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95% of NFTs are Worthless: Report
(petapixel.com)
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this post was submitted on 21 Sep 2023
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Technology
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Crypto and NFTs are complete scams, change my mind.
It's sad, I remember when bitcoin was new and the people interested were actually interested in breaking the state control of money. Now >99% of crypto people are just grifters and people trying to get rich quick.
bitcoin skyrocketed and suckered in a lot of people to the gold rush. they didn't want decentralized currency or anything. They just saw that it was ~16,000 dollars a bitcoin and wanted in.
Most people were grifters back then too. I had a friend who was a libertarian porcfest free-stater and he was against bitcoin because he was afraid everyone would lose all their money and not be able to complete the free state project.
My hope is the fintech people will be gone by the time someone thinks of an eco-friendly consensus protocol that isn't Proof of Stake (ie "the people with the most money have the most power").
I would argue 99.99% of crypto and nfts are complete scams. But Blockchain is a change in how we manage and distribute data, and can remove centralization of power from humans that we would otherwise need to trust for managing autonomous systems like the data in a banks public ledger.
It’s a common misconception that blockchain gives trust. If you control a majority of nodes in a Blockchain system you decide what the truth is.
This opens the door for illicit players to manipulate things their way.
Lack of trust doesn’t replace trust.
Central, provable/accountable, trust is needed for financial systems to work.
Everything else is “Wild West”.
It's also a misconception that some illicit players can take over a large enough Blockchain system.
The cost to run a 51% PoS attack on Ethereum, as of today, is $20 Billion
(current staked total of $40 Billion)... that is, $20 Billion, if you already had them. Buying that much of Ethereum, with an available liquidity of $670 Million... is just impossible, there is not enough on the market, simple as that. If you tried really hard, you could maybe convince some HODLers to part with some of their hoard for a high enough price... unless they decided to stake and try to stop you. How high would you want to go to prevent that? $200 Billion? $200 Trillion...? Then after proving you can pull a 51% attack, the price would instantly crash down to $0. How much spare cash do you have to burn?
Let's do Bitcoin
Running a 51% PoW attack on Bitcoin, would mean either hijacking half of the current 400 Million TH/s hash rate, or adding your own 400 Million TH/s to the network. The most recent and cost effective mining hardware does about 250 TH/s for $8500 (plus power), so you'd only need 1.6 Million of those at a cost of above $13 Billion. Sounds easy, until you realize there are no 1.6 Million miners on sale. If you tried to buy those many, fat chance the manufacturer wouldn't keep 50% of the production to themselves. Then comes the kicker: on a network without smart contracts, you can only double-spend your own coins, or block others from spending theirs... for how long would you be able to keep that 51% attack, before people realized what was going on and just kicked you out of the network?
Trust is trust in the inability of anyone to successfully attack a financial system.
Blockchains are absolutely provable/accountable to everyone everywhere at any time, which central systems are not.
Oh, don’t get me wrong - the technology behind them is something we should be embracing more than we currently are. Being able to publicly have transactions out in the open is great, and ensuring that both parties have to authenticate on both their ends helps a ton in preventing stuff like fraud.
I just think cryptocurrencies and NFTs are squandering the blockchain and the tech behind it. There are a couple of cryptocurrencies that make sense because they have something backing it (which I just personally prefer straight-up, even with fiat money), but it’s otherwise pretty much all crypto follows Bitcoin’s trend, which in turn is more akin to a stock where it just… sort of arbitrarily goes up and down. NFTs as we currently know them, on the other hand, are just a huge scam through and through lol.
"Squandering" is a great description of what they've been used for. The only implementations I've seen thus far that seem genuinely useful are FileCoin and a few decentralized computing attempts like ICP (not Ethereum). I could see a potential niche use-case for NFTs to decentrally coordinate ownership of abstract properties like domain names, but speculative monkey jpegs ain't it chief.
