NFT - Nothing For Tons (of Cash)
September 9, 2021 11:37 AM   Subscribe

If you thought the NFT mania was nutty before..... As Matthew Levine put it: "Another model is that the value in an NFT comes from a concept, and the value in a fractionalized NFT comes from, like, two concepts. “Take an object / Do something to it / Do something else to it,” Jasper Johns wrote. The essential transaction in an NFT is: Seller: I will sell you a unique pointer to an image of a dog for $4 million. Buyer: Ahahaha good one, that joke is worth $4 million to me, here you go. In a fractionalized NFT you have a slightly richer context: Owner/securitizer: I bought this unique pointer to an image of a dog for $4 million. The public: Ahahaha good one, congrats, money well spent. Owner/securitizer: Also I will sell fractional ownership interests in it for like $225 million. The public: Ahahaha another good one, that joke is worth $225 million to us, here you go. It’s two jokes so it’s worth 55 times as much. I don’t know!" The fractionalized asset would go on to double in value to about $500 million before subsiding. Note - article may be paywalled, open in incognito mode worked for me.
posted by storybored (100 comments total) 18 users marked this as a favorite
 
This is pure evil. It reminds me of the securitized mortgages that caused the 2007-08 recession.

(Also, the post could use some structure or formatting.)
posted by wenestvedt at 11:46 AM on September 9 [3 favorites]


Fresh news this morning too: Sotheby's just auctioned off $24.4m of AI generated ape NFTs.
posted by msbutah at 11:51 AM on September 9 [2 favorites]


We keep coming up with novel and more efficient ways to enact pyramid schemes.
posted by q*ben at 11:52 AM on September 9 [30 favorites]


I was just reading this! One thing I've really come to appreciate about Matt Levine's Money Stuff newsletter (which was probably recommended to me in some other MeFi thread) is how he crystallizes the absurdity of the current situation and how it actually makes less sense the more you understand about it.
posted by Not A Thing at 11:53 AM on September 9 [8 favorites]


Back in the 90's, the comic book publishers went through this thing with "variant covers": the same comic book insides with different covers outside, which they sold to collectors who were notorious completists. As a comic book buyer then, myself, I thought this was pretty silly.

But at least you got a damn comic book out of the deal! Here, you "own" a collection of "bits" that point to some other collection of "bits" that has an arbitrary price tag?! What?! Nope, that's not it! You own a share of a bunch of bits that reference a bunch of bits! WHAT?!
posted by SPrintF at 11:57 AM on September 9 [7 favorites]


I forget where but I saw someone describe NFTs as receipts, just proof that you spent money.
posted by little onion at 11:58 AM on September 9 [38 favorites]


The prices of NFT’s and crypto are daily reminders that I don’t understand the world anymore and I am increasingly of the opinion that I don’t want to.
posted by interogative mood at 11:59 AM on September 9 [39 favorites]


Take me to Bergdorf Goodman, I'm buying the most expensive receipt in the store
posted by little onion at 11:59 AM on September 9 [29 favorites]


Has anyone made an NFT of a tulip yet?
posted by briank at 12:03 PM on September 9 [23 favorites]


Nevere mind, of course they have.
posted by briank at 12:04 PM on September 9 [22 favorites]


It reminds me of the securitized mortgages that caused the 2007-08 recession.

Well, you just need to make safe, sound investments and your money will be secure. For instance, I only purchase fractionalized NFTs from Moody's AAA tranche and so far I've ahisdhfiausdhfadslakgdurrdrgdurgdrgfvfjknv
posted by gwint at 12:08 PM on September 9 [19 favorites]


I am begging people to remember that so much of the money in NFTs and crypto is entirely theoretical, just imagined into existence by the rise in value of Bitcoin and Etherium and the rest over the last few years. $24m in digital apes is probably more like a few thousand dollars invested five or six years ago that has ballooned into a ludicrous sum thanks to nothing more than psychological pressure, and it's far, far easier to spend millions of dollars worth of crypto on overpriced NFTs than to convert it into real money that can buy actual things.
posted by Mr.Encyclopedia at 12:11 PM on September 9 [24 favorites]


I hope these buyers are paying in Crypto. Then it is just musical chairs to see who is left without a seat.
posted by AugustWest at 12:40 PM on September 9 [11 favorites]


it's far, far easier to spend millions of dollars worth of crypto on overpriced NFTs than to convert it into real money

I know next to nothing about crypto: Why is it hard? Do you mean technically? If you have millions, transaction costs shouldn't be a problem. Or would trying to exchange a large amount for traditional money drive down the price? It looks like Bitcoin's market cap is close to a trillion USD, so that seems unlikely, unless you're thinking of other, more thinly traded cryptocurrencies.
posted by Mr.Know-it-some at 12:48 PM on September 9


far, far easier to spend millions of dollars worth of crypto on overpriced NFTs than to convert it into real money that can buy actual things.

BTC is large enough that you can totally liquidate a few million dollars worth of bitcoin if you want to, but of course a lot of the people who are newly-minted Bitcoin millionaires don't particularly want to, because they're the sort of person who becomes a bitcoin millionaire to begin with.
posted by BungaDunga at 12:49 PM on September 9 [4 favorites]


(imho NFTs are a bitcoin millionaires' preferred choice of conspicuous consumption less because it's hard to cash out- it's not that hard- and more because they're deep into a community of like-minded people who enjoy creating and trading these things with each other- and sometimes themselves, you can pump a token up to arbitrary market caps by trading with yourself)
posted by BungaDunga at 12:52 PM on September 9 [3 favorites]


You can still pick up a bin of Beanie Babies at some thrift shops for cheap. You never know...
posted by RobotVoodooPower at 12:54 PM on September 9 [4 favorites]


Fresh news this morning too: Sotheby's just auctioned off $24.4m of AI generated ape NFTs.

And like high art it's the perfect vehicle for money laundering.

(imho NFTs are a bitcoin millionaires' preferred choice of conspicuous consumption less because it's hard to cash out

Nah, it's just a form of commerce that doesn't require cashing out, which is the bane of cryptocurrency.

