The three-letter abbreviation of NFT is believed to be familiar to most people, but even senior players in the encryption industry cannot give a clear definition of NFT. Everyone may know that the abbreviation of NFT is “Non-Fungible Token”, which is a non-fungible token, but what it really means is actually a lot of controversy and discussion. For example, is an NFT just a data credential? Is it real artwork? What is the meaning of non-homogenization? What is a token…
In fact, digital art already existed before NFTs became popular. Early digital art usually represents some pioneering achievements of the creator, so it has a certain collection value in itself. So early digital art is NFT?
This article will discuss the historical development of the debate over the definition of NFTs, as well as the meaning of “non-fungible” and “token”. Before getting to the point, let’s first understand what unique features of NFTs are.
Importance of NFTs
What changes does NFT bring to the field of digital art?
Digital art existed before NFTs, and even cryptographic art existed before NFTs for a while. But they have never attracted as many collectors as NFTs.
Someone created “ASCII art” on the Bitcoin blockchain network back in 2011 as a tribute to the recently deceased early Bitcoin developer Len Sassaman. It contains two ASCII images, one of Len Sassaman and one of then-Federal Reserve Chairman Ben Bernanke.
“BitLen ASCII” is a memorable piece of art in blockchain history, and it remains permanently on the blockchain for all to see. But we go back to the original question: why would NFTs be more popular than early cryptographic art?
The emergence of NFT allows digital art to circulate in the market, and people can buy and sell NFT by participating in market behavior, thereby realizing the transfer or exchange of its ownership, which is obviously different from the collectibles issued by companies such as Beanie Babies or Pokemon Cards. The higher the collection value of NFTs, the greater the wealth effect, and the huge wealth effect attracts many collectors, and at the same time inspires more digital artists and creators to participate in the development and creation of NFTs. This is also the beginning of this feast that people usually regard the collection value and wealth effect brought by the transferability of NFT decentralized ownership.
“Token” is an abstract term that doesn’t actually exist, it’s just a shorthand way of invoking the code for identifying an ownable asset. Non-fungible tokens or NFTs satisfy the innate human desire to have something unique, but the definition of “non-fungible” is widely divergent.
Discussion on “non-homogenization”
In some Discord server chats, people will object to calling some well-known digital art NFTs, such as Rare Pepes, Curio Cards or JakNFTs, etc., because they are semi-homogeneous. These different versions of the same token of digital art can be exchanged equally without any loss of value, but they are different from fully fungible tokens because they are irreplaceable in different collections of digital art.
Undoubtedly, these can be called decentralized digital collectibles, but if we want to call it NFT, then we must give a clear interpretation of NFT, that is, what unique meaning NFT has to artists and collectors.
Fungible tokens are interchangeable with each other, and some are created for fully fungible purposes, such as the crypto-assets that most investors trade are fungible. On the other hand, some homogenized tokens still have a certain collection value and exist on the decentralized network. The homogenized tokens with collectible value will also claim to be NFTs, but they have been opposed by doubters. So the question becomes what is “collectible value”? We try to understand it from the point of view of some collectors.
Rare assets have collectible value, and assets may become scarce due to certain characteristics at the time of issuance, or symbolize a milestone event on the timeline. For example in 2014 Dogeparty released the JOLLYROGER, which is the Dogeparty token, with an image attached to it. While each token is fungible in JOLLYROGER, JOLLYROGER is collectible during the creation process due to the imagery attached to it. Renowned crypto artist Rhea Myers created MYSOUL concept art in 2014, MYSOUL has no attached images, but its ownability and tradability make it collectible. Likewise the XCPinata asset on Counterparty has artistic value, and although the actual image was attached at a later date, the original creative intent made it an important collectible.
There are some crypto assets that did not have unique collectible value at the time of creation, but will now have special commemorative value retrospectively, such as the first Counterparty token TEST in 2014, with a supply of only 400. Because the first release of TESR led to the rise of the crypto art movement (Rare Pepes), and because TESR itself is scarce, it now appears to have some collectible value.
