In Summary: 1. The NFT doubles down on the worst of copyright, the property metaphor, & tries to impose old ideas of scarcity & exclusion on the digital realm, where both are obsolete.
2.NFTs are an absolute ecological disaster
NFTs do not cause carbon emissions themselves, just like you don't add carbon emissions by occupying a seat on a public transportation bus. The bus is doing its daily route and has a fixed amount of emissions per day whether it has any occupants or not. This analogy breaks quickly, so I wouldn't look too much into it.
Maybe a better analogy is to think of your WiFi router. Its energy use is (predominantly) static regardless of how many packets you route through it. So by browsing, you are not causing additional carbon emissions.
In more technical terms: more transactions do not cause more hashrate. Ethereum's CO2 footprint does not scale with transactional count. So asking people to use the network less will not cause the hashrate to go down. The only way you reduce energy consumption is by getting miners to mine less, which triggers the protocol to adjust the mining difficulty accordingly. As laid out above, this has nothing to do with how many transactions are happening on ETH, or whether NFTs are being minted on it.
Similarly, for block chains, mining only occurs when the thing being mined has value. NFTs would not be mined if people weren't using them. Therefore I would absolutely call them an ecological disaster.
The point is that energy consumption due to mining on the Ethereum network does not scale with transaction count. So it does not matter if NFTs are issued ("minted") or not. They add no marginal energy cost in the mining process. That is why calling them an "ecological disaster" is a misnomer.
1. Minting an NFT costs ETH in the form of “gas”
2. The miner who mines a block gets that ETH
Assuming both of these are true, each NFT minted on the ETH blockchain increases the amount they can profitability spend on energy in economic equilibrium.
On top of that, there's other more specialised NFT blockchains like flow which are becoming very popular.
Mining hardware will always run at 100% capacity, regardless of the amount of transactions, unless mining becomes unprofitable.
The issue is, while the energy used by mining is not directly dependent on the amount of transactions, it is dependent on the amount of people and money invested into the network, which raises the price, which causes an expansion of mining effort. With more people investing, the amount of transactions also increases.
If NFTs were to become a popular thing, mining will obviously increase at an even faster rate
1) Eth2 has been "coming soon" for a long time, so it will never happen. (Yes progress has been slow, but it's happening, with phase 0 live now.)
2a) In PoS, the rich get richer. (Not true in a meaningful sense. Staking rewards are neutral with respect to economic inequality, since everyone has access to the same rate of return.)
2b) PoS is a social issue. Climate change is also a social issue. Therefore, a PoS is a climate issue. (This is a converse error.)
If you interpret them literally they're a better form of copyright that what currently exists. It accepts that digital recreations are easy and doesn't seek to prevent them yet still provides scarcity and reward for the effort in producing it.
The NFT of Jack Dorsey's tweet is interpreted to captures some essence of the time, effort and manpower that went into creating twitter the platform.
I like this description quite a bit. Im obviously a believer already, but this is a good way to describe the value potential of blockchain based NFTs.
Slight digression, but personally I hate the way scarcity always makes its way into the conversation due to the obsessive discussion of deflation, but I think in the case of NFTs it fits well.
I'd rephrase your statement as saying that NFTs using blockchain protocols preserve the scarcity of owning an asset. Then extending that, digitally verifiable proof of the scarce resource (i.e. ownership) is the aspect that can create an economic incentive for ownership.
Well said!
I agree with OPs inference that the art market is going to get over saturated, but ETH ecology is not an argument against NFTs. Plenty of alt-chains exist and interchain marketplaces are being built as we speak.
- The Beacon Chain is already live (since December last year). It's going to act as the coordinating entity in the PoS system. Future validators are already staking Ether on it.
- Shard chains support is expected to be launched later this year. The plan is to have 64 shards to improve scalability. Together with Layer 2 solutions (which are on the verge of becoming mainstream, e.g. Jack Dorsey's tweet was minted using a L2) that will bring the throughput to ~100-200k transactions per second.
- The last step is "docking" the old Ethereum Mainnet to the Beacon Chain as one of the shards of the new PoS system.
That author also does not engage meaningfully with the green energy side of the crypto ecosystem. Strong international and local regulations would go a long way in protecting the environment and local prices.
NFTs also impose the best aspects of physical goods. Namely that I can re-sell, trade, or borrow digital things as I wish. It’s an improvement on DRM in that sense.
GameStop can become a marketplace for NFT tokens for games. Better than Steam keys.