0

I was reading about this NFT thing on Ethereum: ethereum.org/en/nft

It is very interesting but I have doubts about its usage in real world, hopefully someone could give some light!

  1. The creator can mint any number of NFTs of his digital asset. What prevents him to sold his creation as unique NFT, say at the price of 1 ETH, and then mint 1 million of the same NFT making the price collapsed for the first buyer?
  2. The article explains that only the cryptographic proof of ownership of the NFT and some metadata are stored on the blockchain, while the actual NFT content is stored elsewhere (a generic server, a CDN, a cloud object storage, etc). So I imagine there is some sort of URI in the NFT metadata stored on the blockchain that should point to the actual "physical" asset. But links can be easily broken, the content could be moved elsewhere, or the storage service hosting the asset could stop to exist...In any of these cases the NFT is pointing to a broken resource, so it proves the ownership of nothing. How can we deal with scenarios like these?
1

I'll try and answer these the best I can.

  1. So yes, scarcity creates value. So it is true what you are saying. As soon as the creator creates multiple copies of the same piece, each one's value lowers. An NFT really creates digital scarcity, but the more there is, the less scarce thus less value. So, it actually won't be very beneficial to the owner if they mint more. The law of supply and demand will level out the price to make it less and less valubale even though the first one sold for more. This can also damage the credibility of the owner and just damage their work in the future.

  2. Yes, traditional NFT platforms uses centralized databases to store the "image" or whatever content the NFT holds. There has been cases where the database got corrupted or just went down and people could not see the content of their NFT (Although still holding the NFT on the blockchain). A workaround to this is a decentralized data storage system such as IPFS. This will ensure that as long as one node is online, and the necessary connections are in place, the NFT content will be present. I am not very clued up on IPFS, but find more info here: https://ipfs.io/

7
  • Hi, thank you for your answer. What I would l like to discuss on point 2 is that the connection between the NFT and its digital asset is not enforced. If the link to the digital asset becomes broken, for any reason, we have some sort of "orphan" NFT. No one can obtains back the bytes of the asset it was referring to, since hashing is a one way function. Does it make sense?
    – user75602
    Aug 15 at 9:06
  • 1
    It's important to remember that the "link" is just an address and does not form the digital asset's content. But yes, if that link is broken in some way; then the NFT is an orphan. But that's why a decentralized solution is great, because if the link and the asset itself is on a blockchain, then it's real difficult to break it. Aug 15 at 9:10
  • Yeah, in that case (where the digital asset is stored in another blockchain like ipfs), I could see a possibility to enforce the link between the NFT and the asset using smart contracts. For example if the asset is moved to another location on ipfs blockchain, the contract should automatically update the metadata link on the NFT. Very simplistic but could work.
    – user75602
    Aug 15 at 9:24
  • Yeah, so IPFS isn't a blockchain if I remember correctly. It's rather a peer-to-peer network. It would be very expensive to save a digital asset directly on chain. But yeah, if the address hash changes, it makes sense to have it update. Aug 15 at 9:27
  • Here there are relevant informations about using ipfs with NFTs and how an ipfs uri and content based addressing help to preserve the integrity of the NFT underlying asset: docs.ipfs.io/how-to/best-practices-for-nft-data/#metadata
    – user75602
    Sep 12 at 8:30

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.