NFTs could also be used as ownership proofs of DRM protected stuff, like games, software, music, videos, books... no more "buying" an ebook until Amazon pulls it out of your "library". Arguably any certificate is a kind of off-chain NFT, and vice versa, so using one or the other may become interchangeable depending on whether it should be made public or kept private.
Ethereum focuses on being a generic platform for DeFi services, so it's logical that it has the largest amount of trashy attempts at reinventing the wheel. ICP I still haven't found a real use for, and FileCoin storage costs are crazy high, way above most cloud solutions.
Could you describe a case example how that applies in practice?
Because yeah I understand that when we all have our own copy of the data someone can't falsify all our independent copies but is data being tampered like that even the problem?
It's a problem when you're dealing with decentralized systems (read: Byzantines general probelm). If there's no central authority, how do you verify the person actually has the money and isn't lying / double spending?
Bitcoin is an example. A wallet is unique data (private key) that is stored only the users storage. That private key proves ownership of funds owned by a wallet address / hash. A wallet address has funds if someone with valid funds sent money to it. A person initially gets that data by mining, which is like spending computational power to solve a puzzle, in which solving also processes a set of transactions at the same time. This is like the process of minting, except anyone is allowed to mint. It also helps identify who the miners/minters are, since utilizing energy gives a signature (It's really hard to hide using a megawatt of energy with a thousand computers, for example)
A use case is it allows people in war torn countries to consolidate their wealth digitally. Gold, for example, could easily be confiscated at the border, or the refugees currency could only have value in their country. Lebanese people had their money squandered by the banks and the government, because they were the central authority. In a system managed by people, over a long enough period of time, a bad actor will gain some control of the system. This effect is worse the more control is centralized.
It also means you couldn't sanction other countries the way the America is doing to Russia's banking system right now. I'm indifferent about that argument but maybe you think those sanctions are good in which case would be a point against decentralized currencies.
I think more interesting ideas in blockchain involve decentralizing ID. A microchip in the heart can both act like a smart watch by monitoring health data and represent a unique identity in a decentralized system by using the biometric information like a fingerprint scanner. With a secure decentralized way to establish identity, you can decentralize voting, and remove politicians from the political system
I... think that would be a crime, even with a majority vote. 🤫
We already have that in most countries, it's biometric national IDs and passports. Particularly in EU countries which issue biometric national IDs with secure personal certificates, we could implement direct democracy right now.
I personally envision a future where we use blockchain technology to create a new direct democracy party in which every member has a unique identifier and the blockchain ledger system used to track polling data. Every individual member of the party would have one vote in each poll at ever level (federal, state, regional, etc) - for every single thing that gets a vote, and the elected politician representing that party would be required to vote based on the polling data.
Everyone would have access to a copy of the ledger to confirm their votes are counted accurately, and they can review polling data to confirm their elected politicians are voting based on polling data, and the representative would be replaced if they do not adhere to the results
@cassetti
That's risky, because the way you say it, I can check how you voted on things, and come have a serious discussion about your choices.
Much more interesting are technologies that allow to prove something, without divulging the details.
... Though again, those don't require blockchain
@alyaza @Poggervania @ComradeKhoumrag @GunnarRunnar
Everyone has a unique identifier. If you don't share that with anyone, how would they know who's vote it is? Couldn't the number be randomized and a new UUID provided on a routine basis?
Every American has a Social Security number, but it's not exactly like we're told to broadcast it to the world...... I don't see why something like that couldn't be implemented here using technology.
My point is the general ledger technology of the blockchain which would be beneficial here.
But of course this is all a pipe dream. America is damn near a Kleptocracy and both political parties have written laws to prevent a third political party from ever arising.
Why a party? You don't need a party for direct democracy, just 1 person = 1 vote. Either vote yourself, or authorize someone you trust to vote in your name, be it for a time, or on a certain topic, or whatever, if you're too busy to vote on every poll.
