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Ars Technica’s non-fungible guide to NFTs

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Enlarge / Look ma, I’m on the blockchain

Chris Torres | Beeple | Aurich Lawson

It has been nearly 10 years now since Ars Technica first described Bitcoin to readers as “the world’s first virtual currency… designed by an enigmatic, freedom-loving hacker, and currently used by the geek underground to buy and sell everything from servers to cellphone jammers.” A decade later, Bitcoin and other cryptocurrencies are practically mainstream, and even most non-techies know the blockchain basics powering a decentralized financial revolution (or a persistent bubble, if you prefer).

What Bitcoin was to 2011, NFTs are to 2021. So-called “non-fungible tokens” are having a bit of a moment in recent weeks, attracting a surge of venture capital cash and eye-watering speculative values for traceable digital goods. This despite the fact that most of the general public barely understands how this blockchain-based system of digital authentication works, or why it’s behind people paying $69 million for a single GIF.

Fungible? Token?

Perhaps the simplest way to start thinking about NFTs is as a digital version of the various “certificates of authenticity” that are prevalent in the market for real-world art and collectibles. Instead of a slip of paper, though, NFTs use cryptographic smart contracts and a distributed blockchain (most often built on top of Ethereum these days) to certify who owns each distinct, authentic token.

As with cryptocurrencies, those contracts are verified by the collective distributed work of miners who keep the entire system honest with their computational work (the electricity for which creates a lot of nasty carbon emissions). And just like cryptocurrencies, those NFTs can be sold and traded directly on any number of marketplaces without any centralized control structure dictating the rules of those transfers.

What makes NFTs different from your run-of-the-mill cryptocurrency is each token’s distinctiveness. With a cryptocurrency like Bitcoin, each individual unit is indistinguishable from another and has an identical value. Each individual Bitcoin can be traded or divided up just like any other Bitcoin (i.e. the Bitcoins are fungible). NFTs being “non-fungible” means each one represents a distinct entity with a distinct value that can’t be divided into smaller units.

Just as anyone can start printing their own line of Certificates of Authenticity (or anyone can start up their own cryptocurrency to try to be “the next Bitcoin”), anyone with just a little technical knowhow can start minting their own distinct NFTs. Etherscan currently lists over 9,600 distinct NFT contracts, each its own network of trust representing and tracking its own set of digital goods.

It's trivial to make a digital copy of any of the images for sale on Rarible. But those copies won't have the "authenticity" of the actual NFT being sold...
Enlarge / It’s trivial to make a digital copy of any of the images for sale on Rarible. But those copies won’t have the “authenticity” of the actual NFT being sold…

These NFT contracts can represent pretty much anything that can exist digitally: a webpage, a GIF, a video clip, you name it. Digital artists are using NFTs to create “scarce” verified versions of their pieces, while collectible companies are using them to create traceable, unforgeable digital trading cards. Video game items and characters can be represented as NFTs, too, allowing for easy proof of ownership and portability even between games controlled by different companies (though the market for such games is still very immature).

There are plenty of even odder examples out there. Vid is a TikTok-like social media network that gives users NFT-traced ownership of their posted videos (and royalty payments for the same). The Ethereum Name Service is using NFTs to set up a decentralized version of the ICANN-controlled Domain Name Service for finding online content. Aavegotchi is a weird hybrid that uses digital pets to represent your stake in a decentralized finance protocol called Aave. Essentially, there are hundreds of companies looking to NFTs for situations where they need to trace and verify ownership of distinct digital goods.

The idea has been catching on quickly, at least among speculators with a lot of money to throw around. Nonfungibles’ database of hundreds of different NFTs has tracked over $48 million in sales across nearly 40,000 NFT transactions in just the last week. Rarible, one of the most popular NFT marketplaces, saw its daily trading volume hit $1.9 million earlier this month, tripling the same number from just a day before. Cryptopunks, an early NFT representing 10,000 unique pixellated avatars, has seen over $176 million in total transactions since its creation in 2017 (with over 10 percent of that volume coming in the last week).

How does it work?