NFTs are, in the end, a text file with a URL in it. A URL that is not guaranteed to point to any data at all.
posted by rhizome at 12:57 PM on September 9 [6 favorites]


SPrintF: "You own a share of a bunch of bits that reference a bunch of bits!"

So is this like a timeshare, where you get to look at your digital art one week a year, or do you get to look at the stochastic scatter of "your" pixels, or what?
posted by adamrice at 1:05 PM on September 9 [1 favorite]


An nft is basically a certificate of authenticity
posted by rebent at 1:17 PM on September 9 [6 favorites]


If you make a NFT of a real diamond, and the diamond itself gets destroyed in a fire tomorrow, you still have the same asset.

Because the token still exists and is in limited supply just as before. Nothing has changed.

What NFT is doing to the concept of asset, few understand.
-@RealNatashaChe Aug 22, 2021
Ok, you've all convinced me this is an experiment that needs to be done. So here's the deal.

I'm going to buy a real diamond--> create a NFT for it--> list it on @opensea
--> destroy the original diamond. I'll ping this tweet on my profile so you can track progress.

Stay tuned.
-@RealNatashaChe Aug 24, 2021

Twitter thread has video, pictures, and even more questions.
posted by Nonsteroidal Anti-Inflammatory Drug at 1:22 PM on September 9 [5 favorites]


I mean my first question is wouldn't a fire not actually destroy a diamond?
posted by an octopus IRL at 1:24 PM on September 9 [5 favorites]


Can you light diamond on fire? (Yes, they're carbon, it just requires high temperatures.)
posted by snuffleupagus at 1:33 PM on September 9 [6 favorites]


Back in the 90's, the comic book publishers went through this thing with "variant covers": the same comic book insides with different covers outside, which they sold to collectors who were notorious completists. As a comic book buyer then, myself, I thought this was pretty silly.

That's not gone, it's just changed. Any comic creator's Kickstarter these days is going to offer a higher tier where you can get all of the variant covers with a larger donation. They still tug at the completionist's heartstrings.
posted by Quonab at 1:35 PM on September 9 [1 favorite]




NFTs make Thomas Kincade look like a rookie.
posted by BrotherCaine at 1:39 PM on September 9 [11 favorites]


1. Buy a $5,000 diamond and a hammer to smash it with
2. Dent the hammer
3. Go to three auto-shops to ask someone with power tools to destroy the diamond as a favor
4. Twitter crypto enthusiasts say your video cut out the diamond getting destroyed and ask you to document where you were and who was present to prove you're not just showing them a bag of broken glass
5. Spend $3,219.97 deploying a gif of the diamond to the blockchain
6. ???
7. Prove that NFTs are more enduring assets than diamonds
posted by little onion at 1:41 PM on September 9 [1 favorite]


And the $5000 destroyed diamond NFT is going for 3 WETH, or USD$10,553. (See tweet for how she destroyed the diamond; I didn't bother to watch the video but it seemed to take some special machinery.)

But I think diamonds are as pointless as an NFT, since I can't tell the difference between them and cubic zirconium anyway.
posted by Mr.Know-it-some at 1:41 PM on September 9 [3 favorites]


it's far, far easier to spend millions of dollars worth of crypto on overpriced NFTs than to convert it into real money
I know next to nothing about crypto: Why is it hard? Do you mean technically? If you have millions, transaction costs shouldn't be a problem.
Cryptocurrency is the purest form of fiat currency: it has no value other than what your buyer thinks it’s worth. If I want to sell you $1 worth of Bitcoin I have to convince you that you’ll be able to sell it for at least that much since there’s no other benefit to controlling it. That’s why cryptocurrency users always sound like MLM salespeople: they have to talk it up to maintain the ability to sell their otherwise useless random numbers for the kind of money people actually use. This is also why there’s so much volatility: almost nobody needs to use it so any time the exchange rate dips the easiest response is to use something else.

Now, NFTs are a great way to generate news to hype up cryptocurrency: the people involved can send random numbers back and forth without actually having to spend real currency, and the transaction values can be reported at the current exchange rate to say that the entire network has a huge value even if there’s nowhere near that much money available to cash out more than a small percentage of the total number of coins.
posted by adamsc at 1:50 PM on September 9 [16 favorites]


What NFT is doing to the concept of asset, few understand

Quiztime!

a) making it stupid.
b) making it pointless.
c) making it so Big Stupid that it becomes hard for people to grasp its stupidity.
d) all of the above.
posted by away for regrooving at 1:53 PM on September 9 [3 favorites]


All this talk about paying for the joke is twinging buried memories of r/memeeconomy
posted by subdee at 1:54 PM on September 9 [1 favorite]


Obligatory:

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3
posted by subdee at 1:56 PM on September 9 [4 favorites]


Another way to look at this is, shares of a pointer to a picture of a dog have 10% the value of the whole dogecoin currency, whose value is also based on the picture of the dog. Seems about right, this new joke is about 1/10th as good as the original dogecoin joke.
posted by joeyh at 2:03 PM on September 9


It reminds me of the securitized mortgages that caused the 2007-08 recession.

Except for the fact that it's currently marginal, and the whole financial system doesn't rest on bitcoin.... right? Right? RIGHT?

It's totally crazy, and crypto currencies are a crime against the planet with their huge waste of energy, but so far I don't think it undermines the financial stability of "the system". But then again, there were people warning about a housing bubble and looming crisis before 2007, but most people didn't make the link with the CDOs and how it would brink banks down, so.....
posted by WaterAndPixels at 2:03 PM on September 9 [2 favorites]


I hate everything about NFTs but I have to say, some of my artist friends are effectively using them and getting paid. I know a fair number of computer generative artists, their work is perfectly suited for NFT marketing. And some of them are doing it. I think they have mixed emotions but did I mention they are getting paid? That's a difficult thing for an artist, even a lifelong professional one. IMHO there's nothing at all about the blockchain/scam aspects of NFTs that matter here, it's just a new digital marketplace.

