The Worrisome Rise of NFTs | Hacker News Reader

The Worrisome Rise of NFTs

nautil.us

74 pointszwieback147 comments

The worst thing is the constant and malicious lie being perpetuated.

You do not own an NFT in any legal or moral sense. The ownership is not recognised in any country, by any court or international body.

All you have is an entry in a logical database that says you own it. But unless you have signed a contract with the seller transferring or licensing copyright then it as meaningless as you buying a certificate saying you've named a planet.

The irony is that most NFT do not include any copyright or commercial rights. Only the "respectable" ones do, others are just a link to an image and a pinky promise that it won't be on another marketplace.

I remember one of my friends wanted to do an NFT of some sort and i jokingly remarked "I'll paypal you 10€ and I'll pretend I own something"

And most NFT's are just links that aren't embedded on the blockchain that could go away tomorrow or be switched to something else without any warning.

Possession is nine-tenths of the law. If nobody can take it from you, you "own" it, and everything else follows from that. "It" being: your crypto identity bound to some metadata.

No the artist owns it. They have the copyright.

So the funny part is that if you buy an NFT not only can I legally copy it but I can approach the artist, buy the copyright and then sue you for copyright infringement.

I said you own metadata bound to your crypto identity, not the thing that the artist is making into an NFT.

While this is (in most cases) true, you still own, say, a poster you bought of some artwork. The NFT is a sort of "poster" you own. You still own it, so I don't understand your criticism.

Owning and NFT is more like owning a sign that says there's a poster on the wall in the next room that's yours. For many NFTs the poster may be removed at any time by a third party you have no influence over. All you own is the sign.

> Owning and NFT is more like owning a sign that says there's a poster on the wall in the next room that's yours.

Even if this is true, okay: you still own a sign that says there's a poster on the wall in the next room that's yours. People own all kinds of things that I personally think are dumb: from beanie babies to baseball cards. If we have a problem with abstraction, people trade all kinds of abstract things: from options to futures to a veritable zoo of other derivatives.

Again, not sure what the direct criticism here is.

The difference is that people need your permission to make a copy of that poster.

I can take your NFT image, duplicate it and use it however I want. And you have no legal or moral right to say no.

> people need your permission to make a copy of that poster.

No they don't, I can literally walk in my friend's living room and take a picture of his poster. I can do that in the store, too, by the way. The "I can copy-paste it" is just a terrible and bad-faith argument.

Most NFTs come with an IP license. You cannot buy the copyright and sue someone with a valid pre-existing valid IP license.

Is this comment in support of NFTs or against NFTs? From what I have seen commonly the subject of the NFT is hosted somewhere not on the blockchain (possessed by someone else).

The comment is neutral. If the blockchain is decentralized, it's a lot harder to take the entries from people, but to your point, if it's hosted by a central entity, your ownership of anything is a lot weaker.

Yeah. NFTs are not a bad idea but the current implementation is basically a scam. Ownership of these tokens means nothing, people pay for them and still own nothing.

They could be good. Imagine if instead of the current licensing hell you could just buy an NFT that represents your ownership of a song, a film, a video game. Companies wouldn't be able to take it away from you remotely, you'd be able to resell it at a later date. Such a thing could actually make copyright more tolerable. Unfortunately this would probably require an actual legal framework around it to guarantee these rights.

> Unfortunately this would probably require an actual legal framework around it to guarantee these rights.

I'd go stronger to “would definitely require”. If companies wanted to offer this, there's no reason they couldn't right now so the question really needs to be how you'd get them to offer more consumer-friendly terms. One option is a legal requirement but that would be non-trivial to implement to avoid various scams (e.g. if I license a movie and sell it to you, how comfortable are they with the idea that I didn't save the decryption key when I legally had it?).

The most interesting example I've seen of what this could look like is Movies Anywhere. My understanding is that Disney's motivation was preventing a single tech company like Apple, Amazon, Netflix, etc. from having a large enough share of the market that they'd be able to dictate terms to the movie studies the way Apple was able to use iTunes to push the music industry to be less exploitative. That only works with a list of trusted parties and seems to be about as much as I'd expect to see in the current climate.

Even worse is that a bunch of NFTs are sold by people that didn't even own the art in the first place. https://www.vice.com/en/article/n7vxe7/people-are-stealing-a...

"NFT" means "Non-fungible token". It means that one token of a type is not strictly equivalent to another token of the same type. It does not mean "a link to a JPEG that is hosted on OpenSea."

> You do not own an NFT in any legal or moral sense.

Often this is the case, but it doesn't need to be the case, it shouldn't be the case, and it was never intended to be the case.

Yes, it is stupid that people are buying NFTs that are not linked to a legal or contractual grant of intellectual property. However, it is also the case that there are in fact NFTs being sold that do in fact attempt to convey an ownership right via contract.

The problem is that the salespeople _frequently_ misrepresent NFTs as having legal meaning as a key part of the explanation for why you should pay so much for one and they _never_ mention that the same basis you'd need to convey the legal contract also means that you have a system you can use instead of a blockchain at much lower cost.

Has this been tested in court?

Common law is very flexible, and (IANAL) I wouldn’t be surprised it if recognised an NFT sale as one. Eg if both parties believe and represent the transaction as a sale at the time, does that in itself make it a sale, regardless of finer technicalities?

In most cases it doesn’t need to be tested: the party making the sale isn’t responsible for what some random cryptocurrency salesperson on social media claims.

If the actual seller made misleading claims and the fine print didn’t clarify, it might be actionable. Typically what we see, however, is that the terms do note that you’re buying the link rather than its target.

> attempt to convey an ownership right via contract

If that attempt was a serious one it would be an actual legally binding contract.

But it's not. And the sellers know this because it allows them to scam more money out of people.

> If that attempt was a serious one it would be an actual legally binding contract.

Yes, the idea is to have a legally binding contract that assigns ownership to whomever controls the token.

Even aside from the baloney idea of ownership they offer, the thing that continues to baffle me about NFTs is that the very nature of them assumes that ownership is inherently valuable.