On a technical level, most NFTs are built on the ERC-721 standard. That framework sets up the basic cryptographic system to track ownership of each individual token (by linking it to user-controlled digital wallets) and allow for secure, verified transfer on the blockchain.

Some NFT contracts have built additional attributes and features on top of that standard. The NFT for a cryptokitty, for instance, contains metadata representing that digital avatar’s unique look and traits. That metadata also establishes rules for how often it can “breed” new cryptokitty NFTs and what traits it will pass down to future generations. Those attributes are set and verified on the blockchain, and they can’t be altered no matter how or where the cryptokitty is used.

When NFT’s are used to represent digital files (like GIFs or videos), however, those files usually aren’t stored directly “on-chain” in the token itself. Doing so for any decently sized file could get prohibitively expensive, given the cost of replicating those files across every user on the chain. Instead, most NFTs store the actual content as a simple URI string in their metadata, pointing to an Internet address where the digital thing actually resides.

It may seem odd to link a system of decentralized, distributed digital goods to content hosted on centralized servers controlled by actual people or companies. Given that the vast majority of webpage links become defunct after just a few years, an NFT pointing to a plain-old web address wouldn’t seem to be a good long-term store of value.

A diagram laying out the basic difference between IPFS distributed file storage and standard, centrally controlled HTTP servers.
Enlarge / A diagram laying out the basic difference between IPFS distributed file storage and standard, centrally controlled HTTP servers.

Many NFTs get around this by using burgeoning blockchain-based file networks such as IPFS or pixelchain. These networks are designed to let users find, copy, and store cryptographically signed files that could be distributed among any number of independent nodes (including ones controlled by the NFT owner). In theory, linking an NFT to an IPFS address could ensure the digital file in question will continue to be accessible in perpetuity, as long as someone has mirrored a verifiable copy on some node in the IPFS network.

Are NFTs really that valuable?

Just like a certificate of authenticity, the value of an NFT (and the “unique” digital item it represents) is strongly tied to its provenance. The person who spent $560,000 for an NFT representing the original Nyan Cat meme, for instance, obviously didn’t purchase every copy of the famous animated GIF of a pop-tart cat with a rainbow trail behind it. You can still download your own identical copy with a few clicks. The NFT doesn’t even include the copyright to Nyan Cat, which would at least give the owner some legal control over the work (though some NFTs try to embed such rights in their contracts).

What makes the Nyan Cat NFT interesting (and potentially valuable) is that it was verified and sold by Chris Torres, the person who created and posted the original Nyan Cat video to YouTube in 2011. That gives this copy of Nyan Cat a unique history and a tie to the meme’s creation that can’t be matched by any other copy (or any other NFT, unless Torres starts diluting the value by minting more). And the blockchain technology behind the NFT ensures the chain of custody for that version of the GIF can be traced back to Torres’ original minting, no matter how many times it’s sold or transferred.

This Nyan Cat GIF is practically worthless. So why is an NFT of an "identical" GIF worth so much money to a collector?
Enlarge / This Nyan Cat GIF is practically worthless. So why is an NFT of an “identical” GIF worth so much money to a collector?

Does that fact alone really give this NFT any more value than all of the other identical Nyan Cat GIFs floating around on the Internet? That’s for a highly speculative market to figure out. But just as a stroke-for-stroke copy of a Vermeer masterpiece doesn’t have the same value as the one-of-a-kind original, a verified “original” Nyan Cat from the meme’s creator may retain some persistent value to collectors.

Just because digital goods are easier to copy than paintings doesn’t make one less valuable than the other, either. It’s trivial to make a near-perfect copy of a photographic print, but original photographs can still sell for millions of dollars to the right buyer.

On the other hand, these NFTs might end up being more akin to those novelty deeds that claim the document gives you “ownership” of a star in the night sky. While there’s probably some sentimental value to the idea of owning a star, there isn’t any real robust market where the most coveted stars trade for large sums. And just like there are a lot of competing organizations offering “star deeds” these days, there are a lot of competing firms that could dilute the market with their own NFT offerings.

Do you know where your NFT came from?