Speaking of scam there was a big kerfuffle two days ago when someone took open source code from Lingdong Huang (previously) and started trying to market its output as a new NFT. Without the artist's permission. They may have been legally correct but everyone in the community quickly agreed the NFT minter was an asshole. To their credit they cancelled the project after the criticism and wrote a heartfelt explanation and apology.
posted by Nelson at 2:06 PM on September 9 [7 favorites]


And this is very anecdotal, but I had a friend who was paid in BTC (or ETH) for some work related to ETH contracts, told me it was a total pain in the ass to transform that in real money (that was a few years ago, things are probably different now).
posted by WaterAndPixels at 2:06 PM on September 9


little onion: I forget where but I saw someone describe NFTs as receipts, just proof that you spent money.

More like, "A receipt for the sound your money made when you threw it down a well."

NFTs are purely for suckers. It's worse than the fine art market.
posted by wenestvedt at 2:09 PM on September 9 [6 favorites]


Here's something recent about Tether:

"Tether has faced many accusations over the last few years that it is a form of privately issued fiat currency backed not by real dollars in any meaningful way. But minted in ever-increasing quantities to buy and inflate the price of assets like primarily BTC through exchanges like primarily Bitfinex. And the company minted two billion dollars. This is the irony of the whole situation. Bitcoin’s 2021 narrative is the hedge against inflation as the fed continues to magic trillions of dollars out of thin air. But the Tether printer is going every bit is fast."

https://medium.com/coinmonks/we-need-to-talk-about-tether-b782eb82f78d

Tracks the status of the SEC lawsuit against tether. If thether goes down, the entire crypto ecosystem goes down with it so yes, this is the subprime lending crisis all over again.... Except no one's gonna bail out the crypto exchanges.

If you are holding crypto currency, you should get out. The only question is how long you stay in before you get out.

And meanwhile, the electricity being wasted on generating NFTs and the negative impact all these games are having on the environment is real.
posted by subdee at 2:09 PM on September 9 [9 favorites]


Back in the 90's, the comic book publishers went through this thing with "variant covers": the same comic book insides with different covers outside, which they sold to collectors who were notorious completists. As a comic book buyer then, myself, I thought this was pretty silly.


It was also silly because they flooded the market with them and since the collectors all snapped them up they're basically worthless since they're not rare at all.
posted by jmauro at 2:10 PM on September 9 [3 favorites]


If you tell the average person something is a scam... Some people will be like "oh how horrible" and others will be like "where do I sign up" because they always imagine themselves as the scammers, not the rubes.
posted by subdee at 2:12 PM on September 9 [10 favorites]


I know a fair number of computer generative artists
This's been rough to see, I've followed a fair number of computer generative artists, but as they've been getting sucked into NFTs my general policy around all things NFT & blockchain kicks in.
0. Silently lament their course if they've done stuff I've liked (silently since I know they don't want to hear me, and fair enough)
1. Check the NFT accounts they link & any crypto-boosters in the comments, chain-block them ('chain-block the block-chain', if you will).
2. Unfollow & block personally
3. Propagate block to blocklist, so people who follow my blocklist don't have to repeat the process themselves.
They're getting paid (I hear), so they don't need my attention anymore.
posted by CrystalDave at 2:14 PM on September 9 [8 favorites]


Yeah.. people aren't spending this kind of actual money on an NFT. Crypto money is like digital "points". It's true the points are worth real money but it''s not like anyone decides they want a nonsense NFT and goes and buys $5000 worth of Ethereum to purchase it. People wrack up crypto currency by trading and selling NFTs. There isn't real money changing hands.
posted by Liquidwolf at 2:15 PM on September 9 [2 favorites]


To the contrary, here's an example of someone making £50,450 in a month with NFTs. He doesn't talk in that post about converting the crypto magic beans to real money but I believe he is doing that. (And no, it's not particularly easy but at that small scale it's doable.)

It's true some of the NFTs are more just folks trading things for fun and largely virtual currency. Like trading marbles for adults. But some folks are making real pounds.

Catt's written a lot more about NFTs from the artist's perspective, see here for instance.
posted by Nelson at 2:19 PM on September 9


where can i buy bundled nft derivatives? asking for a friend vampire squid.
posted by j_curiouser at 2:22 PM on September 9 [4 favorites]


Well there are NFT index funds. They are presumably each their own unique scam..
posted by joeyh at 2:24 PM on September 9 [3 favorites]


I hate everything about NFTs but I have to say, some of my artist friends are effectively using them and getting paid. I know a fair number of computer generative artists, their work is perfectly suited for NFT marketing. And some of them are doing it. I think they have mixed emotions but did I mention they are getting paid? That's a difficult thing for an artist, even a lifelong professional one. IMHO there's nothing at all about the blockchain/scam aspects of NFTs that matter here, it's just a new digital marketplace.

From the artist's perspective NFTs are great (except the part about f***ng burning the planet, that's bad for everybody), and you really can't blame them for wanting to cash out, I love that they're getting paid!

I always circle back to "why isn't this just another marketplace?", it's not like you couldn't easily whip out a marketplace website where artists place links to their art and you sell the links and provide a resale/authentication platform. And I really have no answer apart from the fact that it's so dumb nobody would try that, and there's no point in owning an URL to a jpg.

But NFTs are a thing, my only guess is that most NFTs are bought by people who already have ETH/BTC, and are in full cool-aid mode and then more people got in trying to make money speculating on them.
posted by WaterAndPixels at 2:35 PM on September 9 [2 favorites]


The NFT story is a little more compelling than just a website though. There is some claim to guaranteed uniqueness and ownership thanks to the blockchain accounting. Also some of the NFT smart contracts include paying the artist any time their work is traded or resold, that's a neat feature.

OTOH there's nothing stopping an artist or a trusted third party from doing this without all the planet-destroying cryptocurrency nonsense. Just have a centralized ledger tracking who owns what.

Back to the original article, turning Dogecoin into NFTs is just.. absurd on the face of it. The NFT market itself is the art piece.

I can't wait for Tether to finally blow up and all this cryptoshit to come tumbling down. Fortunately it's still small enough to probably not hurt any real economies when it collapses.
posted by Nelson at 2:51 PM on September 9 [6 favorites]


Holding cryptocurrency to sell it for a higher price later is like betting you'll be able to cash out of a MLM scheme before everyone else. Maybe you can, maybe you know someone who did, but mathematically, the longer it goes on the less chance there is of that being true. Ponzi schemes are doomed to be undone by math. Now, if say an artist is managing to get paid for NFTs and cash it out today, that may be great for them, but it also encourages them to perpetuate this practice, which only adds fuel to the fire. Cryptocurrency is just speedrunning Black Friday.
posted by axiom at 3:09 PM on September 9 [3 favorites]


I'm going to buy a real diamond--> create a NFT for it--> list it on @opensea
--> destroy the original diamond. I'll ping this tweet on my profile so you can track progress.


