original" _The Gleaners_, but anyone with a computer can have an exact, perfect -copy of the original _Disaster Girl_, such that there's no true original. But if -I were to put up an NFT of _Disaster Girl_ for sale, I wouldn't get a damned -penny for it (probably). Why was that version apparently worth $500k? - -The reason is that the seller is the girl in the image herself, now 21 years old -and in college. I have no particular connection to _Disaster Girl_, so buying an -NFT from me would be like buying a print of _The Gleaners_ off some rando in the -street; just a shallow copy, worth only the material it's printed on plus some -labor, and nothing more. But when Disaster Girl herself sells the NFT, then the -buyer is actually part of the moment, they are entering themselves into the -history of this meme that the whole world has taken a part in for the last 14 -years! $500k isn't so unreasonable in that light. - -### Property on the Internet - -I don't make it a secret that I consider "intellectual property" to be a giant -fucking scam that the world has unfortunately bought into. Data, be it a -physical book or a digital file, is essentially free to copy, and so any price -placed on the copying or sharing of knowledge is purely artificial. But we don't -have an alternate mechanism for paying producers of knowledge and art, and so we -continue to treat data as property even though it bears absolutely no -resemblance to anything of the kind. - -Disaster Girl has not, to my knowledge, asserted any property rights on the -image of herself. Doing so in any real sense, beyond going after a handful of -high-value targets who might settle a lawsuit, is simply not a feasible option. -Instead, by selling an NFT, Disaster Girl has been compensated for her labor -(meager as it was) in a way which was proportional to its impact on the world, -all without the invocation of the law. A great success! - -Actually, the labor was performed by Disaster Girl's father, who took the -original image and sent it into a photo contest or something. What would have -happened if the NFT was sold in his name? I imagine that it would not have sold -for nearly as much. This makes sense to me, even if it does not make sense from -a purely economical point of view. Disaster Girl's father did the work in the -moment, but being a notable figure to the general public is its own kind of -labor, and it's likely that his daughter has born the larger burden over time. -The same logic applies to why we pay our movie stars absurd amounts even while -the crew makes a "normal" wage. - -Should the father not then get compensated at all? I think he should, and I -think he could! If he were to produce an NFT of his own, of the exact same -image, it would also fetch a decent price. Probably not 6 figures, possibly not -even 4, but considering the actual contribution he made (taking a picture and -uploading it), I think the price would be fair. How many photographers get paid -anything at all for their off-hand pictures of family outings? - -And this is the point I'd like to make: an NFT's price, like in all art, is -proportional to the distance to the moment captured. The beauty is that this -distance is purely subjective; it is judged not by rules set down in law by -fallable lawyers, but instead by the public at large. It is, in essence, a -democritization of intellectual property disputes. If multiple people claim to -having produced a single work, let them all produce an NFT, and the market will -decide what each of their work is worth. - -Will the market ever be wrong? Certainly. But will it distribute the worth more -incorrectly than our current system, where artists must sell their rights to a -large publisher in order to see a meager profit, while the publisher rakes in -the vastly larger share? I sincerely doubt it. - -### Content Creation - -Another interesting mechanism of NFTs is that some platforms (e.g. -[Rarible][rarible]) allow the seller to attach a royalty percentage to the NFT -being solde. When this is done it means the original seller will receive some -percentage of all future sales of that NFT. - -I think this opens some interesting possibilities for content creators. Normally -a content creator would need to sell ads or subscriptions in order to profit -from their content, but if they instead/in addition sell NFTs associated with -their content (e.g. one per episode of their youtube show) they can add another -revenue stream. As their show, or whatever, begins to take off, older NFTs -become more valuable, and the content creator can take advantage of that new -increased value via royalties set on the NFTs. - -There's some further interesting side-effects that come from using NFTs in this -way. If a creator releases a work, and a corresponding NFT for that work, their -incentive is no longer to gate access to that work (as it would be in our -current IP system) or burden the work with advertisements and pleas for -subscriptions/donations. There's an entirely new goalpost for the creator: -actual value to others. - -The value of the NFT is based entirely and arbitrarily on other's feelings -towards the original work, and so it is in the creator's interest to increase -the visibility and virality of the work. We can expect a creator who has sold an -NFT for a work, with royalties attached, to actively ensure there is as -little gatekeeping around the work as possible, and to create work which is -completely platform-agnostic and available absolutely everywhere. Releasing a -work as public-domain could even become a norm, should NFTs prove more -profitable than other revenue streams. - -### Shill Gang - -While the content creator's relationship with their platform(s) will change -drastically, I also expect that their relationship with their fans, or really -their fan's relationship with the creator's work, will change even more. Fans -are no longer passive viewers, they can have an actual investment in a work's -success. Where fans currently shill their favorite show or game or whatever out -of love, they can now also do it for personal profit. I think this is the worst -possible externality of NFTs I've encountered: internet fandom becoming orders -of magnitude more fierce and unbearable, as they relentlessly shill their -investments to the world at large. - -There is one good thing to come out of this new fan/content relationship though, -and that's the fan's role in distribution and preservation of work. Since fans -now have a financial incentive to see a work persist into the future, they will -take it upon themselves to ensure that the works won't accidentally fall off the -face of the internet (as things often do). This can be difficult currently since -work is often tied down with IP restrictions, but, as we've established, work -which uses NFTs for revenue is incentivized to _not_ tie itself down in any way, -so fans will have much more freedom in this respect. - -[rarible]: https://rarible.com/ - -### Art - -It seems unlikely to me that art will cease to be created, or cease to be -valuable. The human creative instinct comes prior to money, and we have always -created art regardless of economic concerns. It's true that the nature of our -art changes according to economics (don't forget to hit that "Follow" button at -the top!), but if anything I think NFTs can change our art for the better. Our -work can be more to the point, more accessible, and less encumbered by legal -bullshit. - -## Fin - -That crypto cat is out of the bag, at this point, and I doubt if there's -anything that can put it back. The world has never before had the tools that -cryptocurrency and related technologies (like NFTs) offer, and our lives will -surely change as new uses of these tools make themselves apparent. I've tried to -extrapolate some uses and changes that could come out of NFTs here, but I have -no doubt that I've missed or mistook some. - -It's my hope that this post has at least offered some food-for-thought related -to NFTs, beyond the endless hot takes and hype that can be found on social -media, and that the reader can now have a bigger picture view of NFTs and where -they might take us as a society, should we embrace them. |