All of this means that tracing the provenance of any given NFT can be of prime importance to its implicit value. NFT marketplace SuperRare ensures its NFTs are “authentic” by only minting tokens for a set of “hand-picked artists” for the time being. NBA Top Shot, meanwhile, relies on its NBA license to make sure its randomized packs of basketball video clips are each unique and have an “official” air to them.

But there are plenty of situations where the original ownership of a particular NFT is more questionable. Game developer Jason Rohrer drew some controversy earlier this month by trying to sell NFT tokens for artwork originally created by other artists for his 2012 game The Castle Doctrine. This did not please many of the artists who were not aware their digital work was being resold as a token, to say the least.

Then there’s Tokenized Tweets, a simple service that can create a sellable NFT token representing any tweet on the service, including ones created by other people. The service has recently stopped tokenizing tweets that include visual media, and it lets artists make takedown requests if their copyrighted art/photography is tokenized by the service. But that seems like a pretty skimpy Band-Aid for an offering that seems rife with fraud potential.

The NFT-backed "Marble Card" frame for Reddit.com has no actual connection to the creators or owners of Reddit. But does that matter?
Enlarge / The NFT-backed “Marble Card” frame for Reddit.com has no actual connection to the creators or owners of Reddit. But does that matter?

There are also gray areas like Marble Cards, which lets you create an NFT “frame” intended to go around a specific, unique webpage URL. That makes each frame akin to a unique trading card with a picture of a webpage on it. While the service states clearly that “no third-party content is claimed or saved on any blockchain,” the direct link and implicit association with the webpage in question could lead to some thorny questions of ownership.

With literally thousands of companies jumping into the NFT space, there’s a gold rush mentality that seems primed to spawn plenty of scams. And even legitimate NFT efforts could see their values fade away quickly if the market’s attention moves on to a different blockchain as its store of “authentic” value. Cryptokitties, one of the first popular NFT collectibles in late 2017, saw transaction volume plummet 98 percent in 2018 as high Ethereum fees and lack of novelty drove some of the more speculative players away.

Back in 2011, it was unclear if Bitcoin was going to be a lasting financial instrument or a flash-in-the-pan technological fad. And here in 2021, you can say the same thing about the future for NFTs.

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Ubisoft’s first NFT plans make no sense

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Enlarge / Galaxy brain, meet Ubisoft brain…

Ubisoft became the first big-name game publisher to jump on the non-fungible token bandwagon Tuesday. After teasing its interest in the space last month, the company is officially rolling out Quartz, a system of in-game cosmetic items powered by a new kind of NFT, called “Digits.”

By using a decentralized NFT blockchain, Ubisoft promises its Quartz system will “grant players more control than ever” and “more autonomy and agency” in order to “genuinely make players stakeholders of our games.” But as currently described, Ubisoft’s Quartz system seems like an overcomplicated repackaging of a run-of-the-mill system of DLC cosmetics—but now with extra buzzwords and artificial scarcity layered on top.

And despite all the bold talk of “decentralization,” the Quartz system is still so deeply controlled by Ubisoft that we wonder whether a simple internal database managed directly by the company would be a better fit.

Quartz, explained

Quartz—which rolls out later this month—is simply a system that provides access to cosmetic items for a single game, Ghost Recon Breakpoint. The first three such cosmetics—representing a specific gun, a face mask, and “enhanced pants” in the game—will be available for free on three days in the coming weeks.

Unlike traditional DLC, where supply is unlimited and every purchased copy is identical, Ubisoft stresses three ways in which Quartz cosmetics are unique:

  • Limited editions: Each Quartz NFT “edition” will be limited to a set number, ranging from “a few units to a few thousands,” Ubisoft says. It’s not clear how many will be available for each of these first three “free” editions.
  • Serial Numbers: Each individual NFT in a single edition has a unique serial number that “is displayed on the collectible and on the in-game item.”
  • Player names: A Digit’s metadata will contain “the history of its previous owners,” represented by their Ubisoft player names.
The first three
Enlarge / The first three “editions” of Quartz NFTs will be available at specific times later this month.

