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A Key Feature of NFTs Has Completely Broken (theverge.com) 137

One of the big promises of NFTs was that the artist who originally made them could get a cut every time their piece was resold. Unfortunately, that's not the case anymore. From a report: OpenSea, the biggest NFT marketplace still fully enforcing royalty fees, said today that it plans to stop the mandatory collection of resale fees for artists. Starting March 2024, those fees will essentially be tips -- an optional percentage of a sale price that sellers can choose to give the original artist. If the seller doesn't want to hand over any money, that'll be their choice.

The NFT ecosystem has been on a race to the bottom when it comes to fees. As the market for NFTs collapsed, marketplaces have lowered their own trading fees and stopped enforcing royalty fees in order to attract sellers. Blur, which has overtaken OpenSea as the biggest NFT marketplace by trading volume, only enforces a 0.5 percent fee on most collections, whereas creators typically set their fees at 5 to 10 percent. OpenSea will stop enforcing royalty fees on all new NFTs starting August 31st. The marketplace will continue enforcing the fees on certain existing collections until March 2024, at which point they'll become optional on all sales.

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A Key Feature of NFTs Has Completely Broken

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  • by Kitkoan ( 1719118 ) on Friday August 18, 2023 @10:23AM (#63777858)
    Oh no... Who could have seen that happening...
    • Maybe all the doom and gloom predictions caused this and I should have kept my mouth shut instead of shitting on crypto and NFT for the last 8 years. So I searched my soul and I don't even feel bad about it.

    • The creators should sue them and demand their digital art back. Since they agreed to have those arts have residual profit based on all sales.

      • They never 'lost' their digital art. There is nothing that kept them from keeping a copy of the .jpg when they first sold the link to the .jpg.
    • The summary is wrong in that an NFT is about art or its key feature is broken. The non-fungible token standard allowed for a decentralized grassroots art market to exist. NFT can also be a game asset or a myriad of other things, and its functionality and scope of features are intact.

      Yes, there was hype because humans are mostly visual beings but what is being broken is the bottom line of some service providers. Not surprisingly it is the creators who are punished again, so nothing new really in that sense.

    • Why does this NFT cruft still exist?
  • NFTs (Score:5, Insightful)

    by Dwedit ( 232252 ) on Friday August 18, 2023 @10:23AM (#63777860) Homepage

    Yes, every time the link to the JPEG that everyone can look at for free is resold, the original artist would get a cut.

    • Re: NFTs (Score:2, Insightful)

      by skumlord ( 7801418 )
      I only looked at your description of a link to a NFT, do I still need to pay?
    • Re:NFTs (Score:5, Insightful)

      by Baron_Yam ( 643147 ) on Friday August 18, 2023 @10:37AM (#63777892)

      Just when you think people can't get any dumber yet still function enough that they can interact with other people... someone comes around who proves you wrong.

      "I have this image. Anyone can see it, copy it, whatever. You can buy an entry in a ledger that says it is yours, but you don't actually get anything or any control over it. At all. Essentially, I publish a public receipt indicating how stupid you are to the nearest penny. $1000, please!" ...And people paid.

      • by drnb ( 2434720 ) on Friday August 18, 2023 @10:52AM (#63777934)

        Just when you think people can't get any dumber yet still function enough that they can interact with other people... someone comes around who proves you wrong.

        "I have this image. Anyone can see it, copy it, whatever. You can buy an entry in a ledger that says it is yours, but you don't actually get anything or any control over it. At all. Essentially, I publish a public receipt indicating how stupid you are to the nearest penny. $1000, please!" ...And people paid.

        I think people paid in excess of $400,000 at the peak of the frenzy. Buyers at $1,000 would be on the winning side of this "greater fool" based operation. One might call them many things, but "stupid" may not be appropriate. The folks at the ground floor of a scam might lack morals and ethics but perhaps not brains.

      • You can buy an entry in a ledger that says it is yours, but you don't actually get anything or any control over it.

        Also, you need to back up the image yourself as the server it's on may not stay up forever, or remove it for whatever reason.

      • Name a star after yourself or a special some one. We'll charge you to put it in this book that we made up and that no scientist uses. We'll also charge anyone that wants a copy of our made up and useless registry.

