WTH are NFTs? Here is the token, there is the Beeple....
- Reference: 1620122533
- News link: https://www.theregister.co.uk/2021/05/04/what_is_nft/
- Source link:
Three letters and a lot of theory
An NFT is a form of cryptocurrency token that has a unique identity. Bitcoins, litecoins, doge, ether, and most of the other hundreds of cryptocurrency tokens out there are fungible, like digital sausage meat. It doesn't matter which piece of a bitcoin lands in your wallet. The value lies in the general price of the asset at the time. In that way, it's a little like cash. Whether someone gives you this dollar bill or that one doesn't really matter.
Now, imagine that Sylvia Plath had written a poem on the dollar bill in your wallet, and you could prove its authenticity. The dollar would be worth much more, even if the poem itself could be reproduced elsewhere. It would gain unique value.
To replicate that in cryptocurrency, you need to make tokens unique. In 2018, the Ethereum cryptocurrency community did that with a standard called ERC-721. Now, people could digitally scrawl whatever they wanted to inside an Ethereum token. Winkelman (aka Beeple) embedded his 443,902,761 pixels in one, earning him just shy of 12 cents per pixel.
Beeple's is far from the first NFT. They date back to Cryptokitties and beyond, and there are platforms like OpenSea and Nifty Gateway (which sells Beeple's work) making money from them. But $69m for a JPG has a way of capturing the media's attention.
[2]
[3]
[4]
So NFTs are just another way of signing digital prints, then, and all this is just a bubble? Well, no and yes. Winkelman himself has said that NFT-based art collectibles are a massive bubble. But it hasn't stopped people trying to do more interesting things with them.
Matt Stephenson is one such person. Last month, the Columbia PHD and behavioural economist sold his own digital asset as an NFT: a polynomial smoothing graph. It was the result of his early research into a two decades-old piece of pseudoscience: the Shangri-La Diet. Professor Seth Roberts wrote the book on this diet after arguing that ingesting flavourless calories (such as extra-light olive oil) in between meals would program the brain to lower the 'set point' at which the body maintains weight.
It was pseudoscience because Roberts experimented on himself and didn't conduct peer-reviewed research. That doesn't mean the idea wasn't plausible. It gained traction, but never got the research it needed to prove or disprove it, explains Stephenson.
[5]
The problem is that the incentives just aren't there, he says, which is why so many ideas that might have some grounds for further research are ignored by academia. "It didn't get absorbed into a research stream of basic science that would preserve it," he tells us. "It also wasn't patentable. So nobody wanted to run the study."
He ran a rudimentary scientific study with crowdsourced respondents in 2018 to see if a more detailed study was worthwhile. "It looks promising enough based on the results of the study," he says. So he auctioned off a hash of the graphed study results as an NFT via OpenSea. It sold for $24,000, which is around a quarter of the amount he needs to run the more detailed replication study.
Ideally, Stephenson would like to see NFTs become an alternative incentive to fund scientific research into plausible ideas that fall through the cracks.
NFTs that compute
Some people envisage NFTs going beyond simply containing or pointing to collectibles. ERC-721 NFTs aren't just tokens. They're smart contracts. Rather than just representing a digital asset, they can run code, making them distributed blockchain-based programs. That enables people to encode rules around how a digital asset is used.
"You can control the access rights, earn rewards, or get paid by letting other people use your NFT to train or test their ML/AI algorithms," says Dragan Boscovic, a research professor at Arizona State University who founded its blockchain research lab.
[6]
"The only limit is your imagination," says Joseph Lubin, co-founder of Ethereum and blockchain software technology company ConsenSys, who sees almost limitless opportunity in the kinds of things you can embed in an NFT.
Rather than storing a pre-made asset in an NFT or storing a pointer to it on an external storage system, a Consensys-based project called EulerBeats encodes the instructions to generate the art as a smart contract. The contract can create art and music from its own code directly on the Ethereum blockchain.
The project sold its second batch of 25 NFTs for at least 45 Ether (around $85,000) each at the end of March, with some fetching far more. Owners can then mint limited copies of each one and earn royalties from them.
Energy consumption
The blemish on this utopian landscape is energy usage. Ethereum still uses proof of work for its consensus mechanism, leading to what data scientist Alex De Vries' Digiconomist site says is a 76.23kWh per-transaction footprint.
"Ethereum's energy issues, which are non-trivial but not terrible, will disappear in nine to 12 months," asserts Lubin. That's because Ethereum 2.0 will use the more energy-efficient proof of stake mechanism. There are also existing PoS-based blockchains such as Charles Hoskinson's Cardano, which appears to be working on an NFT standard.
