Crypto Valley Live (ID: cryptovalley)

Crypto Valley Live (ID: cryptovalley)

, Author: Nic Carter, translation: Jeremy, reprinted with authorization by Odaily.

I keep seeing NFT supporters complain that Bitcoin holders "don't get it". As the saying goes, Bitcoin holders are to NFTs, just like people without coins are to Bitcoin. This argument is an endless loop:

"How come you don't see the value in digital scarcity? You're a Bitcoiner!" This statement will always be countered: "NFTs are not scarce, you can copy and paste!" Endless counterarguments.

In other words - NFT is a process, not a product. For NFT, something is assigned a unique serial number, which exists on the public chain. That's it. Beyond that, the 'NFT' conveys no additional information about the purpose or nature of the content being serialized.

Grimes

The problem is when proponents try to explain NFTs by appealing to specific conclusions (“NFTs are for x” or “NFTs achieve y”). This confuses the issue because the scope of NFTs is very broad and encompasses a large number of applications. (Opensea’s NFT Bible is a good introduction.) So, when NFTs are explained as single-purpose, many people naturally don’t get it: neither do their potential mentors in the NFT world. How can you teach something that you don't really know?

• To pick out the different types of ownership that NFTs offer, let's consider three examples. They are distinct and have nothing in common except their mechanical properties. It is a taxonomic error to confuse them.

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• The first is one of 100 digitally signed works of digital art, made by artist Grimes. When I purchased this piece (I haven't bought it yet, but I admit I'd love to), I bought it for a few reasons:

• I know that I am buying a 'limited edition' of a work of art and I have a perpetual right to it.

I know that I am supporting the artist directly (if buying art in the primary market) or indirectly (some market platforms pass the income of the secondary market to the artist, if not, I am also influencing the market, encouraging artists to follow up markup on sale).

I know that if I choose to resell my artwork, I will most likely be reselling it on the secondary market.

What I bought was actually a digitized version of a signed post-show set, or a signed limited edition album cover. Like I joked, NFT should be understood as a signature, not art.

Cent

This is not difficult to reason about, since the practice is familiar to us in the analog world. Most importantly, there is an extremely close causal relationship between the generation of IP and the digital serial code. I know that Grimes has certified this particular interface as the appointed broker for her digital art sales. I know that extra copies of these autographed artworks won't be sold in other digital content because she would be violating her informal social contract with her fans.

Importantly, we have strong guarantees that Grimes will not replicate these NFTs elsewhere. What good is a limited edition NFT if the artist doesn't promise not to release it on 20 NFT platforms? This is also why the NBA/Top Shots product works: The NBA does not sell designated highlights/moments on other platforms. You have an exclusive guarantee.

The second case here is tokenized Twitter. Jack Dorsey puts the first-ever tweet up for sale and looks likely to sell to Justin Sun for $2.5 million. In this case, when you bid on someone's tweet on Cent (I actually 'own' one of Neeraj's tweets), you are announcing that you are willing to buy bragging rights for that tweet on the Cent platform. Creators have to actually accept the offer, though -- you can't buy a tweet without their permission. So you're effectively committing to buy a signature version of a tweet on a third-party platform. This is Cent NFT. A statement of economic intent as a token of appreciation (also as a bragging rights later. See - just five sentences ago I bragged about having Neeraj's twitter!)

Of course, many other NFT issuers may emerge and compete, so I can't say I have exclusive rights to the tweet, just the tokenized version on a specific platform. In fact, I don't own anything on Twitter about the tweet itself.

Here the connection between the creator and the NFT is much looser. Creators may not know their tweets are for sale. When creators accept a deal, they give buyers a little nod. But again, the buyer just has exclusive bragging rights to the tweet on the Cent platform, and nowhere else. This is as much a bet on Cent as it is on the tweet itself.

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Finally, we have a class of NFTs that you could unceremoniously describe as "art fraud on the blockchain". There have been numerous reports of individuals, maliciously or inadvertently, listing content on NFT sites that is either taken directly from another artist or is a derivative of some intellectual property-secured content. Here's a report of art fraud on Rarible; here's Giphy's complaint about the practice; and there's an allegation that the Wu Tang Clan actually NFT'd another artist's art. These cases are relatively to-the-point, and the platforms themselves try to police it.

But there are additional gray areas that call into question the IP relevance of NFTs. In these cases, creators monetize memories or other content that is effectively in the public domain. Who is the "creator" of Pepe the Frog? In theory, it's Matt Free. But what about those endless mixes and derivatives? NFTizing memories or other culturally significant content can be reduced to a discussion about who owns the culture, and the answer is of course everyone and no one. How to own the right to monetize memories? Is it the initiator, or the adaptor? Or is it a popularizer?

Another problem with buying NFTs that are not directly tied to a specific creator is that you have no guarantee of exclusivity. I recently saw an NFT image of myself put into a filter. If I bought it, I wouldn't have any exclusivity claims to the concept of "Nic's Tweets in the Universal Filter". The artist is also less important here, as the output is content combined with a simple algorithmic process. It's this class of NFTs that is confusing to people, and for good reason: they raise extremely thorny questions of ownership. The purpose of NFTs is to strongly define who owns what, but if you can't agree on ownership in the first place, it doesn't make sense to put this content in a "solid property rights" package.

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it's about intellectual property

By comparison, we can clarify the key differences between NFTs. In my opinion, the distinction between NFT subcategories depends on how tightly integrated the intellectual property is. On one end of the spectrum, I have a strong guarantee that I will receive an autographed original piece of art directly from the creator. I have an extremely strong connection between the creator, her original IP, and the digital stuff that I now meaningfully own. In the middle, we have a more diffuse connection: I have the unique bragging rights of other people's tweets, and they show recognition by earning rewards. But I don't really own their IP, and certainly not the tweet itself, all I get from the creator is a cursory nod -- "Yes, I accepted a fee for these "bragging rights" Ownership in exchange."

On the most nebulous side, my claim to a memory or cultural artifact is suspiciously scarce, it may be uniquely presented, but its creator doesn't even have a sense of ownership. The product is mostly derivative - it's still art in the sense that most art is derivative, but it's definitely not an individual's original and exclusive work. They monetized it, and they may actually be infringing copyright. I might still get some enjoyment out of owning it, but it's pretty unclear what I've got other than the entertainment value.