Buying a painting allows me to hang it on the wall and admire it, where is where I derive the value of owning that painting. Buying a digital videogame allows me play it, even though there is no physical good (and is also a questionable definition of ownership due to DRM).

Buying an NFT allows me to...show off I guess? It entirely separates the ownership from the ability the experience the owned thing, which I find bewildering. To me, 100% of the value of owning something is the ability to experience it. If I can freely experience something, then the concept of "owning" it is worthless. It would be different if it endowed some semblance of actual ownership, e.g. copyright, but that has been functioning perfectly well without blockchains for hundreds of years.

>Buying a painting allows me to hang it on the wall and admire it, where is where I derive the value of owning that painting.

That's true, but why do people spend millions on an original [famous artist] painting? If all they want to do is admire the painting, surely a high quality replica (ie. the type that can fool the naked eye) would be more than sufficient?

“People” in your comment being an extremely small class of wealthy individuals whom have the luxury of trading art. Most people would be totally fine purchasing a high quality replica, as that is their only option.

To me—and I'm not at all a high art person, so take this with a pinch of salt—I think the value in owning an original painting would be knowing that it is the original, crafted first hand by the artist, rather than the notion that it is mine and not someone else's (which to me continues to be a worthless concept in isolation). If The Lourve said I could keep the Mona Lisa above my mantelpiece forever more, I would not be looking to place bids on it.

For digital art that obviously doesn't apply as the concept of "the original" artefact is borderline meaningless, however that leads neatly onto the other thing I dislike about NFTs, which is the introduction of artificial scarcity in a medium not burdened by it.

> ... Even aside from the baloney idea of ownership they offer, the thing that continues to baffle me about NFTs is that the very nature of them assumes that ownership is inherently valuable.

It's less baffling if you realize it's just BS "power of positive thinking" [1]. A bunch of people latched on to NFT's because they wanted to be in on the ground floor of the next big speculative bubble. However the thing is fundamentally BS, but to admit that would contradict their goals, so they use positive thinking to believe the BS in the hope that their belief will somehow make the BS true.

So, basically: I want NFT's to be valuable, so that means whatever it is they provide must be valuable.

[1] https://en.wikipedia.org/wiki/The_Power_of_Positive_Thinking

It's not just positive thinking; it's about creating a new kind of scarcity-based status symbol.

So like beanie babies, then?

At least with beanie babies, after the market crashed, you still had a cute stuffed animal. My family still has a large collection of the purple platypus "teeny beanies".

When and if the NFT market crashes, anyone who bought one will have....nothing.

I thought they would be allowed to keep the JSON. /s

> Buying an NFT allows me to...show off I guess?

And buying some other piece of shit for millions doesn't, right? What's the difference? Why nfts are so important?

Yeah I think the art/jpeg part of it is somewhat meaningless. The creator can probably still can claim copyright, and of course anyone can copy it. At one level it's lust a link to URL that can be bought and traded.

But also: proof of ownership of a NFT can be access to something else, that can be the "utility" defined by the NFT creator. Like the Board Ape Yacht Club gives access to parties. Others give other value add like YouTube revenue license rewards if the NFT shows up in an animation for example. (Quarter Machine) I think "utility" is where more of the potential is. It can be valuable with the people/company backing it and keeping their word.

Almost all of the time that "utility" isn't controlled on-chain, so it requires trusting the people/company backing it. So it doesn't need an NFT, they could just as easily maintain a database.

> You do not own an NFT in any legal or moral sense.

But you do own the very real sum of money that's earned by flipping one. Which is the whole point.

This is arguing against a strawman.

1. Most NFT marketplaces, on which the vast majority of NFTs are sold, provide a default IP license and/or allow custom IP licenses: https://www.natlawreview.com/article/nft-license-breakdown-e...

There are some growing pains to be sure, but by and large, NFTs come with an IP license, despite your belief to the contrary.

Your argument is akin to someone ranting, after the development of photographic prints, that a print is a malicious lie and you do not own anything in any legal or moral sense.

2. Increasingly, most savvy NFT projects provide, and savvy buyers demand, even greater IP rights. For example, here are the IP terms for Bored Ape Yacht Club (one of the top NFT projects in the space): https://boredapeyachtclub.com/#/terms

Note that BAYC grants the NFT holder not only a license to use and re-sell the NFT, but the right to commercially exploit and create derivatives of the image itself.

It's like registering a star...

I'm as concerned as the next person about energy use, but I did read some counterpoints in an article published yesterday [1]

The House Energy and Commerce Committee’s Oversight and Investigations Subcommittee is reportedly going to investigate cryptocurrency’s effect on the environment...

But the meme that bitcoin or cryptocurrency uses as much power as one country or another, promoted by The New York Times last September, for example, deserves a bit of pushback on a couple of fronts.

[1] https://www.aei.org/technology-and-innovation/no-hearing-on-...

Edit: and then someone pushes back on Nic Carter today:

https://jpkoning.blogspot.com/2022/01/the-fallacy-of-bitcoin...

This piece argues that we should listen to a VC partner that is invested in cryptocurrency about the energy usage of cryptocurrency. This is like listening to an oil company giving advice about fighting climate change. You’ll have to do better than this.

I’m not sure why I expected any better from a partisan think tank.

They pushed back on Nic Carter (I’m guessing here) because he has a financial incentive to make crypto look good. This is not hard to understand.

This is reason for suspicion but not for blanket dismissal. If you dismiss every self-interested argument you miss a lot.

NTF's aren't on Bitcoin. They're on Ethereum which is switching over to PoS.

>They're on Ethereum which is switching over to PoS.

It's been switching over to PoS for years. I distinctly remember articles in 2019 about how they'd switch by the end of 2020, articles in 2020 about how they'd switch by the end of 2021, and here we are in 2022.

The point holds until they actually do make the switch.

Ethereum is already running PoS for over a year.

Just not all of Ethereum is running PoS. All of Ethereum will switch over and it's currently planned for July.

This is only true in an extremely technical sense. For practical purposes Ethereum is not running PoS. When you make an Ethereum transaction you are interacting with the PoW chain. Every single NFT transaction runs on the PoW chain.

