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The value of NFTs

· 3 min read
NEST Protocol

Introduction

Referring to previous bull markets, we will find that whenever the bull market starts to speculate on copyright, authentic right and music chains etc. that are particularly close to reality, the bull market is coming to an end. What is the reason? Because we all understand that hype is prevalent, and these are products designed for the most peripheral group of people. This work of magical realism is carefully designed and deliberately pushed by many people behind the scenes. It is the result of all worthwhile ideas being consumed.

Therefore, everything that does not capture value on the chain is a desecration of the blockchain!

Static NFT

NFT as a separate stream of information, if it were completely static, I find it hard to imagine how much or even what kind of contract such a string of information could charge; I don't think it could consistently create a revenue stream, and therefore could only generate value as a scarce stream of information.

However, a string of code that hosts a subjective utility (value), in full transparency, has almost the same amount of information if replicated on the chain with equal GAS, except for the difference in timestamp and the HASH at the corresponding moment. Thus, the difference in value between the two is determined by nothing more than the HASH and timestamp at that moment (since other information can be replicated). For this to map to reality, there must still be a trusted agent to confirm some internal information, i.e., it has only a point-to-point transfer value: that value depends on the information related to the HASH and timestamp and the party (or agent) vouching for that information.

We can take this anonymous static information and deliver it as a medium with some kind of cipher or witness, so as to give it a historical meaning at a specific moment, and thus preserve it as a scarce artifact (similar to some letters or documents). The reason why this preserved scarce information stream is valuable is that the more valuable information behind it has been recognized as a kind of public information, or as private information by the authority, if only the timestamp and HASH value are still meaningless.

Thus, an NFT based on a static message is essentially just a record of the presence of an off-chain authority or public authentication, without which it would be meaningless. This means that this NFT has no substantial value in itself; what has value is the authentication of outside authority or public knowledge, which is a note of such authentication.

Dynamic NFT

If the NFT is generated with dynamic information, and such dynamic information cannot be reproduced again by the contract or the computational resources and time costs required for reproduction are too high, then this type of NFT truly realizes the scarcity plus the possibility of value capture on the chain. Such NFTs need to have a random flow of information plus huge computational resources or time consumption.

How to get random flow of information

The NEST Oracle machine provides an interesting random flow of information for the on-chain world: the price information flow. Designing dynamic NFT with NEST will reduce a lot of unnecessary processing and is an ideal dynamic stochastic information flow.