The Nifty Dictionary: Gas

On the Ethereum network, gas is a fee that must be paid to the network in order to make a transaction.

Gas is paid directly to miners to compensate them for their computational effort used to run the network. It's called "gas" because of the easy analogy to driving: to go anywhere in a car, you must make sure you have enough gas in the tank to cover the distance. Similarly, to complete the transaction you want to make, you must make sure you pay enough gas to cover the cost.

I prefer to think of gas fees as automated taxes. Both are required fees paid by beneficiaries of the network (citizens) to cover the costs incurred by running the network.

Gas fees will arise when interacting with the network in a number of ways, including minting an NFT, purchasing an NFT, and sending an NFT from one wallet to another.

While gas fees may seem inconvenient, annoying, and at times expensive, gas is a critical part of the Ethereum network. Gas fees incentivize miners to run the network, disincentivize spam by giving every transaction a cost, and prevent infinite loops, since a transaction will fail once gas is depleted.

Nevertheless, paying fees on a per-transaction basis is not always ideal, especially for low value transactions, when gas fees can approach or exceed the value of the payload.

Ultimately, high gas fees can even disincentivize people from joining or using the Ethereum network.

For this and other reasons, developers are focused on building technologies that minimize or eliminate gas fees for many interactions with the Ethereum network. One such scheme in the NFT world is "lazy minting," in which an NFT is not actually created on the network until it is purchased, in order to save the seller upfront cost. Other solutions include "layer two" dapps and marketplaces which allow users to conduct most transactions within a network built on top of Ethereum. This can save users from having to make frequent or one-off calls to the Ethereum blockchain by batching transactions.

An Artist Donated This Innovative NFT to the Public. Someone Stole it Immediately.

Last week, artist Steven Baltay, who goes by the handle @realimposter on Instagram, minted a and daring experiment in NFT art. He called it Public Domain, and declared that, "This NFT will belong to the public. The artwork itself holds the seed phrase to the wallet containing it. Please do not buy, sell, trade or destroy this art. It belongs to everyone."

The work shows a graffitied Statue of Liberty bobbing atop an undersized cargo ship in rough seas. Liberty is chained to the ship; the golden chains sway and clink, tangling around her crown and torch. Her tablet is clearly visible, and on the tablet is inscribed the seed phrase of the wallet holding her.

For those unfamiliar, a seed phrase is a 12-word phrase that acts as a recovery mechanism for a crypto wallet. The phrase must be kept secret, or else the contents of the wallet will become forever accessible to intruders. An NFT, as a tradeable object living on the blockchain, must be kept inside a wallet. Baltay had set up a dedicated wallet, placed this Public Domain inside it, then effectively gave the keys to the public.

It took about one hour for liberty to be snatched.

According to the transaction history on Opensea, a collector with the username FriesFrame transferred the NFT to their own collection shortly after it was minted. On Twitter, FriesFrame (@ChasFries) replied to the artist's tweet announcing the piece, saying, "nabbed it 😆."

When a user challenged Fries Frame, asking, "Doesn't it literally say "don't transfer it"

😂🤔", he defended himself on a technicality: "it does not - it just says dont buy, sell, trade, or destory....i traded nothing for it".

According to Fries Frame's Twitter bio, he is a Chicago based collector and "Niftygateway Moderator" (Discord?). He seems to be quite active in the space, tweeting frequently about NFTs, and his Opensea profile shows a collection of dozens of pieces.

On Twitter, I asked him what he was intending to do with the piece - lock it up indefinitely (that is, to hold it) or turn it for a profit (sell)? His answer - "why are those the only two options?" - was noncommital.

It's interesting to consider Fries' options. If he holds it, he can claim the distinction of being the only owner of this unique NFT - though that will always come with some notoriety. He could sell it, certainly, and any price he charged would be pure profit into his pocket. But to return the piece to the original wallet would presumably cost him gas fees - meaning if he chooses to put it back in its place, he will actually need to pay money to do so. At the time of writing, the gas fee might range from $50-$100 - not quite pocket change (at least in USD!). What would you do?

I love this piece as a tribute to and a test of the technology it's built on. It wouldn't work as anything other than an NFT. Because of the blockchain, we can always know who owns it, and who has taken ownership of it at any point in time.

At face value, Public Domain is an optimistic yet naive tribute to the crypto community. But being born of the community itself, I think we can conclude that it is in fact a statement on the value of trustlessness - central to blockchain technology and crypto ideology. When you allow people to take something for free, they will. Passwords, seed phrases, wallet keys, and all the other accoutrements of the blockchain are the essential tools that enable this community to thrive in spite of our tendencies toward opportunism.

With all of the excitement in the crypto space last week - the Coinbase IPO, the multi-day Pak drop extravaganza on Nifty Gateway, the Artvatars launch, and the Paris Hilton NFT debut - Public Domain seemed to fly under most people's radar. I believe that this piece is an early classic of NFTs, and whoever owns it - Fries Frame, the public, or anyone else - will be holding a piece of history.

The Nifty Dictionary: Mint

DEFINITION

Minting means creating a new NFT. Recall that NFT stands for non-fungible token. Just as a metal coin must be minted in the real world, a non-fungible token must be minted digitally. The token is minted on a blockchain such as Ethereum, a public database where it can be stored, traced, and traded. To mint a token is to create a new entry in that database.

In most cases, the true NFT – the piece stored on the blockchain – is just a few lines of code, and does not actually contain the content that is of value, such as a picture, video, or song. That's because storing content on a blockchain is usually quite expensive. In most cases, content is stored elsewhere, and the proper NFT just contains a reference to this content.

Therefore, minting an NFT is often a dual process in which the creator uploads the file for hosting while simultaneously creating a token referencing it on the blockchain. Minting services try to make this process simple for users and may not make the distinction clear. Depending on the service, they may host the NFT on their own servers for convenience.

This disconnect is one huge issue in current NFT technology. When minting an NFT, it is important to know where the content will be hosted, so you can consider how safe and trustworthy that source is. URLs are considered risky addresses, because whoever owns the URL can change what it points to.

For this reason, many people prefer to see NFTs stored using a process called content-addressing on a network such as IPFS or Swarm, which ensures that the link can only ever point to that unique piece of content. Even this approach has issues though, as items stored on such networks must still be hosted and maintained to exist in the future.

When minting (or purchasing) an NFT, make sure you know where the content will live, and that you trust that it will live there for a long time. Otherwise, the buyer may get stuck with owning a permanently broken link.