Yes, there is also a PoS chain, confusingly also called "Ethereum", and yes it will soon become the primary chain, but that does not negate the fact that today nearly all activity happens on the PoW chain.

Update your facts my friend this criticism is stale and has been superseded by a million major events by now. Read the news or hold back on your deprecated knowledge.

In 2019 you probably read about the launch of the PoS beacon chain, as in the "phase 0" of what was then known as the Eth2 roadmap. Beacon chain launched in December of 2020, and since then the work on the merge has been ongoing, which is the hotswap of the network's consensus from Pow to PoS.

We're now in the phase where public testnets of full PoS Ethereum are running [1, 2]. Ideally, we'll have the merge before the next difficulty bomb goes off in June.

[1] https://kintsugi.themerge.dev/ [2] https://beaconchain.kintsugi.themerge.dev/

The specifics of this pushback don't seem that strong to me. FTA:

1. "standard method of inferring miners’ collective electricity use from the “hash rate” of networks relies on guessing what kind of mining equipment did the hashing."

2. "The energy-consumption profile of cryptocurrencies leans toward stranded energy and renewables"

#2, in particular, is completely irrelevant to how much energy is used - it's just hand waving and saying that some of the energy is renewable. Pushback #1 is just saying there are assumptions about miner efficiency in the energy use estimates - valid point, but it's not really a pushback, just the explicit statement of an assumption the analysis makes.

These do not strike me as particularly powerful arguments, especially since one of them (#2) is irrelevant to the question at hand: how much energy does crypto use?

What bothers me personally is that they use so much energy _now_, even though they’re still pretty fringe. Sure, a lot of people have a little crypto floating around, but not most people, and almost no one is using it as a medium for exchange on a daily basis. And yet it’s still using ~0.5% of the world’s energy (aka as much as a mid-sized country).

I feel like you have to pick one: Either argue that crypto is a niche hobby that won’t get much more traction, and that 0.5% of humanity’s total power usage is not that bad. Or express your ambition for crypto to run the world and become a fundamental part of everyone’s life, and have an explanation for how to square this with a multiplication of humanity’s total energy usage and the effects that will have on energy prices, silicon prices and the climate. But I’m tired of people arguing for tomorrow’s revolution using today’s energy usage numbers.

Your citation is full of errors and fallacies. More efficient mining rigs is basically irrelevant, because Bitcoin miners have no incentive to reduce energy consumption while computing the same number of hashes; it is to compute more hashes using the same amount of energy. So as long as you know the lowest possible energy-per-hash of all available mining hardware you can compute a lower bound on Bitcoin's energy utilization.

Then comes the claim that we do not have data on the energy consumed by mainstream finance, but in some cases we do and it really drives home the point about Bitcoin. Visa emitted over 1000 times less carbon in 2020 than Bitcoin, and processes over 1000 times more transactions per second (7 for Bitcoin versus 1700 for Visa). So Visa is at least a million times more energy efficient than Bitcoin as a transaction processing system.

Then the "pushback" claiming that it's really OK because Bitcoin mining can be switched on when energy is abundant, which could, maybe, possibly, subsidize the cost of renewables. Except there are alternatives that also could be switched on only when there is an energy surplus -- beginning with any energy-storage technology, of which there are many at different stages of development. Every joule devoted to Bitcoin is a joule not charging an electric car, and every dollar spent on Bitcoin is a dollar not spent developing better storage. There are also industrial processes that could be selectively turned on during periods of abundant energy, like electric arc furnaces widely used in steel mills (the ability to turn the furnace on and off as needed is one of the big advantages of electric arc furnaces over blast furnaces).

The outright denial that there even is a problem to solve is a classic example of people becoming religious about a technology. Fortunately better responses have been offered from the blockchain crowd, like pointing to PoS as a technical solution to the problem.

I mean, always consider the source. Most people wouldn't consider the AEI trustworthy on energy/emissions issues.

>NFTs are comically bereft of anything we would associate with social or cultural value.

This subjective opinion is frequently trotted out to describe digital items that people pay money for. The arguments used in this piece can just as easily apply to video games or anything else.

There isn't anything new presented here, just one person railing against something they do not like using familiar arguments. IMO not the type of thought provoking content that people come to HN for.

I assume you mean in-game trinkets and costumes etc. rather than video games themselves?

The latter seems like a massive stretch, and I don't know why it wouldn't include films too.

This video game comparison is super incorrect. If you own an item in a game it’s very often to show it off because others can’t use it, it’s only for you. The closed source nature of games enables this. Nobody would buy them if they were easily used by anyone but you had a super legit receipt saying “mhm this guy actually paid for it”. NFTs of dumb copy pasted JPEGs are completely useless.

You misunderstood my argument. I'm not comparing NFTs to video games for ownership purposes, but it's "contribution to society."

The statement that NFTs "have no societal or cultural value" has been historically attributed to video games and other forms of leisurely/fun activity. It's a bad argument.

The fact that a specific argument has been used in bad faith in the past does not mean it cannot be used in good faith.

Games are demonstrably something valuable: they are art, they are entertainment, they are a product.

NFTs are none of those things. They're just a new way to try to milk money out of people, who gain nothing meaningful in return.

NFTs aren't the content and you should not conflate them.

To me, NFTs reek of crypto FOMO. It's like a manifestation of all of those who missed out on the Bitcoin wave, and all of those who want a second version of the Bitcoin wave. The concentrated desire of those two groups create a reality distortion field around NFTs being cool and valuable.

I’m honestly surprised that hysterics about NFTs have dragged on so long. People must be super bored to give a fuck about this or become upset. People just want to trade proof of ownership, as defined in their own sense. They aren’t really bothering anyone or causing any havoc. Why are people so bloody crazy about it? Just ignore it for fucks sake.

I would agree...except that mining operations are literally keeping carbon-emitting power plants online and even bringing already-shutdown plants back online to power mining. NFTs by and large still depend on these energy-inefficient mining operations despite years of promises that "proof of stake" and whatnot would solve that problem in general. Then there are the NFT scams that serve only to discredit the entire blockchain ecosystem, and the fact that NFT proponents have been going around promoting both scams and misinformation. So it is not too hard to see why people are taking the time to weigh in on it...

