Charley, great read! Thank you for the wonderful perspective. Your second-to-last paragraph made me consider something provocative - I thought I'd share.
This paragraph made me reconsider why tech companies are motivated to develop Web3. "Because the systems [are] optimized for the financialization and ownership of every digital thing", tech companies would overtake the roles of financial institutions and become intermediaries themselves - collecting economic rents on the flows of capital. What are your thoughts on this?
Interesting perspective Charley. I think a fair question to ask in your articles, which doesn't get asked, is whether or not the technology in some given context is better than what came before it. NFTs are a chance to do this. At present day, I think we can agree that there are two big emergent use cases for NFTs; conveyance of rights with respect to a purely digital asset and conveyance of rights with respect to a physical asset. While there may be limited precedent for the former when it comes to your rights to a Bored Ape (largely driven by a scarcity market for bragging rights aka collectability), there is sufficient precedent for the digital rights use case with something like music. Since the first iPod, music fans have largely agreed to Apple's conveyance of rights to store and play digital music from their favorite artists. Depending on your point of view, this system was an evolutionary step over the previous system of rights-conveyance; taking physical possession of an original CD. For example, in the new system, rights were conveyed one song at a time at the user's option. You didn't have to buy an entire album. But in exchange for this convenience, some would argue there was sacrifice. A deal with the devil. There were and still are downsides. For example, Apple may have conveyed a right, ensconced in some digital contract somewhere, when you paid $1 for a song. But that right came with restrictions. You could only exercise that right on an Apple branded device. If you died, the right was not transferrable the way a CD previously was. The point isn't to bash Apple. The point is that every system dating back to vinyl involved flaws. And so, the fair and operative question in terms of scenario #1 (conveyence of a right to a digital asset) is whether, despite its imperfections, the new system (NFTs) offers improvements over the system that came before it. What are the sacrifices (as you like to note) and are they worth it. For example, a new system of DRM for music could disintermediate Apple as the final arbiter of your rights, or those of the musician. The musician gets to make the rules, instead of Apple. A smart contract on a blockchain could convey your rights to a successor upon your death, and so on. Just as was the case with iTunes, a case could be made that there's real efficacy in the new system when it comes to the conveyance of rights to digital assets. The second NFT scenario involves conveyance of rights to a physical asset. And so I'd ask the same questions (by the wall, all in context of your question about immutability). Our system of laws in the US have evolved to a standard whereby a piece of paper backed by some system of non-repudiation (typically managed by a widely acknowledged third party such as a state government) is the instrument of provenance that conveys a right to something physical. A title to a car or a house. Rubber stamps and notaries. But that system has flaws. For example, paper can be forged. An entire ecosystem (eg: title searches) exists to mitigate the risks associated with the potential for bad actors in a system based on paper based entitlement. So, the question that should be asked in this case is to what extent this new digital system is an improvement over the previous one. Is there potential for certain bad actors and the risk associated with them to be removed? Does it create opportunities for new bad actors and at the end of that analysis, did we reach some improved state, are we taking a step backward, or is it 6 of one, half dozen of the other? Terrorists remotely detonate bombs with cell phones but we would never throw those babies out with the bath water. Maybe, as Moxie argues, there's a dark side to immutability. But maybe the upside greatly outweighs the shortcomings in the rules and provenance of the current system. Or maybe not. What if the digitally conveyed rights to the building that I think I own are enumerated in two separate distributed public ledgers? Like the CD that got converted into bits, how does today's paper move safely into a new medium that solves for problems that the current system doesn't solve for?
Charley, great read! Thank you for the wonderful perspective. Your second-to-last paragraph made me consider something provocative - I thought I'd share.
This paragraph made me reconsider why tech companies are motivated to develop Web3. "Because the systems [are] optimized for the financialization and ownership of every digital thing", tech companies would overtake the roles of financial institutions and become intermediaries themselves - collecting economic rents on the flows of capital. What are your thoughts on this?
Interesting perspective Charley. I think a fair question to ask in your articles, which doesn't get asked, is whether or not the technology in some given context is better than what came before it. NFTs are a chance to do this. At present day, I think we can agree that there are two big emergent use cases for NFTs; conveyance of rights with respect to a purely digital asset and conveyance of rights with respect to a physical asset. While there may be limited precedent for the former when it comes to your rights to a Bored Ape (largely driven by a scarcity market for bragging rights aka collectability), there is sufficient precedent for the digital rights use case with something like music. Since the first iPod, music fans have largely agreed to Apple's conveyance of rights to store and play digital music from their favorite artists. Depending on your point of view, this system was an evolutionary step over the previous system of rights-conveyance; taking physical possession of an original CD. For example, in the new system, rights were conveyed one song at a time at the user's option. You didn't have to buy an entire album. But in exchange for this convenience, some would argue there was sacrifice. A deal with the devil. There were and still are downsides. For example, Apple may have conveyed a right, ensconced in some digital contract somewhere, when you paid $1 for a song. But that right came with restrictions. You could only exercise that right on an Apple branded device. If you died, the right was not transferrable the way a CD previously was. The point isn't to bash Apple. The point is that every system dating back to vinyl involved flaws. And so, the fair and operative question in terms of scenario #1 (conveyence of a right to a digital asset) is whether, despite its imperfections, the new system (NFTs) offers improvements over the system that came before it. What are the sacrifices (as you like to note) and are they worth it. For example, a new system of DRM for music could disintermediate Apple as the final arbiter of your rights, or those of the musician. The musician gets to make the rules, instead of Apple. A smart contract on a blockchain could convey your rights to a successor upon your death, and so on. Just as was the case with iTunes, a case could be made that there's real efficacy in the new system when it comes to the conveyance of rights to digital assets. The second NFT scenario involves conveyance of rights to a physical asset. And so I'd ask the same questions (by the wall, all in context of your question about immutability). Our system of laws in the US have evolved to a standard whereby a piece of paper backed by some system of non-repudiation (typically managed by a widely acknowledged third party such as a state government) is the instrument of provenance that conveys a right to something physical. A title to a car or a house. Rubber stamps and notaries. But that system has flaws. For example, paper can be forged. An entire ecosystem (eg: title searches) exists to mitigate the risks associated with the potential for bad actors in a system based on paper based entitlement. So, the question that should be asked in this case is to what extent this new digital system is an improvement over the previous one. Is there potential for certain bad actors and the risk associated with them to be removed? Does it create opportunities for new bad actors and at the end of that analysis, did we reach some improved state, are we taking a step backward, or is it 6 of one, half dozen of the other? Terrorists remotely detonate bombs with cell phones but we would never throw those babies out with the bath water. Maybe, as Moxie argues, there's a dark side to immutability. But maybe the upside greatly outweighs the shortcomings in the rules and provenance of the current system. Or maybe not. What if the digitally conveyed rights to the building that I think I own are enumerated in two separate distributed public ledgers? Like the CD that got converted into bits, how does today's paper move safely into a new medium that solves for problems that the current system doesn't solve for?