What's the big deal with NFTs?

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Artman2004
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What's the big deal with NFTs?

Post by Artman2004 »

I've heard a lot about these things called non-fungible tokens (NFTs) that have been quite the buzz recently. As someone who doesn't know much about the crypto scene, can someone please explain this phenomenon?
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nova++
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Re: What's the big deal with NFTs?

Post by nova++ »

It's a fad to cash in on.

countdown to getting yelled at in 3...2...
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Chris
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Re: What's the big deal with NFTs?

Post by Chris »

nova++ wrote:It's a fad to cash in on.
Essentially. People are paying high prices for NFTs because of FOMO (the Fear Of Missing Out). The craze is driven solely by people wanting to be part of the craze.

An NFT itself is essentially a glorified receipt. Basically it's a generated number assigned to you that sits on a blockchain, which contains a reference/link to something. The blockchain prevents the number from being duplicated by someone else, without being seen as invalid on the blockchain, so another person ostensibly can't claim to own that number on the blockchain. However, importantly, the thing the NFT references is not protected by the blockchain. For example, if you get an NFT for a picture or piece of music, that picture or music is just a file that can be copied as well as any other picture or music on the internet. The NFT is just a link to the thing, something that says "I own this", but doesn't do anything more than that.
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Re: What's the big deal with NFTs?

Post by wildweasel »

If you want further reading and a clearer understanding of what an NFT is, read about what multi-level marketing (MLM) is. And the definition of a pyramid scheme. The only way these can ever be profitable is by recruiting more suckers into them, especially if those suckers have venture capital or are celebrities. (See: the likes of Tom Morello and Serj Tankian producing and attempting to sell their own NFTs.)

What's worth noting about the gigantic prices, too, is the fact that these prices are largely in currencies like Ethereum or Bitcoin, which - long ago - were selling for pennies of real currency, and have since ballooned to enormously, ridiculously high exchange rates (a figure I think I saw last month was over $400,000 USD for 1 ETH?). But that's not because those currencies are valuable - you'll probably want to look up what a "pump and dump" scheme is. There's supposition that these currencies, and the NFTs that they pay for, are just being ferried back and forth across people in the system to make them seem more valuable. And when the only regulatory authority for them is the website through which NFT trading is done, there's not much in the way of them being listed for far, far higher than they're actually worth, just like there's not much on the ground floor to catch whoever falls out of the sky when this bubble inevitably bursts.
Valken
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Re: What's the big deal with NFTs?

Post by Valken »

A "legit" Pyramid scheme... for now...
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Kinsie
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Re: What's the big deal with NFTs?

Post by Kinsie »

Think Beanie Babies, but instead of plush-toys it's URLs to a JPG of a terrible drawing of a monkey smoking a blunt.
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Barry Burton
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Re: What's the big deal with NFTs?

Post by Barry Burton »

A last ditch attempt by latter day capitalism to rape the planet to death. NFT's are the epitome of greed. Materialism has been pushed to the point that 'things' don't even need to be material anymore... as long as worldly resources are used up, all's good.
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Reactor
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Re: What's the big deal with NFTs?

Post by Reactor »

Ponzi-scheme. 'Nuff said.
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Re: What's the big deal with NFTs?

Post by Gez »

A tool of financial speculation and money laundering.

Anytime you hear about "<thing> with no real artistic or historical merit sells for several million times what its material is worth", you can safely assume that this value was artificially inflated so as to serve in some money laundering scheme. The people who buy and the people who sell are both in on it.
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nova++
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Re: What's the big deal with NFTs?

Post by nova++ »

I am pretty relieved to see sanity prevailing on this forum.

We'll have to see how long this fad lasts before a spectacular implosion.
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Rachael
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Re: What's the big deal with NFTs?

Post by Rachael »

nova++ wrote:I am pretty relieved to see sanity prevailing on this forum.

We'll have to see how long this fad lasts before a spectacular implosion.
I think in general you'll find that around 70-80% of people are at least nominally sane. It's the remaining 20-30% that fuck so much shit up for the rest of us.
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Re: What's the big deal with NFTs?

Post by NeuralStunner »

Kinsie wrote:Think Beanie Babies, but instead of plush-toys it's URLs to a JPG of a terrible drawing of a monkey smoking a blunt.
And if the art is actually nice in any way you can bet it's stolen, because that's also happening.
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Phredreeke
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Re: What's the big deal with NFTs?

Post by Phredreeke »

It reminds me of when people on image boards were drawing rare Pepes, except this time people are paying money for them. /facepalm
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Caligari87
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Re: What's the big deal with NFTs?

Post by Caligari87 »

A friend of mine wrote a pretty comprehensive and easy-to-understand article about how NFTs and Ponzi schemes work, for anyone who wants to know more.

Ponzi Schemes
Wholesome Rage wrote:God. Okay. This is going to be a fun one. My favourite articles come from assuming something is common knowledge and being told it isn’t.

Okay so almost everyone has heard of Ponzi schemes. The label gets thrown around a lot, but I realized I don’t actually see it get explained when it’s used. It’s what George Orwell would call a dead phrase - in the same way that ‘swan song’ doesn’t actually make you think of a swan, ‘Ponzi scheme’ has just come to mean ‘scam’ in the same way.

The problem with not explaining it, though, is most people think scams are obvious. They immediately think multi-level marketing, pyramid schemes and Nigerian prince emails, something that happens to other people. Stupider people.

Ponzi schemes are the stuff of nightmares, though. Men as brilliant as Sir Isaac Newton have been bankrupted by them. Bernie Madoff conned Wall Street investors out of between $17 and $60 billion dollars - depending on how you count it - in a scam that ran from 1992 to 2009. Even when he was the subject of a federal investigation in 2000, he wasn’t caught.

If these schemes are robust enough to pass federal investigators, why should we expect better from journalists? If Enron could get on the front page of Forbes and Fortune, why should we be surprised when the Rolling Stone not only endorses, but partners with the Bored Apes NFT, what I would call a clear example of an ongoing Ponzi scheme.

More than just how they actually work, I want to explain how these scams are so effective at recruiting people and the effect it has on people inside one. The technical explanation is enough to explain why very clever people will still be tricked, but scams that rely on ongoing trust from their victims are especially vicious and destructive.
More that just a Ponzi scheme though, I think NFTs in particular are an elaborate form of money laundering. A lot of people bought into cryptocurrencies early. Bitcoin, Etherium, Doge.... and they have a LOT. But now that the exchange rates for many of those are so incredibly high, it's probably pretty hard to cash out in any significant amount. So they stumbled upon a way to "use" crypto for a "legitimate market". In this case, buying art. Once the art is made, people buy it (probably even from themselves) in order to generate hype even though it's just moving money in circles. New users entering the crypto ecosystem need someone to sell them currency, and people with a shit-ton of crypto need suckers to buy currency from them in order to cash out.

8-)
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Kinsie
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Re: What's the big deal with NFTs?

Post by Kinsie »

Phredreeke wrote:It reminds me of when people on image boards were drawing rare Pepes, except this time people are paying money for them. /facepalm
It's more like those "generate your own anime avatar for internet forums" generators that there used to be tons of on Newgrounds, except they've pre-generated all of the possible combinations and are trying to sell their URLs for New Benz Money.

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