Because: Climate. Change. Is. A. Thing.

In a world where we are (or should be) in a desperate race to decarbonise the essential industries that make 1st world standards of living possible (steel, concrete, travel, electricity), you're merrily burning a road-trip's worth of energy every time you want to trade a digital beanie baby.

At this point, articles on NFTs are the same as articles on vaccines or articles on Jan 6, or Trump, or anything controversial. It's purely done to drive clicks and serves no real dialectic purpose (there are, of course, some thoughtful writers, but the vast majority is drivel).

> Blockchain technology is purposefully burdensome and computationally distributed, making it notoriously energy intensive. Estimates put the energy used to create and trade a cryptocurrency like Bitcoin on a par with the total consumption of a country like Sweden. And that’s without accounting for the environmental footprint of the physical computer hardware.

Another critic who is willing to criticize without updating their knowledge as to the current state of the technology. Blockchain is not the same as proof-of-work. Yes, Bitcoin is energy-intensive, but other consensus algorithms do not use energy at nearly the same scale.

> Blockchain is not the same as proof-of-stake.

While this is also true, I'm pretty sure this should have been proof-of-work. PoS is actually one of the less energy intensive alternatives.

Of course, yes. Corrected.

I think you probably mean proof-of-work which is the most energy intensive.

Of course. Thank you.

I think it is fair to criticize this technology on the current state, any future improvements first have to prove themselves.

Among the most popular blockchain networks right now, only Bitcoin and Ethereum and their forks (including code forks like Dogecoin and Litecoin) are still using proof-of-work. And Ethereum is moving away from it.

After Ethereum migrates to proof-of-stake, of the top 20 cryptocurrencies by market cap, only Bitcoin, Dogecoin and Tether (which is a multi-chain stablecoin) will operate on proof-of-work networks.

https://coinmarketcap.com/

Alternatives to proof-of-work are no longer "future" tech.

So I don't claim to understand any of this in detail, I only have some superficial knowledge here. How much of the NFT space works without Ethereum? My understanding is zero.

They're moving away from it is fine, but they haven't yet. I'll believe it when they actually do that. And then we'll see how that idea works in practice. And we'll see if there are any new, interesting problems with proof of stake.

Solana is a platform that is frequently used to issue NFTs, and people are releasing NFTs on other blockchains as well. There is a significant incentive to move to these other platforms, because Ethereum is so expensive to use. But yes, most NFTs are issued via Ethereum smart contracts.

Ethereum is operating a proof-of-stake network right now in production, and is scheduled to end proof-of-work later this year. My sense is that they will likely complete the transition before the close of 2022, or in 2023 at the latest.

What percentage of total cumulative cryptocurrency volume is exchanged using PoW rather than PoS?

The PoW market share is and historically has been pretty massive so I don't think it's hugely disingenuous or through a complete lack of understanding that the two are conflated.

NFTs are the blockchain version of the International Star Registry.

At least those scammers send you a participation badge suitable for framing.

The company Ethereum (that supports cryptocurrency as well as NFTs) has indicated it aims to cut energy use by more than 99 percent by changing its core methodology.

Interesting, Ethereum is referred to as a company by these authors?

Possibly this meaning?

3. An assemblage or association of persons, either permanent or transient. [1913 Webster]

This typo/oversight/error/whatever shows the depth of misunderstanding the author has about the subject he or she writes. People of hacker news will still love the content, but nobody outside of this bubble will view this as an honest criticism.

If you want a truly great critique from a person who REALLY understands, read Moxie Marlinspike: https://moxie.org/2022/01/07/web3-first-impressions.html

I liked it a lot!

I wrote a very substantive rebuttal that I hope you like as well: https://community.intercoin.org/t/web3-moxie-signal-telegram...

Digital goods have proven to be viable goods that people will pay for, trade, and hold. Counter Strike Cosmetics, Fortnite Skins, and iTunes downloads are just a few examples of something that used to be a labeled as a gimmick, but are now big money makers. It's very easy to extends these to NFTs, a seemingly more generic digital good that is not tied to a specific company.

But In Game Cosmetics have something that NFTs still seem to lack, a way to use them. Sure you can use an NFT in a Twitter Profile, but so can I with a simple copy/paste. Is anyone really going to surf a metamask wallet gallery to look at others' NFTs? Probably not. But that cool Counter Strike Knife skin can be used in an actual game that people actually play. Until NFTs can be used in a way that is not easily stolen, they will be relegated to speculation and money laundering vehicles like every other shitcoin out there. In theory games could plug into federated markets where an NFT could be used in multiple games, but where is the incentive to open a walled garden that prints money?

The economic and energy arguments are just bikeshedding the real issue of finding an actual purpose for NFTs. 90% of people probably have never been to a museum to look existing art outside of school field trips, why will that change just because it's digital? Just because digital goods are viable, doesn't make NFTs viable by association.

I checked out OpenSea a few days ago to see what was selling. I went in with low expectations but I was still shocked. The hottest NFTs are all trash. It's a bunch of dumb ape doodles and piles of variations on the same few templates. Some of them are algorithmically generated.

It's just shockingly dumb, yet I have smart people I follow on Twitter and elsewhere who are convinced this is all world changing. I keep asking for people to point me to the evidence and it's never there. I've been asking for years.

Yet people keep putting their life savings into it - and coming out significantly richer.

It’s rather frustrating how well the market has been rewarding bad decisions

It's all built on historically low (or even effectively negative) interest rates. We've been in a crazy low rate environment since 2008 and COVID pushed the money printing into overdrive. When inflation eventually forces interest rates to be raised a lot of these crazy bubbles are going to pop almost instantly.

The alternative, a deflationary depression, would probably have been a lot more painful and destructive. Instead of mass defaults and cascades of bankruptcies we get million dollar ape doodles.

Mass defaults and bankruptcies and worse are still coming, I promise you. You can't funnel money upward this hard for decades and not pay a price.