I suppose this person is clever enough to recognize that this novel publicity stunt is what's driving the value of the NFT, not the equivalence between the physical diamond and the proof of its former existence. If every diamond owner did this the NFTs would be worthless.

But as with most of these kinds of things, the real goal is for a few moderately smart people to make money off large numbers of stupid people.
posted by klanawa at 3:11 PM on September 9 [4 favorites]


Not to get all in favor of NFTs or the blockchain or 'fiat currency' anything, heaven forbid, but ALL money is conceptual and based on a shared assumption of its worth, and all art's monetary value is based on the perception of said value.
posted by signal at 3:39 PM on September 9 [4 favorites]


turning Dogecoin into NFTs is just.. absurd on the face of it.

I think this is the other way around. They took a shiba inu NFT and started minting ERC-20 tokens as "shares" of the NFT, thereby creating a new shitcoin named "DOG" whose initial supply is owned entirely by whoever owns the shiba inu NFT, and can then be auctioned off and traded like any other shitcoin. The DOG owner can also set a "fee" that mints new DOG tokens from scratch that they can sell at intervals.

This is all as ridiculous as it sounds.
posted by BungaDunga at 3:53 PM on September 9 [4 favorites]


I hate everything about NFTs but I have to say, some of my artist friends are effectively using them and getting paid.

As it turns out, there's a lot of scams that still make people money. Early adopters to a ponzi scheme also get paid.

Why is it hard [to cash out]?

Maybe it's not so much "hard" to cash out, as
A) you're supposed to pay taxes on your crypto gains already but cashing out makes it much harder to get away with not paying them and generally speaking if you're way into crypto there's a good chance you already don't like the idea of taxes to begin with.
B) Crypto culture actively discourages folks from cashing out, "hodl" etc.
C) No matter how simple cashing out might be today I guarantee it will always be easier to buy an NFT instead.

In any case, if you spend the $100 you invested years ago to buy a $1,000,000 NFT you're an idiot, but if you spend $1,000,000 from your bank account to buy an NFT you're a complete buffoon.
posted by Mr.Encyclopedia at 4:03 PM on September 9 [2 favorites]


Now, NFTs are a great way to generate news to hype up cryptocurrency: the people involved can send random numbers back and forth without actually having to spend real currency, and the transaction values can be reported at the current exchange rate to say that the entire network has a huge value even if there’s nowhere near that much money available to cash out more than a small percentage of the total number of coins.

Bingo. That is the real purpose of NFTs: to suck more people into the pyramid scheme that is cryptocurrency.
posted by Artifice_Eternity at 4:09 PM on September 9 [10 favorites]


I always circle back to "why isn't this just another marketplace?", it's not like you couldn't easily whip out a marketplace website where artists place links to their art and you sell the links and provide a resale/authentication platform. And I really have no answer apart from the fact that it's so dumb nobody would try that, and there's no point in owning an URL to a jpg.

Also this is literally what Steam, Amazon, Itch.io, Gumroad, or any other digital marketplace already does. There's also Patreon and Ko-Fi, there's no shortage of places for artists to get paid for purely digital art right now. These platforms lack the ability to resell the art (though Steam does, in a limited fashion), but there's not really any reason why they couldn't allow that and even kick back a portion of that sale to the original artist just like some NFTs do. There's already so many better options than NFTs for artists, and none of them involve the incredible energy waste of the current NFT offerings.
posted by Mr.Encyclopedia at 4:12 PM on September 9 [2 favorites]


If you think NFTs and crypto are weird wait until you hear about the Metaverse.
posted by ryoshu at 4:24 PM on September 9


Artists getting paid is good and all, but nobody should be paid for the horrific waste of resources that an NFT is. It's selfish and immoral.
posted by Dysk at 4:58 PM on September 9 [8 favorites]


CleanNFTs are a thing too https://medium.com/tqtezos/proof-of-work-vs-proof-of-stake-the-ecological-footprint-c58029faee44
posted by ryoshu at 5:07 PM on September 9 [1 favorite]


Yeah but nobody cares or likely ever will care about non-proof-of-work systems, because the conspicuous waste required in proof-of-work is the very thing that allows people to believe that these things have some kind of value. Like the tweet about destroying diamonds, people believe that wasting physical resources somehow transmutes their value into bits.
posted by Pyry at 5:15 PM on September 9 [5 favorites]


I don’t want to keep an ear to the ground for these sorts of shenanigans but I’m actually quite afraid that someone in the same set as whoever started pushing NFTs and credit default swaps will “inventively” (illegally but no one stops them) loot everyone’s 401k accounts somehow.

It’s one of the greatest accumulations of wealth in history, more or less trapped until retirement and disbursement.

There’s probably more than one group of utter sociopaths working on worming in as we read this thread.
posted by Slackermagee at 5:15 PM on September 9 [3 favorites]


Feels like there's too much money in the wrong places
posted by DeepSeaHaggis at 6:09 PM on September 9 [2 favorites]


Feels like there's too much money in the wrong places

Capitalism!
posted by Dysk at 6:10 PM on September 9 [3 favorites]


The NFT story is a little more compelling than just a website though. There is some claim to guaranteed uniqueness and ownership thanks to the blockchain accounting. Also some of the NFT smart contracts include paying the artist any time their work is traded or resold, that's a neat feature.

None of this is impossible in a standard e-commerce website(s) , it just requires trust, which is the whole point of crypto I guess but crypto is just moving the trust goal post to the exchange, and we all know how well this has gone.
posted by WaterAndPixels at 6:11 PM on September 9 [4 favorites]



Feels like there's too much money in the wrong places

Capitalism!