For his part, Lubin is working on Palm, an NFT platform that will launch with a Damien Hirst NFT sale. Co-founded with others including David Heyman, who produced the Harry Potter movies, Palm will eventually use a small number of verifiers to slash energy usage to insignificant levels.
The Palm network, which will bridge to Ethereum, will also link to the Protocol Labs' Filecoin, which Lubin says will help to provide permanent decentralized storage for digital work on the Palm system.
The flurry of attention paid to NFTs will likely subside in time, and it remains to be seen how much of this will trickle down to those of us without wallets full of Ether. Tech luminaries like Jack Dorsey can flog tweets for millions, and you can pick up a certified unique picture of an anthropomorphised hotdog for 55 bucks on OpenSea. But we're looking for something we could actually use.
Here's a neat idea. Stephenson is plotting another use of smart contract-based NFTs called the Splitstream, to programatically split funds from an academic NFT sale among the authors of any works that it cited. And it would be recursive. "An NFT sale's proceeds is partially split toward the works that the NFT depended on, like a citation. Those "citations" can then further split and cite," he explains.
With so many interesting ideas in play, NFTs have the potential to be far more than an art and collectibles fad. But as with many nascent technologies, someone has to make the use cases work in practice. ®
Get our [7]Tech Resources
[1] https://www.theregister.com/2021/03/12/beeple_nft_sold/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2YJFvmxnV80nti3pYvl01oAAAAFE&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YJFvmxnV80nti3pYvl01oAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YJFvmxnV80nti3pYvl01oAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44YJFvmxnV80nti3pYvl01oAAAAFE&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YJFvmxnV80nti3pYvl01oAAAAFE&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://whitepapers.theregister.com/
Whiskey Tango Foxtrot!
"The blemish on this utopian landscape is energy usage. Ethereum still uses proof of work for its consensus mechanism, leading to what data scientist Alex De Vries' Digiconomist site says is a 76.23kWh per-transaction footprint."
I could drive for 350 miles on 76.23kWh!
Re: Whiskey Tango Foxtrot!
VeChain uses PoA.
NFT's can be done without using the electricity consumption of a small state.
Re: Whiskey Tango Foxtrot!
Can you explain PoA in straightforward terms?
Re: Whiskey Tango Foxtrot!
Very, very roughly:
Bitcoin works of Proof Of Work (how many hashes per second can you do?).
Proof Of Stake means your right to vote on the network is determined by how many coins you own rather than how many hashes per second you can perform.
P.O.Authority is just done by trusted individuals with a financial incentive not to screw it up ( because they've staked a large amount of the currency ). I believe the fact that they can't verify more than one consecutive block prevents a hostile actor from doing any real damage.
Re: Whiskey Tango Foxtrot!
PS: I should add, I've got a bit of VET because I think it's a worthwhile system that could have a large price due to its usefulness rather than, like bitcoin, in spite of a lack of it.
These NFT's worry me slightly because what if somebody stores something abhorrent in them. Does that make the entire blockchain illegal?
Looks like a good way to launder money
Create art in a NFT and get someone to buy for a few million. Nice clean cash
Re: Looks like a good way to launder money
Nailed it.
I am selling this post
on El-Reg. It is available for only £10,000 in NFT. Come on get your wallets out, you know you want to. Own a bit of history.
Re: I am selling this post
I will offer you 900 dollerydoos. [1]This link is your payment .
[1] https://i.imgur.com/SfHBwiu.jpg
Re: I am selling this post
Payment accepted. May you long cherish that post.
I feel like crypto has recently got more complicated. The whole running a program on the block chain?? A black hole is opening up and everyone is jumping in but I can't see what the all the fun is down there (other than all the dosh that seems to be coming back out!).
I kind of get what NFTs are but also I really have no idea what they are.
I'm confused??
Non-Functionible Software
Yeah, bring it on, embedded in your work of art:
• Non-Fungible Bugs
• Non-Fungible Spyware
• Non-Fungible Ad-Slingers
• Non-Fungible Back-Doors
• Non-Fungible Crypto-Miners (e.g. Bitcoin running on Ethereum, ₿@Ξ)
Blockchain is all about creating something that can be sold. Whether that be mining or NFTs.
Unfortunately there's no intrinsic value to the things being sold. They are only valuable because people believe that they are. It's a speculative bubble where those who get out at the right time will make a fortune, and others will lose loads.
