The concept of an NFT was knocked up one evening and the shortcomings were never resolved.
Tech Hole 1: The asset is not on the blockchain 🔗
Most of the problems stem from the fact that because the most popular chain for NFTs, the Ethereum blockchain, is so badly designed that it is too expensive or impossible to store the actual asset (e.g. JPEG) on the blockchain, either because of the block size or transaction fees.
This was known as a shortcoming of NFTs when they were first invented and still hasn’t been fixed. The workaround was to include a link to the file elsewhere i.e. on a webserver, via HTTP.
The NFT for Beeple’s $69 million artwork EVERYDAYS: THE FIRST 5000 DAYS is below. NFTs are a JSON pointer to an asset. If you open see first URL below you will see (and be able to download a copy of) the $69m Beeple artwork, which is stored on IPFS.
{“title”: “EVERYDAYS: THE FIRST 5000 DAYS”, “name”: “EVERYDAYS: THE FIRST 5000 DAYS”, “type”: “object”, “imageUrl”: “https://ipfsgateway.makersplace.com/ipfs/QmZ15eQX8FPjfrtdX3QYbrhZxJpbLpvDpsgb2p3VEH8Bqq", “description”: “I made a picture from start to finish every single day from May 1st, 2007 — January 7th, 2021. This is every motherfucking one of those pictures.”, “attributes”: [{“trait_type”: “Creator”, “value”: “beeple”}], “properties”: {“name”: {“type”: “string”, “description”: “EVERYDAYS: THE FIRST 5000 DAYS”}, “description”: {“type”: “string”, “description”: “I made a picture from start to finish every single day from May 1st, 2007 — January 7th, 2021. This is every motherfucking one of those pictures.”}, “preview_media_file”: {“type”: “string”, “description”: “https://ipfsgateway.makersplace.com/ipfs/QmZ15eQX8FPjfrtdX3QYbrhZxJpbLpvDpsgb2p3VEH8Bqq"}, “preview_media_file_type”: {“type”: “string”, “description”: “jpg”}, “created_at”: {“type”: “datetime”, “description”: “2021–02–16T00:07:31.674688+00:00”}, “total_supply”: {“type”: “int”, “description”: 1}, “digital_media_signature_type”: {“type”: “string”, “description”: “SHA-256”}, “digital_media_signature”: {“type”: “string”, “description”: “6314b55cc6ff34f67a18e1ccc977234b803f7a5497b94f1f994ac9d1b896a017”}, “raw_media_file”: {“type”: “string”, “description”: “https://ipfsgateway.makersplace.com/ipfs/QmXkxpwAHCtDXbbZHUwqtFucG1RMS6T87vi1CdvadfL7qA"}}}
IPFS is basically a modern torrent, a file system accessible via the web that is stored across hundreds of computers. And that’s the next problem.
Tech Hole 2: The referenced URL won’t last forever 🔗
Even if the Ethereum blockchain exists forever (unlikely), the assets are still stored on IPFS. In the 90s and 2000s there were thousands of torrents like IPFS that are now defunct.
You don’t have to look for back on the internet to see that hugely popular platforms, browsers and systems one day became ghost towns.
Tech Hole 3: NFTs are only unique within a single blockchain 🔗
Right now, Ethereum is the ‘main’ blockchain for NFTs. But in the future this could just as easily be Tezos, Stellar, Hyperledger Sawtooth, Hyperledger Fabric, Corda, Algorand, Tron or one of a 1000 more blockchains. You only need to look back at the early internet to see how quickly platforms come and go e.g. Netscape Navigator.
Even today, the ‘uniqueness’ of an NFT is only within the chain. Like choosing a username, if you call yourself web2boomer on Twitter, someone else can use that username on any other website. The same is true for NFTs on different blockchains. So if you are investing in NFTs you are making a big bet on the future of the internet.
Tech Hole 4: Multiple NFTs can reference the same URL 🔗
http protocol includes no protection for the non-fungibility NFTs claim to offer. Even within the Ethereum blockchain there is no check on whether another NFT references the same URL (and due to the design it would most likely be too expensive to do). So an NFT of the same asset could be minted twice.
Tech Hole 5: The asset is a reference to a URL, which can be changed 🔗
Since the NFT just references an HTTP address, if that address changes so does the NFT
In fact, Beeple had an explicit threat to do this on one of his NFTs, below, if Trump was re-elected. And other artists have changed or even destroyed their auctioned NFT artworks.
{“description”:”PLEASE FUCKING NOTE: If trump wins, this token will change to that video of sexy boi king trump stomping through hell FOREVER. I don’t want you coming back to me bitching that you spent $2M* on this and now it’s a video of orangeman going HAM and it’s keeping u up at night popping mad boners. should have voted bruh.\r\n\r\n*and stfu that this isn’t gonna be worth a fuckton more when I hit 30 years of everydays and have a permanent collection in the MOMA. smh.”,”background_color”:”ffffff”,”external_url”:”https://niftygateway.com/#/","image":"https://res.cloudinary.com/nifty-gateway/video/upload/v1603975875/Beeple/BIDEN_WIN_iwkosh.png","name":"CROSSROAD #1/1",”animation_url”:”https://res.cloudinary.com/nifty-gateway/video/upload/v1603975875/Beeple/BIDEN_WIN_iwkosh.mp4"}
Much has been written about the economic flaws, pump and dump schemes, wash trading and fraud that is rampant in the NFT world. But if this flimsy tech does indeed usher in a new economy, it needs to be re-implemented before it can be safe or useful.
Be kind to one another.