Problem is: who is in charge to write down the thing that is being voted for. E.g. "we need to protect the children" will get my yes vote. However, that is very unspecific and the specific thing could be "we are scanning every text message and sent file on every of your devices to compare that with child sexual abuse images as we need to protect the children". I wouldn't vote for that. So, whoever can frame the question that is beeing asked still directs what is happening.
Get an AI to analyze each poll and compare it to whatever preferences/indications you gave it, then output a yay/nay. For the lazy, let it automatically cast the vote for you.
Whoever gets an AI capable of holding more context, and to fool other's AIs, will direct what's happening... but will have it become increasingly difficulty.
OMG fucking techbros. Yes, technology can be useful for many a thing, can both alleviate social issues by providing legit wealth, as well as shape society by its own shape (e.g. the interactions possible and encouraged by a social network).
It won't, it can't, however, bring about utopia for us. For to shape technology such that it would shape us in beneficial ways we'd have to fucking know what we want at which point we wouldn't have the issue in the first place. Society, as a superorganism, will have to understand human nature, first.
Go outside. Talk to people in the real world. Use the faculties nature has given to you to fix shit, like your body, your mind, both ratio and instincts, don't pray to some technological spectre that it shall deliver us from evil you're displacing.
Cryptocurrency has its uses as unregulated currency, though that makes it easy to scam people with it.
The biggest problem is people trying to peddle it as currency.
It isn’t currency, never will be. Much more alike to bonds.
It’s an investment object with a speculative value, and no tangible value. The only value it has is what the next guy is willing to pay for it.
While currency is deflationary by nature, crypto is entirely based on demand and supply, and sure, as long as people think it will be worth more tomorrow - sky’s the limit.
Like any pyramid scheme it pays out to get in early, and get out before it collapses.
Relying on crypto is high stakes gambling, and people being people is the only reason I can find for it not having collapsed totally already.
Where to start...
That's not how pyramid schemes work, the ones at the top never collapse, only the ones at the bottom end up holding the bags. GIF NFTs are pyramid schemes.
Ponzi schemes on the other hand, are the quintessential representation of fractional reserve: creditors get paid with new investors, until there is a bank run; you want to get out before that happens. USD is a Ponzi scheme, just like all currencies, including cryptos.
That's a currency.
Let me introduce you to FOREX Futures and intraday HFT. There is also Crypto futures, but who's counting.
The thing about bonds is that presumably the entity that issues them makes computers or tractors or potato chips or insurance. Bitcoin is like the bad guys in Captain Planet: they build a factory that eats the rain forest and spits out pollution.
The problem with using it as either a gamble or an investment is that the person/people holding control over the currency are doing so with the intent to make money. More often than not your money is gone the instant you pay in if they decide to make it hard/impossible to cash out. This is what Logan Paul's scam crypto ended up doing. Say what you will about the US dollar, their main incentive is to stay in power which backs up the legitimacy of the currency. They're not just going to rugpull the dollar because it would run counter to that goal.
It's fundamentally impossible for crypto to fulfil that role because everyone involved is just there to make a quick buck.
Thats true, but you can still use it as a currency if you want to buy illegal drugs, or donations to organizations that accept it (with monero so its untraceable) and buying mullvad vpn. It's not stable, but its an accepted way of transferring money that can be as private as cash.
It's fiat, I won't argue it was ever going to be a good currency with built-in deflation, but that's what it was originally meant to be. It's long since become too volatile to be anything but a speculative asset, though. It does seem curious to me what that says about the actual distinction between legitimate currencies, stock options, and pyramid scheme buy-ins.
High volatility is not a problem for a currency:
Volatility is irrelevant to a currency, unless you want to treat it as an investment.
Probably a typo, but currency is *inflationary, cryptocurrency is *deflationary, that's why it's not for spending "now" (e.g. hodlbros)
It can be either, Europe just came out of a decade with negative interest rates. That was deflationary. There is nothing inherently inflationary about currency.