It's not dumb, it's gambling. You buy a stupid monkey doodle for $100k and hope to sell it to somebody else for $200k. Nobody wants the monkey doodle. The NFT craze has nothing whatsoever to do with art, novel technology, decentralized ownership, or any of the other high-minded concepts people keep bringing up in these discussions. It's about gambling.

CrytoKitties did it back in 2017. NFTs are not new and there were flurry of articles back then along the lines of "How I Made $100k Trading CryptoKitties in My Free Time".

https://hackernoon.com/how-we-made-100k-trading-cryptokittie...

Gambling not labeled as gambling is a scam. NFTs are being sold to the ignorant as something with real value or even as the future of art ownership and patronage. They are not even close to that today.

Astonishingly low quality article for a publication as wonderful as Nautilus.

For now I just want to comment on one piece, this meme that NFTs are killing the planet through consumption of insane amounts of energy is silly and falls apart with a moment's thought.

All estimates of per-txn energy usage take the total number of transactions and divide by the total energy usage of the chain. However... bitcoin (and other chains) happily consume a lot of energy even when no transactions are being processed. The more important question is: when you make a transaction how much more energy is consumed than in a counterfactual world where you did not make that transaction.

This number is very difficult to estimate, but seems to be at most 10kwh, or as much as driving your tesla ~30 miles, or running your dishwasher 5 times, or running your air conditioner for 5 hours, or doing any of a number of other things which people happily do every day without thinking twice. It would be nice if energy consumption was much lower, this is a non-trivial amount of energy, and multiple chains are working toward lowering it, but popular articles all seem to believe your NFT could power Berlin for a day if only you weren't being so selfish.

> This number is very difficult to estimate, but seems to be on the order of 10kwh, or as much as driving your tesla ~30 miles, or running your dishwasher 5 times, or running your air conditioner for 5 hours, or doing any of a number of other things which people happily do every day without thinking twice. It would be nice if energy consumption was even lower, and multiple chains are working toward lowering it, but popular articles all seem to believe your NFT could power Berlin for a day if only you weren't being so selfish.

Those are all astonishingly energy consumptive tasks for something that, I agree with the article author, is pretty much bereft of any value.

By contrast, you could make... what, five hundred thousand credit card transactions with that same energy? That's f**king insane.

don't worry, "web3" nonsense will be among the first bubbles to pop as US monetary policy tightens over the next couple years

I'd replace the 'as' with 'if' above. I'm not convinced the Fed has the guts to significantly tighten monetary policy at this point. It's not just the NFT market that would crash, it's stocks and real estate as well - followed by a pretty significant recession.

Yeah it will set off a major financial correction and temporary crisis in the markets, but the alternative, letting the status quo of negative interest rates drive further inflation, will lead to a historic economic crisis. SME failures and a general breakdown of social order.

Worst case scenario, they wait too long to raise rates and only do it as a knee-jerk reaction to an unfolding economic crisis that threatens to destabilize the entire USA. Then we get a full-spectrum crisis.

It is easy to forget that the Fed was already tightening monetary policy over a period of years prior to the COVID crash, and only loosened policy in response to the economic impact of COVID. The Fed has historically not been shy about triggering corrections, crashes, and recessions if that is what it takes to achieve their targets, and I am not sure why anyone would think they will behave any differently this time around. Certainly the bond markets have reacted in a way that suggests that participants there take the Fed at their word that interest rate hikes are coming over the next 12 months.

"Worrisome"?

New tech will always bring out fear and anxiety, and fear and anxiety secures eyeballs and votes. Blockchain is here to stay, and Art will always leverage new tech.

Simialar arguments were made at the dawn of the internet, and at the dawn of photography as far as Art is concerned.

NFTs are Art, that's for sure. The concept of ownership that is challenged might as well be part of the Art itself.

Here we go again. 'NFTs is a scam', 'web3 is a bubble', 'This is a going to crash', etc. They already know it is a scam, ponzi and a bubble which is why everyone is cashing in on the hype before it collapses.

90% - 98% of these NFTs will not survive and will be worthless, so let us ignore this common form of NFTs (images, videos, etc) and look at NFTs that have utility and value like blockchain domain names like ENS, which at least that is useful.

The fact you cannot store the NFT image, video or audio on the blockchain tells you alone it is a scam anyway. Even if you could do that, how would you totally remove the image, video or audio if criminals and terrorists also use it for storing illegal content?

So, if you think it is going to collapse, just ignore it. Otherwise we will all be back to complain about NFTs in another thread once again.

> So, if you think it is going to collapse, just ignore it. Otherwise we will all be back to complain about NFTs in another thread once again.

I don’t think this is fair. Thousands of people will be scammed out of their savings. Peta joules of energy will be wasted. Hundreds of art pieces will be stolen. This is entirely preventable with legislation and enforcement, and while we wait for that, this damage can be minimized by informing the public. Just ignoring NFTs until the bubble bursts is allowing unnecessary harm to continue. That is not a very humane course of action.

> This is entirely preventable with legislation and enforcement, and while we wait for that, this damage can be minimized by informing the public.

The reason why it is easy to ignore the hype is that eventually, regulations will eliminate 90% of all these NFTs that do not comply. Right now everyone knows it is a scam and they are scamming each other until the bubble bursts. (again).

This has happened to the ICOs, so it will also happen to NFTs.

> That is not a very humane course of action.

If 2017 didn't teach them about the scams, hacks and immaturity of the unregulated nature of the cryptocurrency ecosystem, then they will learn the hard way again with NFTs.

This is why the serious approach is for the businesses and users to wait for regulatory clarity first rather than jumping into a casino-laden pyramid ponzi scam and repeat the same mistakes of 2017.

The regulators will do all the legislation required to bring the carnage 'under control', just like they did for regulating cryptocurrency exchanges. So we will see. But for now, the madness can be ignored, since it is doomed to collapse once regulations come for it.

The rest of us have to live in the planet being polluted right now. Many of us will have friends or relatives lose money to scammers. Many of us have retirement funds invested with companies or live in cities which are being pressured to “invest” in transparently-overbilled blockchain funds.