Isn't that the case with all these money dumps from property to art and wine and whatever? Just a bunch of people with a ton of "wealth" and no reasonable way to use it. Is this an artifact of QE or just a normal feature of insane wealth acquisition resulting from our transnational economic system with tremendous consumer numbers for everything but insufficient economic friction to induce it to be distributed equally.
posted by DeepSeaHaggis at 6:16 PM on September 9 [1 favorite]


Like, I'm not sure tulips is an appropriate analogy unless the Dutch were investing in tulips because they had unusable amounts of money and/or needed to launder said money
posted by DeepSeaHaggis at 6:20 PM on September 9 [1 favorite]


NFT smart contracts include paying the artist any time their work is traded or resold, that's a neat feature.

It also has implications for the first sale doctrine that I really don’t like.
posted by schoolgirl report at 6:35 PM on September 9 [7 favorites]


That is the real purpose of NFTs: to suck more people into the pyramid scheme that is cryptocurrency.

That is the real purpose of marketing: to suck more people into the pyramid scheme that is economic growth.
posted by flabdablet at 6:49 PM on September 9


People wrack up crypto currency by trading and selling NFTs. There isn't real money changing hands.

If they're selling NFTs via Sotheby's there is, because buyers will be charged a premium. Unless Sotheby's is in it for the long game, that premium will be cash or something readily convertible to cash. That is, Sotheby's will charge say 10% even if the transaction itself is secretly from and to the same person.

What this means is that even if the buyer and seller are secretly the same person, Sotheby's receipt demonstrates that the owner values it at no less than the buyer's premium. I suppose Sotheby's certification of a sale is an NFT in itself, though, one which demonstrabably has real value. So in a sense, Sotheby's has now become one of the world's foremost creators of NFTs.
posted by Joe in Australia at 8:06 PM on September 9


Does Sotheby's permit self-dealing like that? Seems fraudulent like money-laundering but, then, not quite. "I declare this to have value based on what I paid me for it" is, man, I dunno, but at least super weird.
posted by DeepSeaHaggis at 8:13 PM on September 9 [1 favorite]


It also has implications for the first sale doctrine that I really don’t like.

This already happens in France, the UK and one other countries as well.
posted by any portmanteau in a storm at 8:29 PM on September 9


Some other countries as well.
posted by any portmanteau in a storm at 8:29 PM on September 9


Does Sotheby's permit self-dealing like that?

I don't know; but my point is that the value of NFTs traded via Sotheby's can't be wholly fictitious. Trading via Sotheby's has a cost, even self-dealing, and that cost demonstrates that the owner of an NFT believes it has some value.
posted by Joe in Australia at 8:55 PM on September 9


OTOH there's nothing stopping an artist or a trusted third party from doing this without all the planet-destroying cryptocurrency nonsense. Just have a centralized ledger tracking who owns what.

How Banksy Authenticates His Work - "That torn-in-half banknote though? Never mind signatures, embossing or wax seals. The Di Faced Tenner is doing all the authentication heavy lifting here. The tear is what uniquely separates the private key, the half of the note kept secret under lock and key at Pest Control, with the public key. The public key is the half of the note attached to the authentication certificate which gets passed on with the print, and allows its authenticity to be easily verified."[*]

Collector buys fake Banksy NFT for £244,000 - "The incident undermines one of the things that make NFTs so attractive: the fact that they offer cryptographically secure authenticity. But the problem is that authenticity is dependent on the seller being who they say they are."

although maybe in a meta kind of way, the fake guerilla-stunt artist banksy NFT might be collectible? a representation of a representation, which itself is of a digital piece -- a meme to stick in the mind -- and not, as it were, a pipe? eye of the beholder and all that! :P

also btw...
Banksy's half-shredded artwork is on sale again — and it may fetch millions more this time - "Auctioneer Sotheby's said Friday that 'Love is in the Bin' will be offered at a sale in London on Oct. 14. The piece has a pre-sale estimate of 4 million to 6 million pounds ($5.5 million to $8.3 million). It consists of a half-shredded canvas bearing a spray-painted image of a girl reaching for a heart-shaped red balloon. Then known as 'Girl With Balloon', the work was sold at Sotheby's in October 2018. Just as an anonymous European buyer made the winning bid, a hidden shredder embedded in the frame by Banksy whirred to life, leaving half the canvas hanging from the frame in strips... Earlier this year, a blockchain company bought a $95,000 Banksy artwork, burned it and broadcast it live on Twitter — all part of a process of turning the work into a virtual asset called a non-fungible token, or NFT."
posted by kliuless at 10:26 PM on September 9 [1 favorite]


Feels like there's too much money in the wrong places

Capitalism!


The Aristocrats!
posted by loquacious at 1:52 AM on September 10 [2 favorites]


I like how the diamond destroying person also shows in their own threads that they can get an identical diamond for significantly less (because it is lab grown) and no one seems to have thought that she could just destroy that one.
Or have I been watching too much leverage recently?

Or destroy the "Real" one and keep the identical on an atomic level "fake" one.

Basically Diamonds are as much a scam as NFTs.
posted by Just this guy, y'know at 2:06 AM on September 10 [6 favorites]


Looking a bit at the economics of the destroyed diamond NFT:

- The artist paid $4,999 in USD for the diamond.
- She also paid some ETH to mint the NFT, which cost $3,219.97 in USD.
- The top bid for the NFT is currently $10,217.49.

If she bought the ETH with USD to pay for the minting, the NFT sells for the current bid, and she cashes out back to USD afterwards, then she makes a profit of $1998.52, minus whatever it costs to convert back to USD.

The prospective buyer, metaversehodl, is holding $316,058.92 in ETH. They're heavily invested in the currency, and holding enough that they don't need to spend USD to get ETH to pay for the NFT.

The net effect is that the artist has been paid $1998.52 to shift $3,219.97 from USD to ETH.

If you think of all ETH holders as a co-operating cartel who ultimately want to cash out to USD, this is collectively profitable for them. Some ETH holder got paid $3,219.97 in USD to sell ETH to the artist, and the cartel only had to pay out $1998.52 back to the artist to make it happen.