        Scams like these are old. Add some technology and algorithms to confuse people like a magician waving his hands to misdirect and audience, and you can reuse old scams on a new generation of marks.

      • The real question is Who is still buying NFTs? I would pay some Satoshis for an investigation that looked into that.
      • Kind of like paying money to "name a star" in the "International Star Registry," which is essentially a book that lists all the star names that are not officially recognized by any government or scientific body.

    • by Kisai ( 213879 )

      NFT's were only ever signposts to a link, and people could change what that link contained at a moment's notice.

      It's absolutely hilarious what people thought they were buying was a receipt, not the item. It reminds me of people buying empty boxes on eBay, where it clearly says "empty box". The person listing it knows exactly what scam they are pulling.

    • It just goes to show that in the digital age while we enjoy the ease of production that computers offer, and value the many artistic forms that computers help us to create, that there is still just an inherent value in having something real, physical, and tangible.

      Maybe they've conned kids on pay-to-win MMO games into thinking that giving the hosting company real money to flip a few bits on a server somewhere is value for their dollars and that they are achieving something by that, but people who actually v

  • by Ed Avis ( 5917 ) <ed@membled.com> on Friday August 18, 2023 @10:35AM (#63777888) Homepage
    But if they wanted to guarantee that artists would get a cut of the resale price, and NFTs being all blockchainy and stuff, why didn't they enforce this in the blockchain itself? Smart contracts or whatever it is?
    • I'm not an "NFT expert" (thank god), but i suspect it's because they wanted to leave a gaping loophole for them to cravenly monetize, like all other NFT platforms.

    • by The Evil Atheist ( 2484676 ) on Friday August 18, 2023 @10:50AM (#63777924)
      That's the thing, they're stopping enforcing it. It doesn't matter how they were enforcing it before, but apparently they can stop. So even if the enforcement used to happen in the blockchain (smart contracts or whatever), apparently someone has the power to decide to stop doing it.

      It's almost as if this whole thing is actually centralized in practice...
      • It's almost like they took the existing banking and economic models we already have, digitized it, renamed and rebranded it and managed to convince regulators that existing laws don't apply to their platforms. They then proceeded to sell these illegal equities and "tokens" for real money to the scammers and naive. What a joke.
      • But if the commision was coded into the original smart contract it would presumably only be changeable by the beneficiary, not the trading house. The fact that the trading house can change it means that it was "broken" the whole time.

        • I mean, you had people implementing smart contracts that simply transferred all tokens from their victim when they click a link sent to them via SMS. I'm sure there have always been ways to override, that such-minded people could always implement.
    • by Anil ( 7001 )

      If the original artist signed on with the expectation of getting forever royalties, and that is no longer enforced; maybe they have a an avenue to sue for breach of contract?

      The only feature of NFTs that made them seem appealing was the sale link back to the original artist. If someone can actually create some kind of thing to allow that, it would be great. Especially if it wasn't tied to only digital art.

      • by mysidia ( 191772 )

        If the original artist signed on with the expectation of getting forever royalties, and that is no longer enforced; maybe they have a an avenue to sue for breach of contract?

        They can do better i'm guessing... The Contract is the only thing allowing reassignment of whatever rights they included with the NFT. If a material breach occurred, then the artist can maybe hold that any further transfer of the NFT is Illegal (Copyright infringement). The liability for copyright infringement can include all

    • But if they wanted to guarantee that artists would get a cut of the resale price, and NFTs being all blockchainy and stuff, why didn't they enforce this in the blockchain itself? Smart contracts or whatever it is?

      I honestly hadn't even heard of this feature, and given that it existed I'm shocked they didn't enforce it in the blockchain.

      FTA:
      The NFT ecosystem has been on a race to the bottom when it comes to fees.

      For all that crypto nerds like throwing around finance lingo has none of them ever take an econ 101 class or even listened to an econ podcast?

      That a non-mandatory fee of 5-10% would eventually go to zero in a competitive market is just short of inevitable. I can't imagine that anyone who understood the mechan

    • why didn't they enforce this in the blockchain itself

      Blockchains don't enforce anything. They are a record, nothing more, nothing less.