What is really worrisome is a recent flood of cryptoposts in HR top about smth which doesn't matter at all. It starts to look like black PR already. "oh no, nfts!! Oh no, web3!! Oh no, a scam! Memcoins! Ponzi scheme!!"

These money would've ended in some bullshit anyways. We are in the middle of economical crizis. Bitcoin, selfdriving cars, tesla, space tourism or whatever just create a false sense of activity in the market while everything is going down.

Commercial aviation makes up 918 million metric tons of carbon.

Bitcoin mining makes up 22 million metric tons.

I'm less worried about NFTs than I am air travel.

22 million metric tons is 22 million metric fucking tons.

And there's no reason for it. None.

There are better cryptocurrencies: ones with no mining, that use a fraction of the energy.

Nano, for example, uses six million times less energy per transaction, and is mining free. It's fully operational, putting every Bitcoin maxi lie to shame.

In other words: a single cryptocurrency is generating 1/42th the carbon as all commercial aviation. The carbon generated by the two things is only one order of magnitude apart.

If you consider that one of the two is (prior to COVID) used by a significant number of citizens of Western countries for vacations, business trips or visiting family, whereas the other is primarily used for financial speculation, money laundering and grey/black market financial transactions, this should be even more appalling.

I don't know what makes you think you can put these two numbers side by side and have Bitcoin's carbon emissions look like the reasonable one. Especially when aviation is an established industry and has been the target of ecological regulations for years.

Commercial aviation is at least useful: every year many millions of people travel for business, school, family, and pleasure needs which would be non-trivial to replace and aviation cargo is a key part of the global supply chain.

If Bitcoin turned off tomorrow, some speculators would be very upset and nobody else would notice because 13 years in it still hasn't found something it can do competitively with alternatives which are significantly cheaper, easier to use, and less polluting.

The current monetary system has absurd levels of hand wavy magic.

Are you familiar with what is being done on these systems? Uniswap alone did $1 billion in fees last year, a distributed, permissionless, unstoppable exchange. Ethereum did $10 billion in fees last year.

I know someone who bought their house with a loan from Dai, which is far less hand wavy magic than Wells Fargo. It took them 30 minutes and no permission for the powers that be was needed.

> Are you familiar with what is being done on these systems? Uniswap alone did $1 billion in fees last year, a distributed, permissionless, unstoppable exchange. Ethereum did $10 billion in fees last year.

Consider whether bragging about the overhead fees for a system which statistically nobody uses is a great way to sell people on it.

> I know someone who bought their house with a loan from Dai, which is far less hand wavy magic than Wells Fargo. It took them 30 minutes and no permission for the powers that be was needed.

How often do you buy houses that giving up protections is an important selling point? Someone is going to be left holding the bag if they're not scrutinizing the borrower's ability to afford the property and its value.

Fees show obvious usage. "Statistically nobody uses" isn't fair.

The fact that someone is paying interested on their house, a physical asset, to a blockchain application instead of Wells Fargo is a huge deal.

Fees show transactions in the system, not real-world impact — smart contracts, anonymization, pump-and-dump, etc. generate a ton of activity for what most people would think of as a single logical operation.

What you really want to see are real-world impacts: how many people use the network? How many real business transactions occur daily? and, especially, how much real value is entering or leaving the system? If a bunch of early adopters are churning an NFT back and forth boosting its value, they're definitely paying fees but that's neither economically-useful activity nor popular adoption.

Fees are a hard cost making gaming systems far harder and costly. $10 billion isn't anything to shake a stick at. That's real business that's having enormous real world impact.

https://cryptofees.info/2021

Other stats are well known and easily googlable. People in the industry are constantly looking at those statistics, just like any other business or industry. Just for starters, Coinbase has 73 million users. Ethereum is doing 1.2 billion transactions a month.

https://www.statista.com/statistics/730818/average-number-of... https://www.coinbase.com/about#:~:text=Coinbase%20powers%20t....

Crypto's use case is drugs and money laundering.

Those are valid use-cases.

Only until the criminals learn that leaving a signed transaction history for the police is unwise.

they have, and anonymous crypto now dominates the illicit markets.

getmonero

This is a bad argument.

Just because something we currently do is worse than something we want to do, doesn’t mean the new thing is good. Nor does it mean we should add to our current burden unnecessarily.

It also ignores what we use the old thing for. Flight has enabled so much: fast response to disasters, faster shipping of goods, saving human lives. The entire planet can benefit from flight. Crypto is used by a small minority and seems pretty much fueled by speculation.

The only legitimate use of crypto is as a currency in places where the economy is poor, or the state can too easily seize your assets etc.

Aviation makes up only 1.9% of the big pie and bitcoin barely is a blip. It would be nice not to have those tons, but addressing big pollution first makes the most sense for triaging the problem. Personally I would enjoy the lower prices for graphics cards if bitcoin went away.

No one said eliminate all air travel. Cutting it down to once a week for non-emergency use world wide would have a huge effect, but even then aviation is only 1.9% of the problem. Making tarrifs, even within the same country, on food grown by milage from consumption would reduce the transport and farming slice of the pie. Eat locally for the cheapest cost.

Umm... commercial aviation is just a tad more useful...

But air travel has tangible social and cultural value: visiting clients, friends, colleagues, and family.

NFTs do not provide social value. That's the central argument to the article. Did you read it?

Except that we do not have an alternative to jet airplanes that moves hundreds of times more passengers while emitting less carbon. We do have such an alternative to Bitcoin, in fact it predates Bitcoin by decades and is far more popular: Visa. Visa's total carbon emissions in 2020 for its data centers and offices (their ESG report also discusses emissions from employee commuting and business travel) is a whopping 14 thousand metric tons, over 1000 less than Bitcoin. That carbon was emitted as Visa processed 1700 transactions per second compared to only 7 transactions per second for Bitcoin.

In other words, as an electronic payments system, Visa is roughly one million times less polluting than Bitcoin.

So until NFTs are using a system at least as energy-efficient as Visa, I'll continue to worry...

Still 22mln metric tons we could do without.

"An astrobiologist says non-fungible tokens do not bode well for our species’s future. " This is a historical subhead.

