But What Are NFTs Actually

When you know the technical details of what NFTs are you realise that the way most people talk about them is completely wrong!

00:00 Intro - NFTs aren't want people say they are
01:05 Cryptocurrency explained
02:55 What non-fungible means
05:41 The Ethereum blockchain makes NFTs possible
06:55 NFTs are made on the Ethereum blockchain
07:11 NFTs as tickets for an event - a hypothetical real world use case
09:31 Buying NFTs without trust
11:17 What NFT art actually is
19:16 Maybe NFTs aren't stupid
20:50 LegalEagle tells me not to do something stupid
24:15 NFT collectables - CryptoPunks
25:05 Support digital artists by buying their NFTs
27:26 Sponsor message


You can buy my books here:

You can support me on Patreon here:

just like these amazing people:

Frank Hereford
Will Ackerly
Brendan Williams
Cameron Leigh Middleton
Matthew Cocke
Frederic Merizen
Jeremy Cole
Alan Wilderland
Joel Van der loo
Glenn Watson
Doug Peterson
Paul Warelis
John Zelinka
Alnitak
Grant Hay
Heather Liu
Marshall Fitzpatrik
Lukas Biewalk
JJ Masson
Ben McIntosh
Damien Szerszinski

[ShanesGettingHandy]

Thank you for telling us NFTs are stupid without telling us NFTs are stupid.

[mossblomma]

I didn't actually think I would come out of this being convinced that NFTs are even more stupid than I thought they were...

[AnonymousFreakYT]

The explanation of NFTs I came up with is:

Person is standing at a table, on the table are a few polaroid photos. Each photo is set inside a shoebox with no lid.

"Hi, would you like to buy an NFT of this polaroid photo of Picasso's The Charnel House?"

"Oh, okay. So I now own The Charnel House?"

"No."

"Okay, so I own the polaroid photo?"

"No."

"What will I own?"

"You'll own a post-it note that says that _this_ shoebox is your shoebox. The shoebox will stay on this table forever. Inside this shoebox is a polaroid photo of The Charnel House."

"Uh, okay. So I can take the shoebox with me?"

"No, it stays here, but you can come look at it any time."

"Hrm, well, I can put a lid on the shoebox, and you'll only take the lid off when I show you this post-it note, then, right?"

"No, the shoebox lid is always open."

"So anyone could come by and take a photo of the polaroid in the shoebox with their cameraphone?"

"Yes, but they aren't supposed to do that."

"Now, wait a minute, I just realized, you said only that the _shoebox_ is my shoebox. What about the polaroid photo of The Charnel House inside?"

"Oh, the photo is managed by Sam over there. Sam says the polaroid won't be moved, but you just have to take Sam's word for it."

"So Sam could remove the Mona Lisa polaroid and just leave nothing in the shoebox? Or replace it with a polaroid of a pile of dog poop?"

"I mean, technically, yeah. But Sam said they'll leave The Charnel House polaroid there. And your post it note says that the shoebox is yours!"

"But I can choose to publicly display this polaroid of The Charnel House. should I choose, right? Or sell T-shirts with a photo of the polaroid on it?"

"No, The Charnel House is still under copyright, you'd need to get permission from the Picasso estate to display or sell merchandise with it on it."

"But this is the only shoebox with this polaroid in it, right?"

"No, I'm pretty sure Bob over there has another shoebox with a polaroid of The Charnel House in it."

[atraxisdarkstar]

The best description for NFT is buying a voided copy of someone else's grocery receipt. Your receipt says "milk", but you can't exchange it for milk or use it to get milk or claim that it IS milk, you just have a piece of paper that says "milk".

[xenontesla]

25:06 Just one thing to note, there are other ways to support artists you like buying full resolution files of their work, becoming a patron, buying prints or merchandise and paying for commissions (which is when the artist creates an original piece at your request).

[PedroContipelli]

As a programmer, when I saw smart contracts for the first time, I said "Oh... God. What have we done?" Do you know how easy it would be for someone to maliciously OR unintentionally create a smart contract that doesn't do what it looks like it does? A simple overlooked bug could wipe away millions, billions, or trillions of dollars in under a second. Whether you think NFTs are stupid or not, they ARE NOT a safe place to hold your money.

[randommcranderson]

NFTs are a solution looking for a problem. Every NFT implementation I've seen so far has been either stupid or a scam. Can they potentially be used for something good? maybe, but usually there's a non NFT alternative already working there where the NFT is completely superfluous.

