ELI5: What, really, is an NFT? I've read about these multiple times. I've had people explain the mechanics, but I read don't understand what an NFT is supposed to be. Or do. So please, can someone ELI5? Thanks. |
ELI5: What, really, is an NFT? I've read about these multiple times. I've had people explain the mechanics, but I read don't understand what an NFT is supposed to be. Or do. So please, can someone ELI5? Thanks. |
An NFT is a scam. Designed to extract money from gullible and uninformed people’s pockets.
It was designed to be like a digital pass that entitles you as the owner of a digital asset. It could be something as simple as “oh that’s cool let me right click and save image as” or “only someone with this NFT can access this website that leads to a discord server where all the scammers I mean cool kids hang out”
100% (yes the literal 100%) of media regarding NFTs is purely about NFT art and it annoys the shit out of me. The fact that there is free form data (with some generally accepted fields used for consistency), and that this data can be owned and provably traced back to the originator is remarkably powerful Re: the poster's above example of a wedding certificate is a great example.
The most frustrating thing about this tech was the goldrush that happened and the inevitable crash. I view myself as something of a "pragmatic visionary" (yes self-proclaimed) and to see this tech completely abused was both confusing and crushing. I'm on the verge of releasing a platform that, underneath it all, uses NFTs because they have great use-cases, but none of the marketing material mentions it due to the fact that the media have wrecked the public's opinion of NFTs.
If I had to come up with an analogy, I would say that NFT art was akin to the Model-T coming out and the only use was people driving around a track and having a picture taken of them driving around a track. Yes you can do that but you've completely missed the point.
In a digital system, there is no limit to copying data. You can copy and paste a file millions of times, share it with others, they can copy it, and so on. There is no scarcity.
An NFT is simply a way of introducing scarcity into this digital system. An NFT cannot be copied like other files, it is an entirely unique file. [1]
This has resulted in some people and artists using NFTs for digital art to add scarcity. Think about how the physical art world works: an individual art object is unique and cannot be copied. There is only one Mona Lisa. All the copies and photographs of it are not equivalent to the original. This is different than say, a manufactured object like a Coke can, an iPhone, or a Ferrari.
But digital art can be copied. By using a NFT, however, you can functionally have a scarce digital art object in the same way that a physical art object is scarce. So if you’re a digital artist, you can use a NFT to sell a piece of digital art as a scarce original.
Of course, the world of people using NFTs is full of scams and people trying to capitalize on trends. And it’s not really clear if a scarce digital object actually has value in the way a scarce physical object does. But at its core, it’s about scarcity.
1. I oversimplified this. Technically you can still copy the file, but it won’t be treated as the “original” or “valid” file by the validation network. Sort of like how you could make a copy of the Mona Lisa down to the atom, but it wouldn’t be considered the original by the art museums, experts, etc. that are the validation system in the art world.
A [fungible] token is the crypto equivalent of a share, it’s fundamentally a pointer to proportional ownership interest in some (often, but not always, also fungible) asset.
A non-fungible token is the crypto equivalent of a deed, it’s fundamentally a pointer to exclusive ownership interest in some (hopefully non-fungible) asset.
Because in both cases all you’re buying (with “real” money) is a pointer, I leave it to you to determine if either is worth investing in.
The important part is understanding the notion of fungibility: 100% ownership of a block of cheese isn’t the same as 100% ownership of a dog because it’s trivial to take a knife and make 10 smaller blocks of cheese, but just try do the same to make 10 smaller dogs.
What you’re really buying is the ability to be happy about the fact that nobody else can have it. Just like money. (For those who already have too much of it).
So in one regard it’s a cynical way to avoid taxes, on another level it’s a savagely hilarious representation of how our society basically works.
Now this is theoretically transferable, but it might not actually mean any sort of real ownership.
Basically a piece of paper telling that holder of piece of papers "owns" something. Then you can give/sell this piece of paper to someone else and it is "guaranteed" by digital signatures on blockchain...
Someone can associate some data with that unique number, if they want.
https://mirror.xyz/mattdesl.eth/eUrK8MrRfKFJYVKTwi5F4mCIBJEB...
Next-gen RFID/NFCdata tags, as far as the raw tech and generic capability is concerned.
It cannot be faked and anyone can verify that it happened.
To use a comparison: if you buy a game skin from an app, a record of ‘digital ownership’ is modified in some central database. If you imagine a technological solution to this same problem that doesn’t rely on centralized payment processors and ownership databases, you might end up with something akin to NFTs.
hash it with the blockchain, which costs you $
now it's attached to your wallet
now you can trade them by transfering to someone else's wallet for a fee of your choosing
it's a way to create artificial scarcity