Links referenced for video
- https://opensea.io/assets/ethereum/0xbc4ca0eda7647a8ab7c2061c2e118a18a936f13d/3559 - NFT used in example
- https://etherscan.io/address/0xbc4ca0eda7647a8ab7c2061c2e118a18a936f13d#readContract - NFT example Etherscan contract
- https://ipfs.io/ipfs/QmeSjSinHpPnmXmspMjwiXyN6zS4E9zccariGR3jxcaWtq/3559 - NFT example IPFS data (JSON)
- https://ipfs.io/ipfs/QmQHfJJiCuHuyAEgm12SmbQ7tzDiX3xtYGgzvupj3PEeJp - NFT example IPFS image
- https://opensea.io - OpenSea | NFT Marketplace
- https://www.researchgate.net/figure/How-the-BitTorrent-Protocol-Works_fig9_220080811 - Bittorrent Diagram
Please excuse any grammatical errors. I used a tool to generate the transcript and haven't had a chance to read through it yet. ✔️
Maybe you've heard or maybe you haven't, but there is ongoing drama in the crypto space. Not even necessarily drama, just mind-blowing behavior from Logan Paul to SPF with FTX. All of this has reminded me of a topic I've wanted to make a video on: NFTs are not what they seem. These are photos I printed on a Kodak printer at CVS, but they're being sold as NFTs. There's a big misconception that when you buy an NFT, you're buying the artwork, but that's not true. The blockchain only confirms that you own the NFT, not the artwork. I heard someone say before that when you buy an NFT, you're just buying a URL, but I never looked into it further. So today, we're going to look into what you actually get when you purchase an NFT. I would say NFTs are the low point of crypto, but then something else happens and we reach a new low.
This is OpenSea, an NFT marketplace, likely the most popular one out there. For our example, let's search for a popular project such as Board AB Yacht Club. Here are the current NFTs that are up for sale. Let's pick one of these as an example; they just get worse and worse the more you scroll. So let's go with this one. On this page, if we scroll down and go to the details section, from here, we can see the contract that is actually tied to this NFT. Let's go ahead and open this in a new tab. This takes us to Etherscan. On this page, we want to go to the contract. This is the actual code that the contract is comprised of. We want to go to read contract. And on this page, we want to look for a function called token URI. We can see here number 20, token URI. Inside of here, we want to take the token ID from open C 3559. Put that in that box. Select query. Now we are presented with a string that contains an IPFS address. IPFS stands for Interplanetary File System. If you've ever heard of BitTorrent and how it works, IPFS is similar. You have a network comprised of nodes, which are just individuals, servers, or companies running this IPFS software. These nodes can talk to one another. If you're a node on the network and you request an IPFS URL, you'll ask a nearby peer if they know who has this content. That peer will say yes, I know who does and provide the node with the content. It's a decentralized way to store files and share information.
And that's what we see here. This is the IPFS URL. You can't just go there in your browser, it doesn't work. So instead, we're going to use an IPFS gateway. There are public ones available, a popular one is ipfs.io/ipfs. And then we follow that with the string that we found on etherscan.io. Now when we load this, the reply we get is JSON. And what we can see here is we have an image, with a URL that is tied to it, and then some metadata about the image. This is the data that is tied to the NFT that is purchased when it's bought. And this is the image that you actually get. Again, it's another IPFS URL. Now, if we go to this, we can see the image. The image is not actually on the blockchain, it's not there for people to see. It's just this JSON data that has the image URL that you can access on the interplanetary file system. Someone has that image hosted there, but it may not be there forever. Sometimes the image just disappears after the sale. You're not purchasing any rights or anything like that. You're just purchasing this JSON data that has some metadata attached to it, some attributes, and a pointer to a URL. As we saw here, this is going for over $100,000. All that you get is a record on the blockchain that says you purchased this.
To the defenders of NFTs, I know there are different ways to host these files that are more resilient and reliable. But that takes us back to the initial question of what you get when you buy an NFT. To me, this is much different from what I initially thought NFTs were and how they were marketed and promoted. So, this is not glamorous by any means. But I think the story we were told about NFTs is a lot more glamorous than what you're actually getting. So, the moral of the story is, don't pay six figures for some NFT that an influencer promoted so they can make a quick buck off their fan base.