"They are only valuable because people believe that they are."
Well said, that's the art world nailed to a tee!
I'm not saying art has no value but it's so subjective as to only have value to the viewer or viewers. Sure there is some art that simply spans generations, class, etc and most of us can agree on what "good art" is compared to "bad art" but ultimately it's all worthless and priceless at the same time dependent upon who's looking. I'm semi-pro photographer, so I rely on lots of cliches to make my extra income, I rely on playing on a share idea of good artistic cliches and most are happy to pay me for that but ultimately my work has no more value than the next person.
It's a funny old world.
What about mothproofing?
Non-fungible tokens sound like molds will not eat them, that's a good one for the UK! Are they mothproofed though?
Re: Non-fungible tokens sound like molds will not eat them
The idea is certainly mushrooming.
So, it's a bubble?
Basically, yes... and yes.
I'm not seeing any practical use for this that gives you any tangible benefits over a traditional written (or verbal) contract. A solution looking for a problem.
Re: So, it's a bubble?
> I'm not seeing any practical use for this that gives you any tangible benefits over a traditional written (or verbal) contract. A solution looking for a problem.
From what I can see, a NFT is essentially a way to generate a unique identifier that says "this specific collection of bytes existed at point X". And it's this receipt that's being traded, and which has the value.
For a given value of "value", anyhow. Your opinion may well vary... ;)
In truth, the current use of NFTs feels like a speculative bubble - and with the ecological impact it's having (aka: each transaction uses enough electricity to power the average UK house for over a week), I'll be all to happy to see it pop sooner rather than later.
But at the same time, I can see a potential use for NFTs. In that they're a perfect way to record copyright.
In fact, if/when we gt the promised drop in energy cost, I wouldn't be surprised to see companies offering this as a built-in service.
E.g. every time you save something in Adobe Photoshop, it requests an NFT, which it then embeds as metadata within the image.
Instant, automated, untamperable evidence that this particular item was created at date X on machine Y at IP address Z.
No more arguing over who first created something, who contributed which elements, or what was present on date X. It'll all be there in the NFT.
And whenever someone creates a new item based on this item, the system could automatically embed the original NFT(s) into the new file's metadata.
Want to create a meme featuring a photo of a US president, a video game character and the theme tune from a popular kid's TV show? Here's NFT-A, NFT-B, NFT-C for the source items, and NFT-D for the meme itself.
Hey presto. Instant tracability of IP usage, which in turn means you can automatically trace financial or legal obligations.
Admittedly, this sort of NFT system would need to be baked in at the point of creation, and I don't know if NFT generation can scale up to the levels which would be needed, or if it's possible to generate NFTs in realtime to embed them in this way. And there's hosts of other real-world issues - too many to list on the back of this virtual beer mat.
But still. Automatic copyright tracking is pretty much the first and only real practical use I've been able to think of for blockchain...
Re: So, it's a bubble?
You are basically talking about a fundamental change to copyright: automatic vs registered.
Right now, copyright is automatic. It belongs to the creator as soon as creation happens, period.
You want to replace that by copyright exists as soon as it s registered in a blockchain, because in your eyes, it removes the burden of proof that the current copyright incurs.
But this is *still* a solution in search of a problem. It's *already* possible to register copyright, without having to use fancy digital tools. In some countries, it even used to be mandatory to register copyright to own it.
Your solution has the exact same issues: the creation can of course be stolen or duplicated before being registered, and registered by the thief. And then, what? Even if witnesses come to attest that really, they saw the real creator at work, how do you alter the incorrect information stored in an immutable chain? Adding more blocks to it that say "oh noes, this previous block was wrong"?
How is that better?
Just in case you missed it on the BBC yesterday evenng ...
[1]Tulip Fever .
[1] https://www.bbc.co.uk/iplayer/episode/m000vstd/tulip-fever
Prior Art
At the beginning of his carrier in Paris Pablo Picasso could not pay his restaurant bill. He scribbled on a five Franc banknote and signed it. One of his friends swapped it for a fifty Franc note ....
Re: Prior Art
Always a winner, you and your art are worth nothing until you're not about anymore to make more art then if people are lucky it'll be worth a feaking mint and they cash in on your legacy.
Just like life assurance, you're worth more dead than alive!
"distributed blockchain-based programs"
" the only limit is your imagination "
What could possibly go wrong ?
Flash, say hello to blockchain NFTs, your spiritual successor.
Time to update the saying
"Fools and their non-fungible tokens...."