If the artist chooses to keep her gains in ETH, it's even more of a win for ETH overall.
posted by automatronic at 3:38 AM on September 10 [3 favorites]


As a digital artist who knows many others — a bunch of also don't think getting paid is worth burning down the world, so we don't. And frankly I resent people using "at least artists are finally getting paid" as an excuse for doing immoral things, like trading the destruction of the planet for some small beans to yourself.
posted by dame at 4:17 AM on September 10 [5 favorites]


This is your regular PSA about the existence of blockchains that don't rely on proof-of-work or any other kind of proof-of-waste and therefore work just fine without burning down the world and without depriving us of gaming GPUs or hard disks and settle transactions in seconds and cost only enough per transaction (fractions of fractions of a cent) to discourage spam.

Thank you.
posted by flabdablet at 4:27 AM on September 10 [1 favorite]


“Artists actually getting paid” almost feels like EXTRA evidence of scamminess. The scam is SO lucrative that the scammers can toss the artist some token (see what I did there) crumbs, out of largesse.
posted by notoriety public at 4:34 AM on September 10 [4 favorites]


I think it's completely hilarious that the problem that securitized NFTs are supposed to solve is NFTs not being fungible enough.
posted by flabdablet at 4:46 AM on September 10 [5 favorites]


StellarNFT.com appears to be a functioning NFT marketplace operating on the Stellar blockchain, which would make it a suitable playground for digital artists with principled objections to ecocide.

There is another site - nftstellar.net - that was registered in May this year, has nothing whatsoever to do with the Stellar blockchain, makes all kinds of promises about NFTs and artists and even has a whitepaper! with pie charts! but doesn't actually do anything. It's like a crypto-addled version of zombo.com except that zombo.com is better executed and more amusing.

Probably best not to get those confused despite the latter's disturbingly high search engine ranking.
posted by flabdablet at 5:49 AM on September 10


Yeah, a bunch of digital artists I follow got into Stellar-based NFTs, which (while much better for the planet) are still fricking annoying, with talk of "drops" and "collections" and it makes art feel more like a big trading card game, which I find pretty unpleasant.
posted by BungaDunga at 7:00 AM on September 10 [1 favorite]


That is the real purpose of NFTs: to suck more people into the pyramid scheme that is cryptocurrency.

That is the real purpose of marketing: to suck more people into the pyramid scheme that is economic growth.


You'll get no argument from me. Capitalism is ALSO a scam, just one that exists on a much, much larger scale than NFTs and cryptocurrency.

Also, I can't help but wonder about how Cryptocurrency has had a massive upswing in value and the recent massive upswing in collectibles prices, especially retro video games and trading cards. Directly related? Parts of the same larger money laundering scheme? Indirect symptoms of a larger bubble? I don't know but I think we're going to find out soon.
posted by Mr.Encyclopedia at 11:38 AM on September 10 [1 favorite]


I wrote up more details on the NFT appropriation that I mentioned earlier.
Drama in #PlotterTwitter this week: someone cloned Lingdong Huang’s generative art project to sell as an NFT, without permission. (Website screenshot here). The code had an MIT license so this was technically allowed but there’s something obviously wrong in selling an artist’s work without their agreement. The artist denounced the NFT as a sham. The community also condemned the appropriation. Fortunately the NFT creator cancelled the project with a thoughtful explanation. So the crisis is over but it’s left behind some complex questions about open source licenses, commercialization, and computer generated art.
posted by Nelson at 12:17 PM on September 10 [3 favorites]


it makes art feel more like a big trading card game, which I find pretty unpleasant

Not my thing either, but if the only thing wrong with it is that I'm not into it, I'm quite happy to put it in the same bucket with all the other harmless ways that other people choose to fill their days and let it be what it is. If a tech-related pursuit burns less electricity worldwide than online multiplayer 3D gaming, as trading on the Stellar blockchain undoubtedly does, I don't object.

I have very strong objections to proof-of-work and other proof-of-consumption consensus protocols. They're horribly wasteful. Nobody should be using them. And yet El Salvador has picked fucking Bitcoin, the most wasteful and slowest settling of any of the extant cryptocurrencies, to experiment with as legal tender - apparently because cryptocurrency means Bitcoin to people who haven't been paying attention. Really grinds my gears.
posted by flabdablet at 5:39 PM on September 10 [1 favorite]


Capitalism is ALSO a scam, just one that exists on a much, much larger scale than NFTs and cryptocurrency.

I would argue that it's exactly the same scam, in that the way money moves around cryptocurrency speculation is indistinguishable from the way it moves around the economy generally. As in capitalism generally, return on investment - i.e., the rate at which a particular entity's stake in the system grows - is proportional to the size of that stake. This is exponential growth, and it gives the system an inbuilt positive feedback that must inevitably generate extreme concentrations of wealth unless countervailing mechanisms are put in place to spread it around again.

I would also argue that "scam" is perhaps too feeble a word to label a global ideology that the grifters have at least as much passionate faith in as the rubes.
posted by flabdablet at 5:53 PM on September 10


I'm not *surprised* that Stewart Brand & the Long Now Foundation are going in on NFTs for the documentary about Stewart Brand, but it's still disappointing. I still had a bit of hope that maybe they'd avoid Silicon Valley boosterism/snake-oil.
posted by CrystalDave at 6:11 PM on September 10 [1 favorite]


There's at least one interesting Russian artist on StellarNFT, but I don't know how artists are verified, or whether they can list the same item on multiple exchanges or even the same exchange. But i mean you can sell this stuff on itch.io or Gumroad too.

It also seems less interesting than snorting coke with Lou Reed in a giant foil-lined room, which is how I understand the traditional art world works.
posted by RobotVoodooPower at 6:21 PM on September 10 [4 favorites]


I'm not *surprised* that Stewart Brand & the Long Now Foundation are going in on NFTs for the documentary about Stewart Brand, but it's still disappointing.

The disappointing part, for me, is that they picked the Ethereum blockchain - yet another proof-of-work waste vortex - to do this on.

Ethereum is due to switch from a consensus protocol based on proof-of-work to one based on proof-of-stake, a far less wasteful option - but it's been Gonna Do That for a hell of a long time now; something always seems to get in the way. And since the amount of energy a proof-of-work system wastes is directly proportional to its token price, and since ETH's price is growing faster than BTC and already has a far higher transaction rate, it will soon overtake BTC as the world's leading cryptocurrency radiant heater.

