And get this:
NFTs are not in competition with Bitcoin! Bitcoin is a currency; it is supposed to be fungible, and
I defend Bitcoin’s fungibility. Non-Fungible Tokens are, of course,
not fungible. They are not supposed to be a currency. Why are some Bitcoiners getting bent out of shape about this? Just because NFTs run on generalized smart-contract chains,
0 which Bitcoin is not?
Assuming a 100% fungible bitcoin (which is still not the case - which I must concur is unfortunate enough), it is simple enough to add a level of non-fungibility, and as Elwar has pointed out several times, it
has been done with colored coins. However, they came at a time when bitcoin still had to "prove" itself - so to say - to the normies, so the focus was elsewhere.
NFTs apply cryptography for a new use case. A very
useful use case.
1 They have created a new asset class that improves on the properties of similar, older asset classes, just as Bitcoin created a new kind of money that improves on the properties of older monies.
Indeed. I can see a possible bright future for NFTs - including colored bitcoins, which I won't even mention from now on - they perfectly match the definition, so are included in the discussion; indeed, they've been the first of all NFTs. These tokens can be used to create unforgeable, easy to verify titles of ownership. These titles would not be restricted to digital items. On the contrary, I see the digital use case as more remote and less interesting for the time being.
Personally, here are a few use cases I would love to see implemented.
- Stock certificates. Once, certificates were ubiquitous, and you didn't "own" a stock until you had the paper in your hands. Now you can't really "own" a stock. It's just an entry in a ledger, and the broker/custodian is the only entity that can actually do some things with the stock, such as lending it to a margin shorter. If stock certificates were digitized by NFTs, naked shorters would have a hard time, as auditing would be quick and easy. With NFTs based on a permissionless blockchain, an additional property of auditing would be: available for anyone to see.
- Gold. The problem here would be matching ingot and NFT at the source, of course. But the total amount of NFT (and therefore, of ingot) would be much easier to... again, audit. Bye bye, paper gold.
Of course, real estate etc. could also benefit from something similar, although re-hypothecation of RE is much less of a problem in practice.
I agree that the following points are moot, and mostly come from lack of understanding.
- “It’s a Ponzi.” ✔
- “The scarcity is artificial. Anyone can make perfect copies of it.” ✔
- “Drug dealers will use it to launder money.” ✔
- “Those fools will be burned when it is shut down by regulators (SEC, et al.).”2 ✔
With one exception: “The scarcity is artificial. Anyone can make perfect copies of it.”
The scarcity of ownership is artificial, but it's as real as physical scarcity. There can only be one owner. So this point is moot/baseless too, BUT my objection pertains to those goods where ownership is not needed to be able to enjoy the good. As in, picture files, digital music or similar items. The issue here is enforcing DRM based on NFTs. This could be a thing, right, but then apart from the technical details, the creator, too, should be prevented from making additional copies ("reprints") of the creation. So you release, say, a tune as a NFT, and as a consequence no radio can legally broadcast it? Or can they? You sure shouldn't be allowed to release more "declassified" copies, or you are "inflating" the supply. Or I can use the song even if I don't "own" my copy's NFT? So you decide once and for all how many copies you are releasing? Shaky technical terrain. Shakier legal terrain. IANAL. Some legislation will be needed. No, not the SEC, that's right.