Sure, any economy can experience deflation if you have more goods chasing the same amount of currency, but the point is that most economies usually print money, that causes inflation (moderately that mimics around 2% (approx. linear resource growth) and 4% (rent extraction). Interest rates influence market behaviour that causes inflation but do not determine inflation.
I think we just live in an era when population doubles every 50 years, which means more demand, more production, and more currency needed to represent the value being transferred, which lead to more money being created.
We got used to that, to a point where it's become a kind of an act of faith. It's not going to be like that forever, though:
We're way past "peak population" growth, and if nothing else were to change, eventually demand would go down, production would go down, and the amount of transferred value would also go down, with a rampant inflation and a need to drastically reduce the amount of money.
But of course, it's not the only change on the table. The AI revolution is right upon us, which will not reduce human demand, but will shift a bunch of production from humans to AIs, which is likely to increase the rate of value production several-fold, at the same time as increased interest rates are stifling the creation of money to combat the recent inflation.
I'm afraid we might be coming into a perfect storm where a slightly slower growing demand, will be met with a much faster growing production from a much lower number of people, causing on one hand a sudden deflation, and at the same time an impoverishment of a large part of society unable to afford that value even at the deflated cost.
Ok, fine, I hadn't considered that and it's a factor. None of the demographically declining countries like Italy, Japan, Portugal is doing great in terms of growth...but they don't have deflation either. You also have the productivity growth factor into account with automation (meaning each citizen produces more but also uses more resources)
Just 🤦
NFTs aren't always a scam... sometimes they are just tax fraud.
many are yes, but not all. Bitcoin and Ethereum (among others) are legit, and there are a few NFT projects out there that actually try to do the right thing even if they're not worth much at all. Many other NFTs are nothing but pictures that have no meaningful value except what you assign it to, but they never pretended to be anything else so that's still not a scam in my book
Bitcoin is never going to be wisely used for it's intended purpose. It's been too sold as as investment that you buy and sell rather than a currency.
Bitcoin had a huge congestion problem in 2021, it's been mostly solved now with major exchanges accepting Lightning Network.
For comparison:
In 2023, Bitcoin with LN support is comparable to EU transfers, way better than international transfers, and better for microtransanctions.
Its investment value has been overhyped, it's too volatile for long term value storage, but that's irrelevant for instant value transfers.
I'm not arguing that, it's definitely very debatable if it's ever going to have some practical use outside of its current speculative one. That doesn't make it a scam tho
Okay I'll change your mind slightly. It's not always a scam. Sometimes they are just a silly mistake. Some artist caught up with a new way their digital art can make money. Thus it's hard to call that a scam but instead just a poor attempt on a misunderstood fad.
Shitcoins and GIF NFTs are complete scams, nothing to argue there.
Also Papal Indulgences, stamp collections, carbon offsets, the USD... we can go on 🤷
If the price of rare stamps craters you can always just use the stamp to mail a letter to your friend. They are onysical items with actual scarcity and legit demand from collectors. Loads of people have collected stamps, coins, and baseball cards for decades and even centuries
This isn’t always true. People collect stamps with postmarks on them as well, that can’t be reused. Stamps without postmarks are generally worth more. But if a rare stamp only has examples with marks, it will still be worth a lot, but useless to post a letter with.
Still there is scarcity because these are physical objects, most of which are out of production. With NFTs you don't buy a thing, you buy a link to a digital representation of... something. If the creator of the NFT decides to stop hosting that link your NFT is not only worthless it is also gone.
To me crypto has some genuine projects, although it is dominated by scammers and grifters. Nym, which is a mixnet project, with a token to incentivize people to host nodes, and Stasis Euro, a euro-backed stablecoin, look pretty legitimate. I believe there really are honest, well-intentioned crypto projects, though they are a minority and largely suffer from redundancy or poor implementation.
NFT's are 100% a scam though.