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Replying to
But NFTs create a mechanism for fine-grained rights *optionality.* If I make a game with my characters for example, then perhaps the holder of the NFT is suddenly granted airdropped the right to pick game characteristics of the character. You don't have to know ahead of time.
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This is kinda like how land rights evolved. Until there were airplanes, airspace rights above land were meaningless. Buying land doesn't give you limitless rights to pump groundwater, but might grant you *some* rights. Mineral deposit rights may or may not go with the land
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The ability to define and sell pointers to future rights I think is a powerful programming mechanism for rights management. Right now, this is based on trust of the creator, but I think norms will emerge.
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I think answers like "it's an autograph" or my own first metaphor "it's like the scam companies that allow you to name a star but it isn't recognized by astronomers" are... kinda wrong. They don't really exploit the fact that the NFT is a uniquely identifiable pointer to a thing
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Another way to think of it comes from TradFi... the popular (and also perceived-scammy) mechanism of SPACs. You're buying a pointer to a future undefined company when you buy into a SPAC.
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This btw, makes 1/1 NFTs less interesting to me than 1/n. Because limited editions allow you to create undefined *communities* of pointer holders. For eg. the next NFT experiment I'm thinking through relates to this playable maze created by and me.
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Now this thing is more than just a nice graphic. It's also the base map for a 3d maze we tried to create with (project is on backburner). It provides some of the scaffolding for my next book. I've written a whole series of articles exploring the symbolic logic of it.
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There's many places to take this. For eg. if we mint a 500, we could later mark 500 locations on a metaverse-navigable version, and the buyers get naming rights (like "John Doe junction"). If there's a video game, maybe you get an in-world persona in the story etc. etc.
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But all these are speculative *potential* projects. They may or may not happen, so the NFT has to be priced like any option, based in part of likelihood of various interesting things of value happening.
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If the game or navigable virtual world already existed, I would just sell that directly, and charge an undiscounted-for-risk access price. So if it cost 0.01E to collect this map now, perhaps access to the game would be worth much more...if it happens.
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Setting aside goodwill/support/patronage aspects, there's probably a way to price an NFT as a sort of hyperlocal option, based on what you know of the creator. For this map for eg. it would be worth much more if Dan and I had a history and track record of making 3d video games.
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But there’s other valuation signals. For example the Loot project is just lists of gameworld objects. Even knowing nothing about future games that may/may not be created, you know rare items across lists will be worth more. And this is exactly how market priced Loot.
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In the case of the maze, you might guess that prominent locations on the map might be worth more. Even if unassigned initially, chances are we’d do something like allocate more valuable real estate to people who paid for higher levels of tokens or bought in earlier.
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Note… I am NOT promising to do any of this with the map. I might do nothing besides write some more blog posts about it. Video game projects might start and fail, or fail to start. But the information revealed along with the NFT is a pricing signal fir *whatever* happens.
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So when you buy a “serious” NFT… one that’s more than a pet-rock collectible and shows signs of future generative evolution, you buy a stake in the *realized* future. Of course this doesn’t preclude wysiwyg art valuation, but the generative direction is more interesting.
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So NFTs are fundamentally social. One-offs are less generative than collections (or more generally, meaningfully decomposable things). The non-fungibility creates a locus of value, the collection creates a context of value, and the undefined future is the risk/reward space.
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I haven't looked too much into big hits like bored apes and cryptopunks, but seems they too get priced by the rarity of attributes (like "punks with glasses"), but I think that approach has limited generative potential. It's differentiation but no obvious collection "chemistry"
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The big downside of this is, oddly that it requires too much trust. Ironic for a technology of trustlessness. Maybe there's a no-free-lunch trust theorem here. You have to trust that a) the creator will do something interesting and valuable b) act in good faith in sharing it
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You have no guarantee of either. So this is scam potential. I expect 90% of things done under NFT to be de facto scammy, in that they will hint at future value they have no intention of trying to deliver. Like vaporware startup pitch decks etc. but worse.
happy season 4 GIF
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So oddly enough, the test of whether there will be value is the old-fashioned human trust way... if the person seems like they'll want to remain in your milieu indefinitely (maybe they are part of your subculture) your best guarantees come from that. They won't want to lose face.