Can NFTs replace microtransactions? Sure, but its just moving the database to a blockchain instead of the developer's database. Can they become tickets? sure but you still have to trust the issuer that the event exists and you will be let in. Can NFTs be used in smartcontracts? sure, but if you have an issue you can't appeal to anyone except a court and that's essentially the same as regular contracts.

It's all crypto bros looking for the next big crypto bucks, so they invent solutions to problems that dont' exist.

[jdraven]

This was well presented. It's funny that everyone uses tickets sales for an event as the one example of NFTs being useful. Indeed, they don't HAVE to be stupid. They could be the unforgeable third-party verification mechanism we need for some things.
For digital art, however it's flatly ridiculous. You're buying nothing, you own nothing, except for the ability to pass the hot potato off to someone more stupid than yourself.

[tintern]

This may be an impressively stupid question, but here it goes: if the blockchain ledger keeps a record of every transaction, doesn't it eventually get too big and unwieldy?

[RC-]

For a system built around not needing trust, an awful lot of trust seems to be involved. Trusting marketplaces, trusting that content related to an NFT will be ported to future platforms, trust that the one minting the NFT is the one deserving credit for whatever their NFT links to...

They might as well use centralized systems instead of trust; way less inefficient.

[Bebeu]

I would have liked to see the apparent paradox regarding centralisation be discussed in the video. What I'm talking about is the fact that blockchain is inherently supposed to be a decentralised/trustless technology, but the way blockchain is actually used (at least for NFT’s), it has become centralised and does rely on trust. What if the images are taken down? The NFT doesn't mean as much now. What if OpenSea goes down? That's going to make a lot of apps stop working. Most people won't be interacting with the blockchain directly, just as people don't host their own websites on their own servers – they rely on companies to do the hard work for them. This might be more of a problem with “Web3” than NFT’s specifically, but I still think the argument stands.

[hexandcube]

You can tell that a lot of research went into this video. This is one of the best explanations of what NFTs are, what is a blockchain, and how smart contracts work. Great job.

[SILVERFX]

The issue with the trading card analogy is that the link on the NFT can be broken at any time for any number of reasons. Yes, your line in the ledger still exists, but the content it was pointing to isn't guaranteed to last. If I buy a trading card, there isn't any risk of me pulling it out some day and having the artwork on it suddenly change to "404 not found".

[frankowalker]

So when you buy an NFT, you are buying nothing. Got it.

[mute]

If you want to support an artist, you can just give them the money, whether by making a commission, supporting them on Patreon/Fanbox/etc., or simply by donating to PayPal or wherever they accept donations. NFTs provide no additional benefits here.

[outandaboutintheworl]

The comparison to trading cards is a interesting. Its true that some products do have long lasting collectible value and NFTs are in theory no different. But those collectibles first began as products people simply wanted to own, not in the hope of selling to someone else. Trading cards in the 90s had a boom driven entirely by speculation, comic books had a similar phenomenon at the same time. In both cases the market came to be dominated by people buying in the expectation of profiting by selling it later to another buyer. Both markets collapsed after a few years and settled back down to markets of consumers buying the product because they actually want it, with a smaller secondary market of trading.

That's the issue with NFTs, how many people actually want an AI clipart image of a monkey, and if they do is it actually worth $500, 000 to them? Or is it bought just for speculation? I mean, we all know its the latter, and then how can anyone expect that speculation to carry on forever, with the price always going up?

[MrDowntemp]

One aspect you didn't cover, which I find particularly concerning, is that you are given no control/access to where that URL points. You may buy an NFT that points to an image on geocities, but if the owner of that server deletes the image/gets hacked/or stops paying their bills, your link will point to a 404 page, or worse. It feels more like buying a receipt to me. That receipt will have the address of the shop on it, but the shop can up and move. If the jpeg was actually on the blockchain, that would be different. Sure that would be more expensive, but at least there's something to it then other than a hope and a promise. Your initial idea of selling tickets with escrow contracts is the best actual use for blockchain tech that I've ever heard of, so I doubt we'll ever see it in action :/

I'm still firmly in the "NFTs aren't just stupid, but also irresponsible, and more often than not, a scam." camp.

[graysonsmith]

Given how big the current market is for autographs and collectibles, I'm pretty sure this is mostly a bubble. Some will survive, but people will want physical objects and stuff that actually feels nice to "own" rather than something they think someone else will buy thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else thinking they can sell it to someone else

[passerby]

I was arguing with my friends for a long time that NFTs is the dumbest idea I've known that people believe in. Now that I know this video exists, I'll just point them here.

[andrewpastor]

I wish you had been a professor at my uni! You have a beautifully concise, easily understood explanation for the topics you discuss. Thank you for the education sir!