      Smart contracts or whatever it is?

      Smart contracts are ... *this will shock you* ... contracts. Contracts can change depending on their clauses, and they can also be breached. Nothing about smart contracts made them any stronger than an existing written contract. The only thing the smart part brings to the table is a cryptographically hashed signature.

  • Self Organisation (Score:4, Insightful)

    by John Allsup ( 987 ) <slashdot.chalisque@net> on Friday August 18, 2023 @10:43AM (#63777914) Homepage Journal

    A system based on self-organisation through selfishness and greed, that somehow magically works out well for everybody. Simples! What could possibly go wrong. I mean, an intermediary company who's main priority is to maximise profit will surely put the interests of the artists who, to them, are simply originators of stuff they can scalp for a profit, surely they'll think of the poor artists? Won't they? With modern business and our economy all promises are empty, save for the promise that a business will do all it can to make money, and see everything else as either a side-effect or a means to an end to be exploited.

  • if they expect to get a 5 to 10% cut for every sale - but ib case they do I have a unique investment oppourtunity to a url of a picture of a river in Egypt to offer.
  • by rsilvergun ( 571051 ) on Friday August 18, 2023 @10:52AM (#63777936)
    There were several ways to dodge taxes with art. Those loopholes were closed, and a bunch of rich bastards thought they could maneuver NFT's through them anyway. That's where all the hype came from. The IRS ruled that the medium art is on doesn't matter, and that the loophole was still closed, and as soon as that happened everyone with money gave up since they couldn't buy a $50k NFT, declare it's value $1m, "donate" it and take a $1m tax write off on a $50k purchase.

    That's what deflated the market. As soon as that happened all the real money left and all that was left was a few bag holders and a handful of rich assholes miffed they spend $50k and didn't get their tax write off.
    • ... everyone with money gave up since they couldn't buy a $50k NFT, declare it's value $1m, "donate" it and take a $1m tax write off on a $50k purchase.

      That's an interesting take, but surely tax auditors are not stupid enough to let people simply "declare" an arbitrary value on donations? If that's the case, why would an NFT be required? You could take any type of art or collectible item and claim an inflated value.

      • by ceoyoyo ( 59147 ) on Friday August 18, 2023 @11:41AM (#63778108)

        You can't just declare the value. You have to have some evidence. That's usually in the form of the selling price of a similar item.

        So the actual scam is to buy several pieces, sell some of them at auction (often to yourself or some buddies) at an inflated value, then donate the others for fat tax breaks. Usually you know a gallery owner or someone who helps pump up the value and can also give you generous appraisals.

        It absolutely works with regular art and collectibles; that's where the scam originated.

        • by rsilvergun ( 571051 ) on Friday August 18, 2023 @01:35PM (#63778394)
          it's highly subjective, so all the rich people get together and agree on the value, that makes a "market" and it creates the value.
        • You can't just declare the value. You have to have some evidence. That's usually in the form of the selling price of a similar item.

          When it comes to value, the high art world in general is a corrupt joke at best. NFTs were behaving no differently, especially when it came to the rich wanting to abuse it with current tax laws. After all, tax dodges are the reason high art is valued so high.

          Tax dodges were/are exactly the hype, and much like The Big Short demonstrated when it came to corrupting the entire business of regulators, I'm quite certain there are ways to buy collusion within the world valuing billions in tax shelters.

      • Not just art, but land also.
        https://www.thedailybeast.com/... [thedailybeast.com]

      • That's an interesting take, but surely tax auditors are not stupid enough to let people simply "declare" an arbitrary value on donations? If that's the case, why would an NFT be required? You could take any type of art or collectible item and claim an inflated value.

        The value of an asset is sometimes the price it last sold at. So you have a group of people, A, B and C. C creates and sells something to B for $1K, B sells it to A for $10K, A donates it to charity and claims a $10K deduction. Now about that $10K from A to B, it was financed, 10% down 90% financed. So B only really sees $1K, which is un-coincidentally what B paid C. Now A does NOT pay any part of the financed money, $9K, and B writes it off as a bad loan and gets a $9K deduction. As for C, where the only $

      • the prez has a lot of power because he appoints who's in charge. Plus congress can and has defunded the IRS. Voters hear that and think "good" because everyone's scared of an IRS audit and they can't imagine a world where we just limit those audits to the rich and businesses (because they're the only ones who have any money worth recovering).

