I don't get NFT

I only recently learned about the existence of NFTs as a "thing".  If you are also unfamiliar, NFT stands for "Non-Fungible Token".  CNN has an explanation here, but t's essentially a unique digital token, stored on a blockchain, that represents some digital asset.  Apparently NFTs have recently become the latest hot trend, with some of them selling for hundreds of thousands of dollars.  

However, this Slashdot post points out that there are some potential issues with NFTs.  Basically, NFTs don't actually store the asset you're purchasing.  So if you buy an NFT for an image, the image doesn't actually live on the blockchain.  You've only bought a reference to the image, which is actually hosted someplace else.  So if whatever server or service is hosting that image goes away, you will no longer be able to access it, regardless of owning the NFT.

So I guess what I'm confused about is: what's the point?  I mean, what are you really getting when you buy an NFT?  In a theoretical sense, I can see how an NFT is better than "conventional" digital assets in that it's not tied to a particular service.  Your ownership of that item is recorded in you crypto wallet which is independent of any particular service an can be used with multiple NFT marketplaces.  And that's a good thing. 

But when you look at it functionally, there's not really much difference.  The actual asset still exists completely independent of the blockchain, so it's not like a physical asset - there might only be one token, but you can still infinitely duplicate the asset.  And as far as I can tell, buying an NFT doesn't actually mean you're purchasing the copyright for the asset.  So you're just buying a copy and there's nothing to stop anyone from making other copies.  And because the asset isn't stored on the blockchain, if you want to ensure you always have access then you need to download a copy of it.  So...how is this different from buying a service-specific digital asset?

It seems like the point is less the actual asset and more that NFT is the same thing as Bitcoin - that it's just a different way to speculate on blockchain stuff.  Especially when you're talking about something like spending $2.5 million for jack Dorsey's first tweet, it's hard to see any other rational explanation.  But even for less absurd cases, it's not clear to me what the practical benefit is.  The main reason that blockchain "works" for cryptocurrency is because the thing on the blockchain is the thing you're transferring.  As soon as you introduce a disconnect between the thing being traded and the thing on the blockchain, it seems like you lose a lot of the benefit of the blockchain.  

You can reply to this entry by leaving a comment below. You can send TrackBack pings to this URL. This entry accepts Pingbacks from other blogs. You can follow comments on this entry by subscribing to the RSS feed.

Add your comments #

A comment body is required. No HTML code allowed. URLs starting with http:// or ftp:// will be automatically converted to hyperlinks.