Meanwhile, the Stellar Consensus Protocol is already in use on the Stellar blockchain, where it works fast and cheap and good with a very low energy cost that doesn't scale with its token price. If the Long Now Foundation had anything resembling a clue, that's the horse they would have backed.

Full disclosure: I hold a substantial (to me) parcel of Stellar Lumens (XLM) and therefore have a direct financial interest in seeing Stellar do well.
posted by flabdablet at 6:53 PM on September 10 [1 favorite]


As I tend to state in these conversations: I have done cryptography work professionally. I have also done currency trading work professionally. So it is my professional opinion that absolutely all cryptocurrencies need to die in a fucking fire. I apologize, flabdablet, you may have a stake, but there are NO "good" cryptocurrencies. The entire endeavor needs to be burned to the ground, the ashes salted, and then re-burn the salted ashes.
posted by notoriety public at 8:02 PM on September 10 [10 favorites]


I confess to having been a total Stewart Brand stan since I was a kid. Bought every issue of the WEC, charter subscriber to his Coevolution Quarterly, bought all his books. Now I spend my own dotage meditating upon the sublimity of the phrase "Never trust a Prankster", I should generate an NFT of my own callowness.
posted by Chitownfats at 8:46 PM on September 10


Yeah, I bought a few bitcoin at $4, sold a few years later for the down payment on a new car. No regrets. I have felt and still feel that bitcoin could collapse to nothing on no notice. Hmm, I wonder what I have around that would make a good NFT, might see if I can get lucky twice.
posted by Blackanvil at 9:43 PM on September 10 [1 favorite]


I apologize, flabdablet, you may have a stake, but there are NO "good" cryptocurrencies.

No offence taken, and given that you have relevant professional experience and I don't, I'd be very interested in your take on what's wrong with Stellar and why I ought to switch from thinking of it as a tidily engineered design with interesting possibilities to something I'm as passionately opposed to as you. Links to relevant material would be fine if you aren't motivated to reiterate the gist of them here.
posted by flabdablet at 11:14 PM on September 10


I'd be very interested in your take on what's wrong with Stellar

Can a mistaken or fraudulent transaction be revoked without the permission of the one benefitting from the mistake or fraud? If not, the system is absolutely horrible and cannot be remedied. Seriously, this isn't something you can argue away. Society depends on trust, and if you can't forcibly revoke a transaction when the counterparty violates trust (because either in the case of fraud or mistake, it's a violation of trust to not make good on it), that's an unforgiveable failure of something that is claiming to be a medium of exchange.

Can it be taxed, without requiring willing cooperation from either party? Because like it or not, taxes are a thing. I make a pretty damn good living, and I pay a fuckton of taxes, and I don't complain because that's how a society gets run. What I DO complain about, is the fuckers who dodge their taxes even when they're rich enough that they wouldn't even feel it, apart from the moral injury they perceive because they believe taxes are for those lesser beings, not the mighty titans who deserve to rule. Cryptocurrencies are a tax dodge, and that's part of the point. That point is an unforgiveable abomination.

Basically, it all boils down to every transaction is not strictly between two parties. It is two parties PLUS the entire rest of society, and society should be seeing what's happening and be able to intervene if what's happening is detrimental to society. It sucks that in practice, there's plenty of governments who abuse that kind of power in the name of the society they are meant to be serving. But you don't fix that by going anarchist (libertarianism is a form of anarchy as far as I'm concerned). Anarchy is never the answer. Ever.

If you want public ledgers for all ownership and transactions, make all the fucking ledgers public without hiding behind either secretive property/banking laws OR cryptographic keys. Eliminate the ambiguity between "private property" and "secret property". Private property is fine, secret property is not. You don't fix that by upping the secrecy, you fix it by eliminating the secrecy.

Anyway, I acknowledge that my politics are a little radical here. Okay, a lot radical. It requires a staggering amount of cognitive dissonance on my part to be a capitalist professionally (I mean, seriously, I've worked in electronic trading for like 20 years), when I'm a raging pinko socialist personally.

Honestly, I'm really more of a "burn it all down, absolutely all of it everywhere forever, there's no fixing this world" kind of person at heart, but in the very center of that shriveled, dark, twisted blood-pumping engine in my chest, there is a special hell for cryptocurrency in particular.
posted by notoriety public at 8:09 AM on September 11 [6 favorites]


A simpler critique of Stellar and other proof-of-stake systems is they remain largely theoretical. It's not an accident most of the NFTs are choosing Ethereum as a basis. It's also not an accident that Ethereum is not actually moving to proof-of-stake, at least not on any timely schedule. It's like when folks said "sure Bitcoin can only do 7 transactions a second but we'll fix it!". I hear they're up to 10 now.

The counter-example to my grump is StellarNFT, discussed above. I'm glad it exists! My impression is it's a very small part of the NFT action most of which is done by people who really don't care about the externalized global warming impact of their magic bean trading.
posted by Nelson at 8:52 AM on September 11 [1 favorite]


A simpler critique of Stellar and other proof-of-stake systems is they remain largely theoretical.

Stellar isn't a proof-of-stake system, and it's in use right now so it's more than theoretical.

The Stellar Consensus Protocol implements federated Byzantine consensus, not proof-of-stake. SCP guarantees that new blocks added to the chain are agreed upon before they can be added rather than relying simply on a mainline chain growing faster than any competing branch as the various proof-of-x protocols do.

SCP means that Stellar transactions can be relied upon as soon as they appear on the public ledger. There's no need to wait for them to get "confirmed" under six newer blocks before it's reasonable to have confidence in them, as is required with proof-of-X longest-chain consensus protocols, and this is a major contributor to SCP's very rapid (usually well under ten seconds) transaction settlement time.

Can a mistaken or fraudulent transaction be revoked without the permission of the one benefitting from the mistake or fraud? If not, the system is absolutely horrible and cannot be remedied.

No, but the same applies to cash, so I don't see this as the showstopping dealbreaker that you clearly do. Your position is reasonable and arguable but it's not one I share. Cryptocurrency isn't Visa and it isn't cash; it has some commonality of function with both, but isn't a replacement for either. I don't think that makes it horrible, just different.

