What is NFT?

May 16, 2022

How to briefly explain what NFT is? "The record of asset ownership recorded in the common notebook of the blockchain nodes." But the more I thought about it, the more I felt that I could hardly understand it myself.

Engineers may be bored and say that something that conforms to ERC-721 or ERC-1155- like specifications is an NFT. So more people don't understand.

Why don't we watch a video of Taiwan's Legislative Yuan's questioning (you can start at 01:42):

Legislator: Will NFTs be taxed?
Minister of Finance: NFTs are goods and services, and they are taxed according to the Business Tax Law.
Legislator: Who exactly is the competent authority of NFT? FSC? Ministry of Economic Affairs?

Seeing this, in addition to worrying that the NFT you bought may be taxed, you may be as confused as I am: I heard that there are many kinds of NFT, which can be artworks, membership cards, event tickets, game virtual treasures, "Metaverse" land... It can be said that "everything can be NFT", how can it apply to a single competent authority?

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What's inside an NFT?

The information that NFT actually writes on the blockchain is often only metadata, not the image ontology, because the cost of writing a large amount of data on the blockchain is too high. Take my Travellogger #549 as an example, if you follow the steps in this video and enter the tokenId as 549, the returned value will be:
ipfs://QmRAjjAcxWMaG4GUKRk5B4YiMD1doigKCaZX875duPFvXD/549

And this string of JSON is the body of this NFT, which specifies that the image address is: ipfs://QmXEYf3mGnoZCfPPKt6UF9nfZuviGPYw4uBLdSzH28g14

In other words, if IPFS falls one day, this NFT will lose its contents and become nothingness. Note that this is actually the norm, and the Bored Ape Yacht Club (BAYC) project team does it too!

What else can NFTs do?

In addition, NFT can implement additional functions through smart contracts, and actually write lower-cost "text" on the blockchain. Since both Travelogger Logbook 1.0 and Mintverse are built on Ethereum, which is nicknamed the "Noble Chain", the gas fee for writing on the chain is still expensive (the following US dollars are the estimated value of the transaction day displayed after clicking):

When Matters wrote this letter in Logbook 1.0, the ETH price and gas fee were high, and the transaction fee was as high as US$208.80 .
A few days ago, when the currency price and gas fee were low, I finally wrote this cosmic signal in Logbook 1.0, but it still cost US$7.50 .
I participated in the Matters Lab Discord event to get the Mintverse white list, so "free" mint (you have to spend a wave of US$14.36 first) to obtain a vocabulary NFT, and the cost of writing the annotation definition is US$6.58 , and the result is in OpenSea " platform ".
As for the newly launched Logbook 2.0 by Matters, since it is set up on the Polygon blockchain, the transaction fee is very low. I previously put the entire article "Suffix" Interview Writing Camp | How to Use Email to Interview " on the "Suffix" Logbook 2.0 , Only cost US$0.01 !

In the above transaction fee link, click "Click to see More ↓", and then in the Input Data field, select "Decode Input Data" to see the Logbook content, which is indeed on the chain.

When we talk about Web3, we often talk about giving users "digital ownership" (Ownership). The above-mentioned logbook content on the chain is the wallet address that can verify the writer; and the NFT held by any wallet address is also recorded on the blockchain.

What exactly does holding NFT hold?

Holding NFTs can often enter a specific community, which is called "community-based NFT". However, everyone can freely come to the Matters Lab Discord. In the recent Q&A activity of "🌠︱nft-discussion area", among the three values of "collection, economy, and use", it was unexpectedly found that almost all of them valued "collection value". ! In this discussion channel, even just watching the discussions between the channel drivers and everyone has made me more familiar with NFTs, which are currently popular in transaction volume, so I always thought that the most important thing for everyone is "economic value". Based on the results of this questionnaire, I look forward to more sharing and discussion of "collectible value" in the future. In this era of explosion of social channels, we can still shape the attributes that belong to our community.

Why do people attach the most importance to "collection value"? I think in addition to the recent sluggish bear market in the currency circle, which makes it difficult to arbitrage, it may also be because holding the picture NFT "will not" obtain its copyright. In essence, only the " naming right " is preset to prove that you are the buyer, and That's what collectors are all about.

As for BAYC, the image usage rights are additionally authorized , but the copyright property rights still belong to the project team.

What about the written works written on the NFT (actually written on the blockchain of the NFT smart contract)? In theory, it is classified as "Copyright ©️All right reserved", but the legal statement like Mintverse specifically writes:

You agree to license your written work on Glossary NFT under the terms of the Public Domain License

Did you notice? Public Domain License! That means anyone can use the copy you wrote on the dictionary NFT!

Therefore, the possible extension of the problem is: if the written content is misappropriated from other copyright works, then in addition to the suspicion of infringement, there is no right to "re-authorize" its content into the public domain.

For example, the " freedom " defined by Zhiqi YouTuber is signed as "Ailian Yeka". Is there any suspicion of infringement? Or can it be regarded as a "secondary creation"? To make things more complicated, the writer recorded on the blockchain is not the current holder, but looks more like a substitute writer in the project team.

Of course, as long as the holder does not resell it for profit, the possibility and necessity for the author to sue across the sea is very low.

So what exactly is an NFT?

Hello, this is my NFT and this is my JPG .

Let’s talk about what blockchain applications are. The blockchain is like a common notebook. If someone owns a piece of land, it will become an asset record; if someone holds 1 ether, it will become a cryptocurrency (cryptocurrency for short). Record sheet; as drawing paper, then it may become a masterpiece of art; record I love you, then it will become my love letter.

So do you know who is the competent authority of NFT?

postscript

This is a locked article that was originally scheduled to be limited to around the stove. Because of the combination of NFT review and the Matters Lab Discord "🌠︱nft-discussion area" event , the full text is specially released for free, and I also thank the existing members of the stove for their support.

If you also like this kind of analysis, please support this article and welcome to join me around the fire: Web3 Lab to learn and discuss more together.