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I'm kinda curious about creating an NFT valuation formula. The individual's past track record and home milieu stability can predict a future via something like iterated prisoner's dilemma ("this artist's NFT experiment will follow him through his career in the NY art scene")
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While characteristics of the work itself (statistical signatures, measures of composability and chemistry) can provide some sort of valuation of the generative potential.
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And of course, the strongest signal is just the buy-in levels of funding themselves. If a set of graphic assets raises $50m worth of ether, there's a good chance the artist will want to double down and do something with that windfall, like make a game or movie or whatever.
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An NFT is (or can be positioned as) something like an unsecured restricted income share agreement (or general value share) anchored on an asset+person. Unlike a generic ISA, it points only to the value induced by “seed” objects
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In fact you could just “NFT yourself” as a simple ISA-like thing. Name a coin after yourself. Done. Null nft with all alpha linked to the minter.
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Sidebar elsewhere on the practical matter of planning for the inevitable crash. I’m not a big believer in predictions, but it’s interesting to lay out the worst case scenario that would still keep you interested. Will you keep tinkering if ether is at $400 for 2y? $200 for 5y?
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here we go again twitter.com/latimes/status…
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Not ether specifically, but as indicator of crypto overall. If analogies to 2000 are justified, then a 90%+ crash for 5+ y might be what you plan around as worst case. Can you keep tinkering with NFTs, DAOs etc through such a winter? I frankly don’t know my lower limit.
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I’m not talking about the relatively internal boom-bust cycles within crypto that we’re all used to thats been primarily speculative-financial. This time, there’s a non-trivial scenario where it’s a long *tech* slump/winter like 2000. The grown-up general economy version.
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Replying to @vgr
This has happened in cycles since all of crypto started (bulls in 2010,2013,2017,2021). It's so accepted that people even joke about wanting bear markets because development is nicer. Less grift, nicer people, less anxiety of having to rush development, etc.
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The Web3/ETH scene now seems less like a weird sideshow and more like Amazon in 2000. Web3 today is like “e-commerce” in 2000. Took Amazon ~9y to regain early 2000 peak. 9y in which they proved all skeptics wrong and pioneered cloud, but it was still hard to believe in them.
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Yes, everything good tends to get built in long winters, but large numbers of talented people do tap out at various points along the way simply because they do not have the resources to stay interested. So macro good/micro ??.
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Replying to @vgr
ERC-721 standard was proposed in Jan 2018. The same month as the first big crash. All of everything *gestures* was all built out in winter. ¯\_(ツ)_/¯ #BUIDL
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After a burst of enthusiasm in 1997-2000, between 2001 and 2007, I basically did not write online, did not participate in internet culture really, and did not buy tech stocks. Telling though that I did shop more and more at Amazon but still didn’t believe enough to buy stock.
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Partly, life got in the way. I was on a student visa gathering old economy credentials, unsure if I’d stay in the US or ever get back to internet stuff. Placing bets elsewhere. But if I’m being honest, it was also loss of confidence. Lost interest/faith in the internet for ~7y.
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I think some combination of 4 things sustained those who stayed in game 2000-07: 1. Enough $ to sustain belief (delusional or not, think Google vs Yahoo) 2. Belief in non-social-proof trend (eg: YouTube = bet on cheaper bandwidth) 3. Specificity of goal (mobile web, cloud)…
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4. Most important… sunk costs, both financial (imagine holding what would now be millions in Amazon stock at the bottom in 2000 after believing) or psychological (entire identity invested in code you’ve written over a decade).
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None of the 4 applied to me. I had no money, I had no specific trend I believed in, no specific goal that required the internet (I was working on internet-agnostic aerospace tech). I had a few options from the startup I’d worked at 2000-01 but forgot to exercise these in time 🤣
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Can’t recall the details, but I probably lost a few 10s of k due to that carelessness. But it tells you how little I cared about what little stake I had. I was still mildly and peripherally interested in the internet, but it wasn’t my “thing” through that period.
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This time 1 and 4 are somewhat true for me. I’m actively hunting for a thesis on 2 and it looks promising. But I suspect what will keep me hooked through a potentially long winter is hooking into a good goal. I think it’s robotics for me. Web3+robots = I care enough to stay in.
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One of the interesting things about crypto is this possibility of digital destruction that works without taking a physical hammer to a hard drive or something. Not entirely sure how it works. I think you send tokens to a blackhole address or something?
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