        Basically you can get away with anything if you can put the right people in charge of enforcement.
      • That's an interesting take, but surely tax auditors are not stupid enough to let people simply "declare" an arbitrary value on donations? If that's the case, why would an NFT be required? You could take any type of art or collectible item and claim an inflated value.

        An NFT wouldn't be required because all art is subjective, you just need someone with the "proper" artistic credentials to state the appraised value of a thing is worth the inflated value. I'm sure you've heard the old "The artwork, originally appraised for $50k, recently sold at auction for $1.2 Million blah blah blah fancy pretentious art terms and a quote from appraisal company PR person here."

        It's all about getting the right person to make an appraisal that says the thing you bought for $50k is worth $

  • by The Evil Atheist ( 2484676 ) on Friday August 18, 2023 @10:56AM (#63777952)

    OpenSea’s changes are “fundamentally wrong and hurts the entire NFT space,” Wildcake, the founder of the Posers NFT collection, tells The Verge in a DM.

    So you're saying there's a standard of ethics/morals/regulations that's needed outside of the technology? Something that just can't exist on its own in a libertarian paradise with no common/public authority?

    You want the free market without some restrictions to keep it free, you got it.

    • So you're saying there's a standard of ethics/morals/regulations that's needed outside of the technology? Something that just can't exist on its own in a libertarian paradise with no common/public authority?

      Actually the libertarian paradise has just enough regulations to create a fair/safe playing field, no more. Its a political philosophy of minimizing the state, not eliminating the state.

      • I haven't met a libertarian who, if I talked to them long enough, didn't eventually admit that there is no regulation that they wouldn't get rid of. They literally think the free market would solve all problems.
        • by drnb ( 2434720 )

          I haven't met a libertarian who, if I talked to them long enough, didn't eventually admit that there is no regulation that they wouldn't get rid of. They literally think the free market would solve all problems.

          Funny, my experience is the opposite. For example fire codes in buildings. They would consider one person building a fire trap of a house for another person as crossing the "harms another person" line. However I could see a radical arguing that if you build your own fire trap of a house that does not cross the line as it is self-harm. But when you start mentioning what if another person enters the house, or the house sets a neighboring house on fire, reintroducing scenarios where others are harmed, the noti

          • So you had a conversation where this happened? You got them to admit that they don't want fire codes at all. Then you posed a scenario when fire codes make sense. Then they backtracked and begrudgingly admitted it's useful?

            Sounds like what I encounter with some of them - they realize the thing they want is so stupid that it makes them look bad. They don't stop believing it. They just say whatever sounds reasonable so they don't "lose the crowd", so to speak. But amongst themselves, or if you're in their
            • by drnb ( 2434720 )

              So you had a conversation where this happened? You got them to admit that they don't want fire codes at all.

              No, they started with a distinction between harming others and self harm. That if you were seeking a service from someone else it was OK to have some adherence to best practices to ensure safety.

              Then you posed a scenario when fire codes make sense. Then they backtracked and begrudgingly admitted it's useful?

              So contractors were taken care of, this left do it yourselfers. Here the argument of self-harm seemed to rule. So I brought up proximity to other homes to introduce a harm to others threat. This was then recognized. I wouldn't say begrudgingly, it was more moving from the superficial to the more detailed perspective

            • It depends greatly if you are talking to Libertarians or libertarians.

              The gap between the two is vast.

              Plenty of libertarians think the Libertarians are fucking nuts.

        • Signature fits.

      • Actually the libertarian paradise has just enough regulations to create a fair/safe playing field, no more. Its a political philosophy of minimizing the state, not eliminating the state.

        Fair/safe playing field between national healthcare companies with local vertical oligopolies and a patient. Gotcha.

        • by drnb ( 2434720 )

          Actually the libertarian paradise has just enough regulations to create a fair/safe playing field, no more. Its a political philosophy of minimizing the state, not eliminating the state.