So in practice, your “Wolf Enhanced Helmet A” will look and function a lot like mine. But if you look closely, you’ll see a different number etched into the virtual forehead of that helmet. And if you dig into the NFT’s metadata, you’ll be able to see who used to own that particular copy of the helmet.

Ubisoft seems to foresee a chase-the-collectible metagame forming around these minor differences. “Owning a Digit will make you an actual part of its history,” the company says in its FAQ. Elsewhere, Ubisoft encourages players to “be the first owner of a particular Digit or chase the one of your favorite streamer.”

OK, sure. Maybe some people will get really excited about “owning” the only digital pair of Wolf Enhanced Pants numbered “69420” and once owned by Ninja. We can’t say that we’re excited about it, but there may be some market for such a thing.

But marketing rare or unique in-game items—and letting players resell them—isn’t a new thing. Ubisoft doesn’t need NFTs or “the blockchain” to enable this kind of artificially scarce digital collectible; a basic centrally controlled database could do the same thing much more simply.

Anyone who has sold a special-edition ship in Eve Online‘s strictly regulated economy knows how this can work. The same goes for anyone who bought and sold Artifact cards on the Steam marketplace or those who remember the ill-fated Diablo III real-money auction house.

All these examples and more predated the widespread adoption of NFTs and didn’t need the technology for any of the features Ubisoft is touting here.

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Halo Infinite’s PC version looks like it needs more work

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Enlarge / Get ready for choppy frame rates on this bad guy’s animations, even on your most powerful PC, thanks to certain missing optimizations on Halo Infinite‘s upcoming PC version.

Xbox Game Studios / 343 Industries

Ars Technica will eventually go hands-on with Halo Infinite‘s campaign on PC, but as I noted in my feature-length review, our repeated requests to test the game on PC were declined.

So ahead of the version’s Wednesday launch, we’re left sifting through reports from the few outlets that were deemed worthy of getting a PC-specific look at the Infinite campaign. The most comprehensive analysis thus far, delivered by Digital Foundry PC gaming legend Alex Battaglia, ends with a pretty strong judgment.

“I will not be playing to beat the campaign to completion until a number of issues I mentioned are sorted out, as I really want to have a super-smooth Halo experience that the current game does not always offer,” Battaglia says.

See for yourself (kind of)

Head to Steam or the Windows Store right now, and you can download the free-to-play competitive multiplayer version of Halo Infinite. If you do, you’ll find a pretty robust settings menu that includes the all-important toggles for visual settings, along with sliders for both your field of view and your monitor’s aspect ratio.

The best news ahead of the campaign’s launch is that the PC ultrawide monitor ratios—which can reach extremes like 32:9, compared to the HDTV standard of 16:9—seem to be working well in the versus modes, which focus primarily on first-person combat, along with brief cinematic camera pulls before and after a match.

The Infinite campaign will arguably put more of an emphasis on arbitrary monitor ratios, as it includes a lot of cut scenes. These scenes also play with Master Chief’s perspective in clever ways, as they move from his in-helmet view to third-person perspectives at a moment’s notice. Previous promotional footage for Infinite confirmed that the game’s PC development team has focused on making sure those cut scenes work with ultrawide monitor ratios. So far, though, we haven’t seen anyone test these perspective-shifting cut scenes, nor Infinite‘s ambitious open-world environment, on screens beyond the 16:9 standard.

Not feeling so dynamic

Exactly how much will this scene stutter in <em>Infinite</em>'s PC version? According to Digital Foundry, perhaps quite a bit.
Enlarge / Exactly how much will this scene stutter in Infinite‘s PC version? According to Digital Foundry, perhaps quite a bit.

Xbox Game Studios

Battaglia also says there are a few curious issues with the PC build’s performance that aren’t found in the console versions. The biggest problem is a constant “frame time” bump when the game’s dynamic resolution scaling (DRS) system is enabled.