Are Bitcoins mined in early blocks collectible? They have no images and are not scarce, the only thing that makes them different is the UTXO mechanism that defines where each blockchain transaction starts and ends. Officially, this traceability and uniqueness make early-mined bitcoins collectible. Casey Rodarmor created the ordinals project to allow satoshis to be numbered and tracked in transactions as a way to observe collectors’ attitudes towards the time series of token releases.
Some semi-fungible and homogenized tokens with collectible value
The debate over Namecoin NFTs centers on the ownership of “tokens”.
The earliest NFT is Namecoin NFT. The domain name with the text content “d/bitcoin” minted on April 21, 2011 became the first NFT. There is no concrete argument that Namecoin assets are non-fungible, ownable, transferable tokens. Ethereum founder Vitalik Buterin mentioned Namecoin NFT on the first page of the Ethereum white paper. He used “non-fungible assets” in the white paper, and the term NFT officially appeared in 2017.
The Namecoin NFT was the first NFT to be largely accepted, with more controversy surrounding the setting of the expiry time: if the owner did not renew their domain name in time, it would expire after nine months.
Some argue that if holders have to renew their domain names, it’s more of a lease than a true transfer of ownership, defeating the purpose of Web3.
This view is false, as Namecoin NFTs provide holders with full ownership. Unlike renting, the decision to continue ownership is entirely up to the owner. Updates are mainly to maintain the network and require extremely low fees paid to miners, more like an infrastructure tax. As of this writing, a 50-year renewal costs about $1.
The bigger problem with Namecoin NFT is the traceability problem. Namecoin NFT can be re-registered after it expires, so there will be a problem of change of holder.
Technical discussion on Namecoin NFT traceability
What happens to Namecoin domains when domain ownership expires and is re-registered after a period of time?
When a domain name is registered for the first time, there will be a specific identifier UTXO, through which the transaction history data of the domain name can be queried. UTXO is a special kind of token, and this special identifier is called “colored coin” in this article. When the domain name expires, the “colored coin” will be unusable, that is, “burned”. When the domain name is re-registered later, a new UTXO will be generated, which means that when the domain name expires, the unique identifier of the domain name will not be recognized. Domain names are unique, and all updates and transactions are stored on the chain.
Editor’s Note: UTXO is a protocol for distributing bits of cryptocurrency data that allows users to track and query cryptocurrency ownership transactions. “colored coin” roughly describes a class of ways to represent and manage real-world assets on the Bitcoin blockchain, where the asset issuer promises to redeem it for certain goods and services, thereby attaching displayed world value to the token superior.
Not only can the transaction process of the domain name be queried through UTXO on the block browser, but also the function of the domain name can be queried. Domain names have a built-in PRC model from the beginning: “name_show”, with the built-in “name_show”, information about domain names can be returned even during domain name expiration.
In fact an expired domain name will still work, returning to the local state name_show will indicate that it is in an expired state, and if the resolver is reset, the domain name will still work. Also expired “id/” names in domain names can still be used as login names.
Another built-in RCP method is name_history, which extracts all the original data and history of the domain name, which shows that the domain name has traceability characteristics from the beginning.
Explanation of “Tokens”
Explanation 1: A “token” is a “colored coin” represented by a domain name with a unique identifier. When the domain name expires and is re-registered, a new “colored coin” will be allocated to form a new asset.
Explanation 2: “Tokens” themselves are domain names, and they are all uniquely identifying assets. Namecoin is designed with domain names as the primary unique identifier. When the domain name expires, the data of the domain name is still kept on the chain and can still be traced back.
Explanation 3: A “token” is a “colored coin”, which is an encrypted representation of a domain name. When the domain name is re-registered, the new “colored coin” becomes a new NFT, but it still represents the value of the asset before the re-registration, that is to say, only the ownership of the “colored coin” changes before and after the registration, and the represented asset The value has not changed.