          Fair/safe playing field between national healthcare companies with local vertical oligopolies and a patient. Gotcha.

          Or fair/safe play between the doctor that lives in your neighborhood and has a full doctor's office and examination room at his house. Been there, done that, as late as the 1970s.

          Or fair/safe play with a community based hospital. Many generations of my working class family got care from the local doctor and the local community hospital.

          Or fair/safe play between healthcare companies and groups of people that organized. You realize it's not just employer based groups? College grad, check your alumni off

        • replying to fix a mouse-slip mod.

  • by satsuke ( 263225 ) on Friday August 18, 2023 @11:01AM (#63777978)

    That is what happens when you put any faith in an external system that can and has change the rules after the agreement was made...

    It sounds like a former employer .. they got rid of our pension plan and upped the 401K contribution to make up for it. 2 years later they zeroed out the employer contribution because (contrived reason 1 2 3).

  • Unlike a paper receipt, the NFTs can't even be used to help light the grill.

  • NFTs were broken, it would just take a while for everyone else to figure it out
    • It took me the whole of 3 seconds to determine what a moderately mentally competent child could plainly see, which is that NFTs as pure bullshit that make no sense at best, and a scam for greedy people or a tax-dodging scheme at worst.

      • by drnb ( 2434720 )

        It took me the whole of 3 seconds to determine what a moderately mentally competent child could plainly see, which is that NFTs as pure bullshit that make no sense at best, and a scam for greedy people or a tax-dodging scheme at worst.

        Yes and no. While the folks behind the NFT network would seem to largely be scammers or high stakes gamblers, the NFT still exists as a digital receipt of ownership. The owner could print their bored ape on merchandise and maybe they could get their 400K back.

        • The owner could print their bored ape on merchandise and maybe they could get their 400K back.

          Yeah... no they couldn't.

          • by drnb ( 2434720 )

            The owner could print their bored ape on merchandise and maybe they could get their 400K back.

            Yeah... no they couldn't.

            Apparently you missed the 1960s/70s yellow circle with a :-) inside craze. T-shirts, button, patches, bumper stickers. ;-)

        • Does any copyright or IP protection pass along with the NFT? If I bought an NFT of, e.g., an image that I thought would look cool on a t-shirt, does that give me the right to monetize it, and does it prevent others from having that right? (Even if the image itself it freely available to view)

  • by laktech ( 998064 ) on Friday August 18, 2023 @11:33AM (#63778078)
    fuck the engineers that took these jobs to build these apps. scammers just the same.
  • by istartedi ( 132515 ) on Friday August 18, 2023 @11:40AM (#63778106) Journal

    But... but... I thought code was law. I thought this was an ironclad cryptographic secured "smart" contract.

    Ha-ha, only serious. I really did think the transaction fee was somehow baked in to the code and you couldn't transact it on the ledger without the fee. Of course you can transact anything off the books, so maybe that's what most people are doing. That's like what happened in the housing crisis where they were transacting real estate off the books to dodge transaction taxes. That didn't work out too well either, as it lead to a lot of questions about who really owned the property.

    Either that, or the contract was never secured in the first place.

    • Protocols, not Platforms.

      Every site like OpenSea or Facebook or Gmail is a poor substitute for a protocol and client.

      Clients can refuse bad terms - site users cannot.

      Historically ISP server bands were used by the cartels to stifle competition. STUN and the like sorta helps.

  • Sounds like It's no different than if there were some gentlemen's agreement in place that, every time my old 93 Escort Wagon was sold, the original dealer from 1993 would get a percentage of the new sale price.

    Can you imagine if SSL communications had been designed with this level of intelligence? Port 80 and port 443 traffic would be identical - but if the target port were 443, we would be told we're simply not supposed to look at it...