Can it be taxed, without requiring willing cooperation from either party?

Sure it can. I am right now in the process of filling in my income tax return for Australian financial year 2020-2021, and I'll be paying capital gains tax on all the AU$ I've made from trading XLM over that year. And of course you could argue that there's nothing baked into Stellar itself that forces me to do that, but the simple fact is that Australian law requires me to keep records of all capital gains for tax purposes, and if the Australian Tax Office decides to audit me and finds that my Stellar-related records are not up to scratch then the results will be very unpleasantly expensive for me.

I also note in passing that Stellar allows anybody to issue assets (whether they be NFTs or full-on currencies or anything in between) on the Stellar network, and that such assets can be defined in a way that includes automatic transaction fees payable to the issuer. There is no technical impediment to a national reserve bank issuing tokens backed by that nation's fiat currency on the Stellar network and automatically collecting a tax from every transaction conducted with those tokens. El Salvador could (and to my way of thinking, should) have done this instead of fucking about with Bitcoin.

What I DO complain about, is the fuckers who dodge their taxes even when they're rich enough that they wouldn't even feel it, apart from the moral injury they perceive because they believe taxes are for those lesser beings, not the mighty titans who deserve to rule.

I make the same complaint. I would also point out that fuckers of that ilk have been dodging their taxes since centuries before cryptocurrency was even a thing; I'm yet to be convinced that cryptocurrency facilitates tax dodging to a greater extent than cash does.

If you want public ledgers for all ownership and transactions, make all the fucking ledgers public without hiding behind either secretive property/banking laws OR cryptographic keys

Any use of a public blockchain as the definitive record of ownership for any class of asset would of course require the establishment of a provable link between the public keys appearing in the blockchain and the identities of the entities whose ownership is so recorded, and crypto makes that completely feasible; only the owner of the private key corresponding to any given public key can generate matching transactions on the blockchain. Trying to claim ownership of any given thing without disclosing ownership of the corresponding public keys would be completely self defeating. So I'm not clear what your objection to cryptographic keys actually is in this instance.

Private property is fine, secret property is not.

Secret property doesn't strike me as terribly consequential.

The point of wealth is that it enables the wealthy to do things, and to the extent that those things are consequential, they will also be visible.

I can also see no reason why blockchain crypto should be any less susceptible to rubber hose cryptanalysis than any other kind of crypto, and nation states can always legislate whatever degree of rubber hose cryptanalysis their taxation regimes require.

Thanks for your perspective, which again is reasonable, thought-provoking and valuable. That said, I still see things from a different angle from you and still feel no pressing need to burn all of cryptocurrency to the ground.
posted by flabdablet at 10:38 AM on September 11 [2 favorites]


...only those variants of it, Bitcoin and Ethereum more than most, that are making outsized contributions to doing that very thing to this planet.
posted by flabdablet at 10:51 AM on September 11


Can a mistaken or fraudulent transaction be revoked without the permission of the one benefitting from the mistake or fraud?

It's simple. The victim contacts a provider of protection services (probably effectively monopolized by one local provider in the case of most Metafilter users). This provider employs a number of burly and well-equipped individuals who can make credible threats of pain, death, confinement, etc., in order to compel the perpetrator to reverse the transaction or hand over private keys. Having this capability, the protection services provider will also use it to compel the payment of protection fees ("taxes", in the monopoly case.) As noted above, same as cash.
posted by save alive nothing that breatheth at 11:28 AM on September 11 [2 favorites]


Not my thing either, but if the only thing wrong with it is that I'm not into it, I'm quite happy to put it in the same bucket with all the other harmless ways that other people choose to fill their days and let it be what it is. If a tech-related pursuit burns less electricity worldwide than online multiplayer 3D gaming, as trading on the Stellar blockchain undoubtedly does, I don't object.

Right, but it's the same problem I had when Pokémon came out and that was the only thing everyone else wanted to do on the playground. Suddenly you start ignoring a whole bunch of people since that's the only thing they're talking about. It's not the end of the world (unlike PoW coins, which actually might hasten it), but it still kinda sucks.
posted by BungaDunga at 12:41 PM on September 11


Maybe it's just me, but I still haven't ever seen or heard compelling evidence of the problems cryptocurrency or NFTs are supposed to be solving. I only see the same immortal story in the history of hyper-capitalist finance over and over again:

1. Make a new hard-to-explain-and-harder-to-understand financial product.
2. Market the hell out of it.
3. Make money from asymmetry of information, trading on volatility and bubbles, selling supporting technology and services, etc. until the regulators catch up, then cash out before the inevitable crash.
4. Rinse, repeat.

What's absolutely clear is that cryptocurrencies are a Rorschach. Do you want a libertarian paradise where you can conveniently dodge government oversight and purchase anything no matter how legally out of bounds? You'll see plenty of people saying that. Do you want a global economic community un-tethered to the whims of a single government and public records of transactions to keep everyone ostensibly honest? Yep, you'll see plenty of others saying that as well. Do you want a new way to print money passively from the comfort of your home with minor effort that certainly doesn't involve smashing the system or sacrificing your current levels of comfort? Yes, indeed, plenty of how-to guides on that as well.

It's apparent to me that whatever you want out of crypto can already be accomplished with existing, comparatively 'ancient' financial products and technologies (commodities, transparency regulation, algorithmic trading, etc.). My fear is that the world at large will only catch on at the end of this experiment, once the damage to the environment and to countless people's lives has been done.
posted by donttouchmymustache at 9:17 PM on September 13 [2 favorites]


Maybe it's just me, but I still haven't ever seen or heard compelling evidence of the problems cryptocurrency or NFTs are supposed to be solving.

This frequently recommended book goes into it a bit: from the authors' perspective one of the major use cases of cryptocurrencies is to incentivize miners to do work on a blockchain thus making that blockchain productive in providing services like smart contracts, distributed autonomous HR, making sure robot drone strikes are killing the right people, etc.

Those services are largely stupid dogshit that shouldn't be autonomous or distributed, but that's a whole other discussion beyond crypto and NFTs.
posted by Lentrohamsanin at 6:19 AM on September 14


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