These three explanations divide “tokens” into three categories
- Crypto assets
- Off-chain assets (for cases where real-world assets are referenced, eg: Twitter Eggs, Blockheads, Quantum, etc. Not used for Punycodes, Damselfly, Identities, Bit Domains)
For collectors and decentralization enthusiasts, it is important to own collectible assets in a decentralized manner. Even the historical data of expired Namecoin domains still exists on the decentralized blockchain. This data can be owned in a decentralized way, so it is still called a decentralized collectible.
The above has been discussed from the perspective of technical principles, and then we will start to consider the ethical, philosophical and legal perspectives. These perspectives are subject to a certain degree, but they are worth learning from.
Ethical and philosophical discussions on the traceability of Namecoin NFTs
The big bull market in the crypto market triggered by NFTs in 2021 has made many Web3 participants believe that the characteristics of blockchain decentralization and traceability will bring about a paradigm shift in ownership. Holders of this view support CC0 (no rights reserved) and are less concerned with real world arguments or even laws.
Editor’s Note: CC0 makes scientists, educators, technologists, and other copyrighted or database-protected content completely open source so that others can freely use and supplement it without restrictions under copyright law.
Critics of this view argue that blockchain can bring a lot of value to creators and collectors, but that physics, ethics, and universal truths cannot be ignored.
The conflict between Larva Labs and v1Punks reflects these two very different perspectives. Larva Labs, the original creator of CryptoPunks, has long argued that the flawed v1 contracts do not represent their real artwork (artist statement and intent), while v1Punks holders argue that blockchain timestamps reflect v1 still It is a decentralized collectible with collectible value. A similar debate occurred with Namecoin NFTs.
If an artwork is created by a creator on Namecoin and re-registered by the same creator after expiration, the ownership has not changed or transferred in a philosophical sense. However, if it is re-registered by someone else after the expiration, there is a lot of controversy.
Explanation 1: In a philosophical sense, after an artist has created a work, others cannot claim to be the creator after re-registration; from this perspective, it is immoral to embezzle other people’s works and sell them.
Explanation 2: Namecoin provides 100% ownership and it is up to the owner to extend ownership. In a philosophical sense, if an artist does not extend their ownership, it signifies a decision to make their work public and anyone can claim it. If the holder later increases its recognition through marketing, then it is ethical to derive financial benefits from it.
Things get more complicated when the artwork is linked to an external server that the original creator has control over. We take the off-chain information into account, so what exactly does art refer to? Whether it is one or all of the off-chain file, the domain name attached to the link, or the “colored coin” corresponding to the domain name is a matter of debate.
traceability for ethical reasons
Recently, the Punycodes community discovered the original creator of 966 Punycodes. Punycodes DAO immediately invited haluciphile to become a DAO member and gave away multiple Punycodes. The Punycodes DAO also promises to distribute a portion of the royalties from the vault contracts on Ethereum to haluciphile. Punycodes then announced an announcement: If the original creators of Punycodes prove their identity through a wallet verification message process, the Punycodes DAO commits to do its best to ensure that the original creators receive value, such as token assets and royalties.
Fundamentals and Indicators of Collectible Value
- Timestamp: Immutable objective data on the blockchain.
- Scarcity: The amount of an asset in a collection or edition.
- Creativity: Artistic and Conceptual Intent.
- Technological Achievements: Technological innovations that drive the development of NFTs.
- Coined blockchain: Game NFTs have high requirements on the interoperability and composability of blockchains, and the decentralized governance model is still important.
Most of us won’t pay attention to the debate about semi-homogenization, the meaning of collectible value, and the expiration of ownership, but this does not affect people’s participation in this feast brought by NFT. Collectible assets can contribute to the NFT movement as long as they can be transferred or traded in ownership and held in a decentralized manner. As people use it on a large scale, the definitions between confusing NFT terms, decentralized collectibles, and blockchain collectibles will become clearer.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/this-article-clarifies-the-debate-on-the-definition-of-nft-in-the-process-of-historical-development/
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