Infinite can strain an average gaming PC’s CPU, even when the game is running at a 720p resolution and low visual settings. The problem occurs on both Intel and AMD CPUs. Because of this, Battaglia recommends enabling Infinite‘s built-in dynamic resolution setting so that pixel counts can rise and fall to help stabilize performance during frantic, open-world encounters.

But something about this DRS system is triggering a constant, predictable freeze in the game’s frame time steadiness. Worse, the freeze is triggered by some form of rendering measurement inside the engine. So if you crank your frame rates higher, the freeze happens more often—like every four seconds when running at 120 fps. Yikes.

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Tesla’s center-screen games can now be played while the car is moving

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An August video shows a game being played on a Tesla central console while the car is in motion.

When we covered the first video games available on Tesla’s center-console video screen back in 2019, we noted that the feature only worked when the car was parked. Now, though, those Tesla games can apparently be played even when the car is moving, a feature that could run afoul of National Highway Traffic Safety Administration guidelines and state laws designed to combat distracted driving.

While the ability to play Tesla games outside of Park is being highlighted in a New York Times report today, the change was seemingly rolled out months ago. A YouTube video from January shows Solitaire being played on a Tesla screen while the car is shifted into Autopilot mode, for instance (though other games appear not to work with Autopilot in the same video).

In another video posted in July, a Tesla owner shows space shoot-em-up Sky Force Reloaded being played while the car is shifted into drive. That video says the new capability was added as an unannounced feature of July’s 2021.12.25.6 firmware update.

While Tesla also added the ability to stream video services such as Netflix and Hulu on the car’s central console in 2019, those services are still completely disabled when a Tesla is not in park (though some owners have tried to find ways around this limitation). “When full self-driving is approved by regulators, we will enable video while moving,” Tesla founder and CEO Elon Musk tweeted ahead of that streaming-video rollout.

When it comes to games, though, Tesla’s software now notes the possibility of titles running while the car is moving. “Use of Touch Arcade while the vehicle is in motion is only for passengers,” reads a warning that pops up before a game launches in the second video. Users must confirm that the player is a passenger. “Please check local laws prior to playing,” the warning says.

Laws and regulations

Those “local laws” seem aligned against the idea of having a game visibly running while a car is in motion, even if the driver isn’t the one playing. A 2014 round-up from the Consumer Electronics Association found “video screen restriction” laws on the books in 34 states and the District of Columbia. While the specific laws vary, most regulations are focused on the operation of “television” screens that are visible to the driver while the car is in motion (California’s law more broadly restricts the use of any “video monitor or a video screen or any other similar device that displays a video signal”).

Enlarge / Sky Force Reloaded running on a Tesla’s central screen while the car is driving down the road.

The NHTSA also suggests that showing active gameplay on a Tesla’s central console is likely to be a significant distraction to drivers. The agency’s 2013 “distraction guidelines” (PDF) suggest that “displaying images or video not related to driving” on a monitor visible to the driver will “inherently interfere with a driver’s ability to safely operate the vehicle.”

The NHTSA specifically calls out any display of “video and continuously moving images” and includes “things such as video phone calls and other forms of video communication, as well as prerecorded video footage, and television” as examples of what to disable when a car is in motion.

True, these laws and safety guidelines generally don’t mention video games on an in-car display specifically. But that’s likely because the concept of playable games on a car’s central console wasn’t even in consideration when the laws were written. Video games are specifically mentioned in a handful of laws targeting cell phone use while driving, however.

“It’s a big concern if it plays in view of the driver, for sure,” Jonathan Adkins, executive director of the Governors Highway Safety Association, told The New York Times about games on a car’s console screen. It’s a problem that “is crying out for NHTSA to provide some guidance and regulation,” he added.

Tesla has come under fire recently for dangerous failures of its “Autopilot” system, including many in which a distracted driver was allegedly not actively monitoring the car as required. Last year, police filed charges against a North Carolina man who was watching a movie on his phone when his Autopilot-enabled car crashed into a police cruiser. And forensic data from a fatal 2018 Tesla crash suggests the driver may have been playing mobile game Three Kingdoms when his Autopilot-driven car crashed into a concrete lane divider.

Listing image by YouTube / Cf Tesla

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