Thursday, November 11, 2021

I Confess To Right-Clicker-Mentality

"Worth $532M"
Both Cory Doctorow and Matthew Gault and Jordan Pearson have fun with the latest meme about NFTs, "Right-Clicker-Mentality". (Tip of the hat to Barry Ritholtz)

Gault and Pearson explain the meme:
what is the “right-clicker mentality”? Quite literally, it is referring to one’s ability to right-click on any image they see online to bring up a menu and select the “save” option in order to save a copy of the image to their device. In this term we have a microcosm of the entire philosophical debate surrounding NFTs.
I join in below the fold.

They continue:
NFTs, or non-fungible tokens, are unique tokens on the blockchain ostensibly representing a receipt of ownership pointing to some (usually) digital thing, like a JPEG hosted on a server somewhere. To be an NFT collector is to philosophically buy into the idea that owning this string of numbers means you “own” a JPEG that lesser people simply right-click to save on their machines at any time.
I wrote in NFTs and Web Archiving about the tenuous relationship between an NFT and the thing it purports to "own":
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. There is no guarantee that the creator of the NFT had any copyright in, or other rights to, the content to which either of the links resolves at any particular time.
Gault and Pearson are less technical:
NFTs only hold value because everyone owning them and trading them agrees they hold value.

To right-clickers, the blockchain ledger where their receipt resides is a comforting technological myth that NFT owners point to to legitimate their claims of ownership of a JPEG. It’s a kind of slacktivism, a way to address the problem without risking anything. Right-clicking a JPEG, saving it, and displaying it back to the NFT owner is a way to point out the Emperor has no clothes. Meanwhile, the NFT fans make millions off their naked Emperor.
Cory Doctorow is more direct:
The creators of NFTs envisioned them as a kind of bragging right that described the relationship between a creator and a member of their audience. When you paid for an NFT, you recorded the fact that you had made a donation to the artist that was inspired by a specific work. That fact was indelibly recorded in a public ledger – the blockchain – so everyone could see it.

Instantly, the idea of supporting artists with NFTs was converted into a financial bubble. The point of an NFT wasn't to support an artist – it was to acquire a tradeable asset that would go up in value because the buyer thought they could unload it for even more.
Source
The Economist dipped a toe in the water by selling an NFT of its cover about NFTs, and reports on the experience in The fun in non-fungible:
A scramble of bids forced the winner, who went by the alias @9x9x9, to make an offer of 99.9 ether—around $420,000. The proceeds, net of fees, taxes and transaction costs, will be donated to The Economist Educational Foundation, an independent charity we support.
It was in a good cause, so that's all good clean fun. But, on reflection, The Economist had three takeaways. First:
Despite the slick interface of NFT platforms, the process is a nightmare. It includes setting up a digital wallet, funding it to pay any fees associated with creating an NFT, creating the token and finding a way to convert the proceeds into conventional money in a bank account. For most legal and tax advisers this is all virgin territory. The process is expensive: we paid “gas”, a fancy word for fees, and other levies. In order to become mainstream, applications in decentralised finance will have to be as easy to use as an iPhone and cheaper than dealing with conventional financial intermediaries.
BTC transaction fees
The risks inherent in a system attempting to provide immutable, anonymous transactions make "easy to use" and "cheaper" a considerable stretch. Especially as "gas" is volatile, cheap when few want to transact and expensive when many do. I wrote about this problem in Blockchain: What's Not To Like?:
CryptoKitties average "price" per transaction spiked 465% between November 28 and December 12 as the game got popular, a major reason why it stopped being popular. The same phenomenon happened during Bitcoin's price spike around the same time.
The second problem is energy:
Our modest experiment created as many emissions as a seat on a long-haul flight. Most platforms are exploring how to lower their energy use. If NFTs are to be the Next Big Thing, they must innovate their way towards a carbon-neutral footprint.
NFTs use the Ethereum blockchain. As I explain in Alternatives To Proof-of-Work:
Ethereum, the second most important cryptocurrency, understood the need to replace PoW in 2013 and started work in 2014.
...
Skepticism about the schedule for ETH2 is well-warranted, as Julia Magas writes in When will Ethereum 2.0 fully launch? Roadmap promises speed, but history says otherwise:
Looking at how fast the relevant updates were implemented in the previous versions of Ethereum roadmaps, it turns out that the planned and real release dates are about a year apart, at the very minimum.
Source
Switching to Proof-of-Stake would definitely reduce Ethereum's carbon footprint, at the cost of greatly increasing the system's attack surface and making it even less decentralized than at present, when two mining pools control the majority of the mining power. The fact that a highly-skilled team has worked on the transition for seven years and claim, however credibly, still to be a year away from done is a testimony to how hard a problem this second one is.

Source
The Economist's last takeaway is:
A third concern is contract enforcement. We hope that this will not be an issue for our token, because the asset—a unique digital representation of a cover image already in wide circulation—will be used within decentralised finance, and there is no obvious incentive to misuse it. But for NFTs that refer to assets outside this self-contained world, such as a patent or a building, the property rights conferred by the NFT may conflict with other contracts, and courts may not recognise the digital agreement.
I'm with Cory Doctorow when he he writes:
NFTs, which have blown up into a massive, fraud-ridden speculative bubble that is blazing through whole rain-forests' worth of carbon while transfering billions from suckers to con-artists. A bezzle, in other words.

3 comments:

David. said...

If you're confused about the relationship between an NFT and the thing it purports to represent, you won't get much enlightenment from the lawsuit Miramax vs. Quentin Tarantino.

David. said...

The apotheosis of right-clicker-mentality has arrived! The NFT Bay has the Billion Dollar Torrent, 17TB of every NFT on the Ethereum and Solano blockchains. One click and you have them all for the much-less-than-a-billion-dollars cost of 17TB of storage. Geoffrey Huntley writes:

"Did you know that a NFT is just a hyperlink to an image that's usually hosted on Google Drive or another Web 2.0 host?

People are dropping millions on instructions on how to download images. That's why you can right-click Save As, because they are standard images. The image is not stored in the blockchain contract.

As web2.0 webhosts are known to go offline (404 errors), this handy torrent contains all of the NFTs so that future generations can study this generation's tulip mania and collectively go…. 'WTF? We destroyed our planet for THIS?!"

David. said...

Stephen Diehl's The Tinkerbell Griftopia is a must-read:

"Still to a lot of us technologists, it looks like NFTs are the emperor running around with no clothes and crypto acolytes are selling broken hyperlinks to each other as either vanity projects or get rich quick schemes. But truly that is the message of the Andersen folktale, that power begets the capacity to inspire delusion in the masses. And that’s why this subject is such a divisive one, because the entire enterprise of NFTs is like a mental contagion that can only sustain itself by perpetual proselytizing and conversion. A lot of us feel this in our bones, because we know and lost friends that went “down the crypto rabbit hole” and turned into wildly different people, oftentimes for the worse because these ideas tend to have a comorbidity with risk-seeking and gambling problems."