    The well of stupidity that seemingly surrounds all aspects of NFTs seem

  • by ctilsie242 ( 4841247 ) on Friday August 18, 2023 @12:01PM (#63778174)

    With all the abuse of NFTs, it has killed any actual legit use for this technology. For example, one place where NFTs would be useful is ticket sales. You buy a ticket, and when you get to the venue, you can validate ownership of it. Or, you can sell the ticket off. Plus, you have a provable "ticket stub" afterwards. This adds decentralized flexibility, where if someone wanted to get rid of their tickets, it is easy, and one doesn't have to worry about counterfeits. As an added bonus, this covers individual seats.

    Of course, this also can be handled by a website and a secure database, although there isn't any cryptographic proof that one was there if the website goes down.

    Of course, using NFTs for high value stuff, like having them replace property deeds, just isn't in the cards. NFTs and cryptocurrency are often stolen, and the technology storing keys is not rated for high value storage, so trusting a hardware wallet, or even an app is just asking for having one's wallet contents swept.

    • by Junta ( 36770 )

      Of course, this also can be handled by a website and a secure database, although there isn't any cryptographic proof that one was there if the website goes down.

      And, in fact, generally is. A lot of things that required me to show a ticket now can just look at my phone screen. Generally that means there's a trivial to copy barcode/QR code so it's not 'secure', but I have not really seen people experiencing an actual problem as a result. If they felt really paranoid about the whole thing, they *could* insist on something like an NFC tap to authenticate, but in practice it's a solution to a problem that doesn't exist. Besides, most of the time I think the scanners

      • by flink ( 18449 )

        A lot of things that required me to show a ticket now can just look at my phone screen. Generally that means there's a trivial to copy barcode/QR code so it's not 'secure', but I have not really seen people experiencing an actual problem as a result.

        Some etickets QR codes include a TOTP element these days so the QR code changes every few minutes. The scanner needs access to the DB to validate, but the ticket app can re-compute the barcode offline as long as it has the secret. I imagine the venue could download a DB of all the secrets at the start of the event so they don't need continuous internet access.

        If the holder resells the ticket, you need the the app server to invalidate the old secret and issue a new secret to the new ticket holder.

    • As this story demonstrates, NFTs aren't actually decentralized. There's still a centralized body that enforces, or chooses not to enforce, the rules. So in your ticket scenario, you'd also still have centralized control over the terms of the transaction. So what exactly do we gain by calling it "blockchain"? All the features you listed, can be achieved with a centralized (traditional) system as well.

    • With all the abuse of NFTs, it has killed any actual legit use for this technology. For example, one place where NFTs would be useful is ticket sales. You buy a ticket, and when you get to the venue, you can validate ownership of it.

      That already happens.

      Or, you can sell the ticket off.

      That already happens.

      NFT hasn't solved any problem, it just added senseless complexity. You don't need a public ledger or blockchain to do the things you say it made possible, things which are already done.

      Of course, this also can be handled by a website and a secure database, although there isn't any cryptographic proof that one was there if the website goes down.

      A solution looking for a problem. Recently a computer problem caused check-in issues at a soccer game. They delayed the game by 30 minutes, whoop de fucking do. And this meaningless delay is an event so rare it made national news. Once again NFTs bring nothing to the table.

  • Seriously? If NFTs and their ilk didn't already have enough to hate about them...

    Could you imagine if this was applied to things like a bolt or screw or nail or piece of lumber? Every time anyone re-sold a tool or vehicle or home, the person who made those parts got a cut? Or the house builder? The plumber and electrician? On and on down the chain?

    The sad part is, I'm sure people are salivating over that idea, instead of universally shunning it.

  • If the marketplace is no longer going to adhere to the rules that they agreed to when the NFT was first sold, then the artist has the right to distribute the digital piece as the see fit, in other words, remove any semblance of uniqueness from the NFT and make them worthless (if they can get any more worthless than the NFT market already is)
  • I suppose it depends if it is an African or European tulip....

  • It was absolutely NEVER about the artistsâ¦

  • This wasn't a feature of NFTs, but rather a feature of one specific market place. There was only ever a contractual agreement in place with a broker that you would get paid. There's nothing underlying in the NFT that makes this the case.

    The entire framework NFTs operate in is existing contract law. This is the really stupid part, the technology provided absolutely no benefit nor did it create anything new. Most of what is required for NFTs to work doesn't exist on the blockchain, it's exists as services pro

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