And the article doesn't fail to live up to it --

"...because of the potential [of blockchain] to outpace any efforts to transition to zero-carbon energy production."

I think that even the most craven cryptocurrency and NFT buyers have yet to envision such exponential scenarios that 'blockchain' consumes resources at a clip that subsumes other greenhouse-gas activities like, flying, driving, HVAC, etc.

"There is of course another solution: We stop reinventing things like currency or certification until we have a proper plan [...] until humanity has figured out a way to generate all our energy cleanly, from solar, nuclear, and so on, would make more sense."

"There is of course another solution: We cease all human behaviors [...]".

I would like to see an actual measured critique or discussion of NFTs and adjacent cryptocurrencies.

I'm absolutely willing to hear that NFTs (and related cryptocurrencies) are bad for the environment, bad for society, have no "intrinsic" value, but I'd really like to hear some counterpoints.

For example.

* Which is worse in terms of environmental costs: ordering 100 T-shirts or minting an NFT [0]?

* There will always be fads, regardless of NFTs. Beanie Babies were the fad in the 2000s that bootstrapped PayPal and EBay [1]

* There is at least an argument, whether it's true or not, that cryptocurrency can/will bootstrap solar adoption [2]

* Explorations of what it means to have "unique" art, especially as it pertains to the current ability to mass produce and copy maybe with real attempts at a critique against academic artists who believe in intrinsic value of fine art vs. digital art.

Though I'm not sure if there's any concrete statistics, it's at least a well accepted hypothesis that fine art is used as a tax evasion and/or money laundering device. If anyone has references on this point, I would appreciate it.

Again, maybe NFTs are an indication of societal decline, but I'd like to have a good faith discussion about it instead of incredulous dismissals.

[0] https://web.archive.org/web/20211112062740/https://twitter.c...

[1] https://morfene.com/021.pdf (pg 43-44)

[2] https://assets.ctfassets.net/2d5q1td6cyxq/5mRjc9X5LTXFFihIlT...

Regarding cryptocurrency and solar power, the argument has some gaping holes in it. The premise is that solar (and wind) does not have the constant generation rate that fossil fuels or nuclear plants provide, so by having miners going online when there is an energy surplus (and thus it is cheaper) can help pay for solar installations (which must be over-built to supply energy off-peak).

The most obvious problem with this line of reasoning is that miners make more money when they are constantly mining than when they only mine opportunistically. This has already been demonstrated in the real world, with miners generally clustering around energy that is cheap and always available. We have seen miners keep gas-burning plants that would have shut down online, bringing already shut-down coal plants back online, and clustering in countries and regions where coal/nuclear/etc. energy is cheap and abundant (China, a few former Soviet republics, etc.).

Moreover, anything that consumes power and that does not need to run round the clock would have the same effect on solar deployment. Why not create a smart washing machine that waits for energy prices to fall before starting a load? Why not a steel mill? A basic flaw in the argument is the assumption that there is no better use of energy than Bitcoin mining or that Bitcoin is unique in its "flexible" energy needs. Neither assumption is true. There are alternatives with the same "flexibility" that have a clearer benefit for humanity, like direct conversion of atmospheric CO2 and water into gasoline (still a research topic, but prototype facilities are being tested at small scales right now) or any other energy storage technology (which in theory could be operated separately from generation).

Finally, a basic economic point: energy spent on cryptocurrency mining is energy not available for anything else. Even if all Bitcoin mining was exclusively powered by solar, wind, and hydro power, Bitcoin would still be slowing the progress on phasing out fossil fuels by consuming so much energy. Electric cars need to be charged whether or not Bitcoin mining occurs, and if renewable sources are all being sunk into Bitcoin then cars will be charged using non-renewable sources.

I know you asked for the other side, but sometimes there is no other side and this is one of those times. The idea that Bitcoin is actually good for the environment because it could, possibly, subsidize solar production is just a desperate attempt to work around the criticism that Bitcoin wastes energy. Yet that criticism of Bitcoin is very easy to demonstrate: divide the number of transactions processed in one second by the power consumption of Bitcoin, and compare the same estimate for Visa or whatever. Even if the estimated power consumption of Bitcoin is off by a factor of 100 you would still be better off with Visa, since Bitcoin processes 7 transactions per second while Visa processes about 1700 (and Visa's annual reports on the topic always show much lower power consumption figures than even the most generous estimates for Bitcoin -- several orders of magnitude lower).

I'll give credit where it is due: people who reflexively shout "PoS" when these criticisms are raised are at least acknowledging that PoW is a problem that needs to be addressed. That is the only actual counterpoint to the complaints about energy consumption, a technical improvement that is ready for deployment (and is already partially used by Ethereum, with a full switch supposedly coming soon).

You raise some good points and you ultimately might be right, but from my perspective, you're recycling lazy arguments without much backing.

I live in New York state (USA) and we have restrictive policies about how much solar we can build and push back into the grid. In some cases, even doing an investigation to see if an area can support pushing a significant amount of solar back onto the grid can cost upwards of $10k (so I've heard). This steers solar production to only provide solar to the facility that it sits next to and disincentivizes pushing solar back onto the grid.

Let's say I wanted to build a solar system, at dirt cheap costs, that could meet 3x the energy needs of my house. What do I do with the excess that can't be pushed back into the grid? You're absolutely right, I could smelt aluminium, scrub C02, or open a "smart" laundry mat, but all those require a large up front capital expenditure.

Put another way, let's say you're producing an excess of cheap energy as an individual, so maybe 100kWh per day. What technology can you install that's cheap to set up, can use the energy in a linear fashion (can scale up) and be profitable? There's other benefits, like transportability and relatively sporadic use, that might come into play as well. I would genuinely like to know what other technology could fill this niche. Cryptocurrency is one and it seems well suited.

In terms of sporadic energy availability, I've heard this argument in a video that Elon Musk did as well and I'm not sure I believe it. If the energy availability is consistent enough, say in a block of 6-10 hours in a day, then I could imagine that could provide enough stability to mine intra-day. Regardless, battery technology is coming down in price and it wouldn't be hard to install a battery system to give consistent power by increasing the solar installation cost by a factor two to three times.

