NFTs signify a the ownership of a unique digital asset. This uniqueness is determined by one or more variables of the NFT's class. In the case of the opening iteration of "NFT art" on Ethereum the only identifying serial number is a SHA-256 hash. The image file would get hashed without actually being on chain. The question then becomes, where do you store the image file? The attack vector then becomes obvious: a centralized image storing solution.
Native NFTs
A term I just coined in the last 5 seconds, a native NFT would be one that doesn't have one of these silly centralized bridges. A good example might be cards on Splinterlands or other NFTs used for in-game digital assets. NFTs are much better suited to represent skins and items in a video game than they are representing pictures (because picture files are large compared to text).
However, what I really wanted to talk about was NFTs as they apply to ownership in the real world. This is the ultimate centralized bridge; one that tries to cross the gap from the digital to physical world. This is the bridge that we have to look out for, as it is also the one that makes crypto pegged to gold (or any other physical commodity) completely pointless.
On the flip side, I have to assume that this will become a thing. I have already written several posts about how libertarian/anarchist city-states are going to be popping up all across the world over the next few decades. Obviously, within the borders of these sovereign territories, citizens will be able to claim ownership of items in the physical world using NFTs. The question is: how will they implement it?
Does this city-state have a court system? If someone steals the NFT representing your house, do they get your house without any kind of possible lawsuit? I have to imagine some pretty crazy stuff is gonna go down in the first iterations of these emergent chaotic governance structures. Lot's of scams, but also lots of value.
Is it so difficult to transfer the deed to house using an NFT that code becomes law? How do we reverse bad transactions, or is that the price we pay for immutable blockchain? Every city-state will have different rules, likely drawing off of one or more templates that get created for physical governance in a crypto-based economy. Of course those templates won't be created until we see the rag-tag prototype iterations come out first, so I'm getting ahead of myself.
Is it better than what we have now?
Would you rather have the ownership of your car validated by a pink piece of paper and the military might of the government, or an NFT enforced by XYZ city-state's rules? I get the feeling that we can make things a lot more secure than they are already once citizens get with the program and crypto goes mainstream once and for all. For now, it's a waiting game.
Market Watch:
Bitcoin volume is still complete trash, but there are seemingly still zero sellers left in the market. A break above $35k is probably going to trigger a wave of FOMO up to at least $40k, with a maximum of around $45k-$42k given the declining resistance.
However, it's pretty clear on #cryptotwitter that most retail enthusiasts are absolutely thrilled that we didn't tumble below $30k (@edicted included). Looking back at every Bitcoin bear market, July 19th would have been the the day that Bitcoin flash-crashed once again to fully bottom out to the doubling curve. That didn't happen, and investors are ecstatic. We can all see that this is the perfect time for a reversal to occur given a potential mega bubble at the end of the year.
And why wouldn't there be a mega-bubble at the end of the year? I'm sure there are reasons, but now Amazon is looking to hire "blockchain experts". Interesting.
The Big Tech entities that wanted to control crypto fully are capitulating and settling for less. That means more for everyone else. As a reminder, most gains come in the last 3 weeks of a mega-bubble. They hit hard and fast and take everyone by surprise, even the people predicting them. Number go up x1000 has a way of striking at an irrational and emotional level.
And that's what some of these networks are going to do during a mega-bubble: x1000 from the lows. We saw it in 2017, we'll see it again. DEFI shitcoins are a huge upgrade from ICO shitcoins. The liquidity is there and available to all now, not just the pre-investors.
There's also the legal issue to consider.
ICOs used a model that was clearly issuing an illegal security controlled by a centralized authority (dev team). With DEFI yield farming, the lines have become extremely blurred and now it's considered a rare circumstance that a dev team will "dox" themselves. Meaning a lot of these dev teams are anonymous and can't even be targeted by the regulators in the first place.
So rather than a dev team or a corporation selling tokens in an Initial Coin Offering, A yield farm allows users to acquire some tokens and then pair half of them to another token for maximum yield in the LP pool, which creates exponential liquidity growth. All of a sudden, there is no centralized entity in control right at the beginning, making regulations much more tricky.
This is a great example of what's going on in terms of NFTs and crypto-city-state governance, because a lot of these issues are both a blessing and a curse at the same time. That is exactly what privacy is: freedom for everyone (including the bad-actors).
The question becomes: can we incentivize citizens to behave positively enough to justify these extreme changes? The answer will have to be simulated just like everything else in this world. Theory rarely meshes with reality and implementation. The devil is in the details.
Conclusion
NFTs often have a bridge of assumed ownership that must be enforced in a centralized way. The best NFTs are the ones that can avoid such bridges entirely, but the most interesting solutions will come from the risk-takers.
Only one certainly remains:
Volatility and risk are fated to increase across all markets. The writing is on the wall, and change is on the horizon.
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Return from NFT Ownership Bridge to edicted's Web3 Blog
