Non-Fungible Token Bubble Lasted 10 Months
mrpg writes:
https://blog.dshr.org/2022/10/non-fungible-token-bubble-lasted-10.html
Although the first Non-Fungible Token was minted in 2014, it wasn't until Cryptokitties brought the Ethereum blockchain to its knees in December 2017 that NFTs attracted attention. But then they were swiftly hailed as the revolutionary technology that would usher in Web 3, the Holy Grail of VCs, speculators and the major content industries because it would be a completely financialized Web. Approaching 5 years later, it is time to ask "how's it going?"
Below [...] I look at the details, but the TL;DR is "not so great"; NFTs as the basis for a financialized Web have six main problems:
Technical: the technology doesn't actually do what people think it does.
Legal: there is no legal basis for the "rights" NFTs claim to represent.
Regulatory: much of the business of creating and selling NFTs appears to violate securities law.
Marketing: the ordinary consumers who would pay for a financialized Web absolutely hate the idea.
Financial: like cryptocurrencies, the fundamental attraction of NFTs is "number go up". And much of the trading in NTFs was Making Sure "Number Go Up". But, alas "number go down", at least partly because of problem #4.
Criminal: vulnerabilities in the NFT ecosystem provide a bonanza for thieves.
The technical problem is that the connection between an NFT and the resource it purports to represent is tenuous in the extreme, as Moxie Marlinspike brilliantly demonstrated (both links point to the same NFT) in My first impressions of web3. I explain the problem in detail in NFTs and Web Archiving but the brief version is:
the purchaser of an NFT is buying a supposedly immutable, non-fungible object that points to a URI pointing to another URI. In practice both are typically URLs. The token provides no assurance that either of these links resolves to content, or that the content they resolve to at any later time is what the purchaser believed at the time of purchase.
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