In terms of your basic economic point about Bitcoin using energy that isn't available for anything else, that's like saying energy invested in supporting the networking infrastructure can't be used for anything else. The energy invested in the system is so that the system can be used as intended. If you don't believe Bitcoin/cryptocurrency has any value, then just say that.

In terms of the Visa/scaling/energy/transaction limit, yes, Bitcoin can't use "layer 1" as the payment processor at scale, but maybe providing "layer 2" solutions, like Lightning or something similar can work out. This is what places like El Salvador are using and is why people are invested in Lightning development.

Again, you might ultimately be right, but my plea is for better discussion on this topic here. Especially for the "bitcoin mining needs consistent energy availability", I haven't seen any good resources to really refute or bolster this claim.

One of my favorite rappers, Nas, is selling royalty rights to his songs as NFTs[0]. I think selling NFTs as if they were trading cards is silly, but what Nas is doing? I think that's actually pretty cool. Thoughts?

0: https://www.nme.com/news/music/nas-to-sell-royalty-rights-to...

I only have one thing to say here: “Smarten up Nas” Jay-Z, Takeover, The Blueprint (2001)

How about a dash of Ether?

I can’t think of a more perfect reply than this, nicely done! It even works on more than one level. Diogenes always had a clever retort, I should’ve seen it coming :)

(Illmatic is better than anything Jay-Z ever released, imo)

Illmatic is A+ tier, but I like Stillmatic more. He recently dropped "Magic" would recommend if you enjoyed Illmatic.

What benefit does he have selling it via NFT vs something like ebay?

The NFT has nothing to do with the transaction here. You're giving something of value to Nas in return for a slice of a revenue stream. Nas could choose to do that with a regular old fashioned contract. The NFT is just an extremely expensive way to print the receipt, and introduces a third party to the process that doesn't need to be there. What happens when they go out of business or pivot to something else in a couple of years - are you still going to get your royalties then?

Why a non fungible token instead of a totally fungible ERC20 token for each song? So each person can buy the amount they want.

Why not use a traditional method like Bowie https://en.wikipedia.org/wiki/Celebrity_bond ? That gives some protection in case he, his manager or the discographic decides to do creative accounting.

btw I don't think this question should be downvoted, it's a fair thing to ask.

> The much bigger question, though, has less to do with these emergent upstarts in our informational world and more to do with humanity’s overall trajectory. Any species that endlessly grows, and continually invents energy-hungry processes, may not be destined for a happy ending.

Unless energy consumptive processes lead you off-world for more resources. I'm surprised that the author, an astrobiologist, doesn't see a more open ended future.

Too bad we don't live in sci-fi land. Crypto is burning resources here and now as we already face a climate catastrophe and drag our heels in replacing fossils with renewables.

There's currently no pressure to drive anyone "off-world" for more resources. "Off-world" is not only completely speculative and untested but also prohibitively expensive. Even if we could solve all the technological problems overnight simply by thinking really hard and running simulations (and that's a ludicrous assumption for any time scale), it would still be extremely resource and labor intensive to build the necessary infrastructure to actually implement it. In other words it would require burning more resources, creating more pollution and damaging the climate even more during an ongoing climate disaster.

And then what? Asteroid mining? This would solve resource scarcity but not actually help the climate. Sure, lithium and precious metals are cost factors when producing batteries but you still need to transport those resources back to Earth and refine them. All of this is still extremely energy and resource intensive and creates pollution.

No, an astrobiologist with a good head on their shoulders probably isn't naively pursuing some speculative VC promises of a high-tech future with off-world carbon capture and space elevators. They're probably more concerned with the one world we have not totally going to shit in the next few decades.

> There's currently no pressure to drive anyone "off-world" for more resources. "Off-world" is not only completely speculative and untested but also prohibitively expensive.

Well, good thing people are making it cheaper now. The people who don't think it's possible will benefit from that eventually despite their grumbling. It's the way of the world. Endless cycles of laughing at Colombus and then enjoying imported tea.

if, by “worrisome”, you mean “hilarious”

If it's good enough for Radio Shack, then it's good enough for me!

When the GAP is getting into NFTs, you know the bubble has already burst.

Pogs3.

People have been buying "high end" artwork as a tax shelter for a 100 years. Proving ownership through digital means instead of paperwork is insignificant to the practice.

NFTs do not confer, imply, or prove ownership of artwork.

You own this URL to the thing until someone else buys the domain name.

i flagged this article. there is no new or intersting information. it is an opinion piece on a well-known subject both sides have thoroughly voiced their opinions on. regardless, the article itself is barely coherent and i dont even detect a running theme.

im a crypto hater and id rather this not be here.

I have a bridge to sell you. It's an unbelievable deal for anyone, but I don't think you're ready for it.

This is a lazy argument that could apply to any art or leisure activity. Counterpoint (and shameless plug) – NFTs are one of the best bundles ever created. They combine:

1. A display of wealth.

2. An elite social network.

3. A signal of good taste.

4. A limited collectible.

5. The excitement of roulette.

https://paranoidenough.com/2021/12/21/The-Value-of-the-NFT-B...

> 3. A signal of good taste.

Or, given the current crop of popular NFTs, the lack thereof.

Professor of made up field writes an article bemoaning the existing of made up money. Oh, and how these made up tokens are going to literally end all human life.

> It’s possible to see a purpose for cryptocurrencies, but NFTs are (for now) almost comically bereft of anything most of us would associate with social or cultural value.

They incentivize energy production and research into better energy production. That isn't trivial.

Unless you believe that NFTs are useful in and of themselves, this is a classic example of the Broken Window Fallacy[1]. For example, we could "incentivize energy production" just as well by phasing out LED light bulbs and replacing them with incandescent ones. So why don't we?

[1] https://en.wikipedia.org/wiki/Parable_of_the_broken_window

Broken windows conflates general economic growth with specific incentives.

Jevons’ Paradox implies any energy efficiency gains from cryptocurrency will be used by .. cryptocurrency.

https://en.m.wikipedia.org/wiki/Jevons_paradox

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