Poll 31: End Note, Pt. 3 (In The Crypt O’Currency)

Please don’t do an NFT.

Imagine you’re walking through the woods, and you encounter a tree. Suppose you knew that you could have your voice amplified, and your projects circulated, and you could capture the esteem of your peers, and all you have to do to make that happen is chop that tree down. You’d do it, wouldn’t you? If you’re an artist driven to communicate an idea, even if it’s just an idea about you, I’d wager you would. There are lots of other trees in the forest. Another might grow in its place. You may reason that all of our activity on the planet does damage to something or other; why be squeamish about this one tree?

But what if it was more than one tree?  Suppose it was five?  Would you still do it?  How about ten? Twenty? How many trees must be felled by the blade of your ambition before you’re satisfied? Would you destroy an entire habitat — all the plants and bugs and beasts — if it meant you could put a record out, or sell a painting, or get a screenplay filmed?  

You know this isn’t science fiction. You know this is a choice you face every day. Even word writers, plunking away at our keyboards, need to blow through electricity in order to bring our humble text-scratchings to an Internet audience. We might not be drinking as deeply from the fossil fuel reserves as a traveling airshow does, but slurp we do, and our contribution to worldwide habitat destruction isn’t negligible. We must believe that what we’re doing is significant: that the impression on the planet made by our words is worth whatever we’re removing from its energy reserves.   

If you’re the guilty type, you don’t want to think about this too much. You don’t want to envision a gopher, its meadow destroyed and its biome immutably altered by human activity, wandering around in desperate search for a drink of water.  You might reason — this time a bit more disingenuously — that if your art found a mass audience through the Internet, you’d be in a position to help that gopher.  You might transplant it to a beautiful farm where it might live out the rest of its days in harmony, or at least until somebody else’s ambition destroyed that farm.

Which, at the rate we’re going, may well be tomorrow. Looming eco-catastrophe has not curbed the human appetite for recognition, and it certainly hasn’t slowed down those whose ambition is to accumulate as much wealth as possible. For instance, if you’ve got an Internet connection, it’s a lock that you’ve heard about the utterly bananas market for NFTs, and the race among artists and investors to release new material through this new channel. You may also have heard that the NFT is the future of whatever branch of the culture industry you happen to inhabit. This may be true. But if nothing changes, it’s going to be a desolate future for the gopher, and the farm, and the tree, and, sooner or later (but probably sooner) me and you.

To understand the scope of the problem we face, we have to understand what NFTs are — and, more importantly, what they aren’t. NFTs are not tangible objects. They’re not even digital files of the kind that we’ve all grown accustomed to. They aren’t JPEGs or MP3s, or anything widely shareable. An NFT is a link to a single, exclusive copy of a digital work. Theoretically, this work is the original, but since the entire point of digital art — its sole advantage over its analog cousins — is reproducibility, authenticity and primacy on the Internet oughtn’t mean anything to anybody.  The NFT exists on the blockchain that is the habitat for cryptocurrency transactions, and is, in effect, a kind of cryptocurrency itself. The owner possesses it in the same imaginary way he might possesses a Bitcoin.

But heck, even that isn’t true. Although your NFT guarantees access to an exclusive iteration of a file, it doesn’t mean that other people can’t reproduce other versions of that file. Since that file is indistinguishable from the NFT, there’s no difference between copying that one and copying yours. You cannot stop other people from using that file, and you’re not buying a share of the copyright, either. You have no influence over the work you’ve purchased, and you can’t restrict or monetize other people’s access to the art. This is not like Martin Shrekli with the magic box with the sole copy of that Wu-Tang album in it. Everybody can hear those Kings Of Leon songs that were initially released as NFTs earlier this year.

You might be wondering who in their right mind would pay thousands of dollars for one of these codes. Unfortunately we’re not in our right minds and haven’t been for quite some time. Collectors have convinced themselves that the exclusivity conferred by an NFT is worthy of investment, and the wild spikes and crashes of the NFT market demonstrates that human beings will speculate on anything.  Imagine, if you can, a million dollar exchange of those certificates that say the holder possesses a share of a star. And if that was all there was to the NFT trade, it could be dismissed as another irritating Internet craze; a get-rich quick scheme for artists who kinda wish they were stockbrokers, and excitable bankers who’ve had a little too much punch at the gallery opening.  But it isn’t. Not even close.

The problem with the NFT market is that it runs on the blockchain used for minting, or “mining”, cryptocurrency — Ethereum, specifically — and mining cryptocurrency is spectacularly wasteful. You’re using a computer right now, sipping silently but steadily from the pool of fossil fuels, and you’re likely thinking, how much worse could crypto activity be?  I am here to tell you: boy howdy, it’s worse. A lot worse. The electricity needed to create a cryptocoin will stagger you. The Guardian estimated that the 2020 carbon footprint of Bitcoin was equivalent to that of the entire nation of Argentina; those radicals at Morgan Stanley conceded that the network consumes as much electricity as 2 million American homes. And Bitcoin, alas, is not the only cryptocurrency.

Waste is not a byproduct of cryptocurrency mining. It’s the heart of the system. A cryptocoin is a tokenization of waste: it represents the guarantee of expenditure of electricity.  Most cryptocurrencies require proof of work (usually abbreviated PoW), which means that value is generated through intense computer activity.  The system is designed to make it increasingly difficult to mine a new bit of currency — this is the means by which those who originally bought into the scheme maintain value in a closed economy with a fixed number of coins. At the dawn of Bitcoin, a home investor with a quick connection to the Internet could mine currency by himself. A decade later, it requires an armada of high-powered computers, yoked together in a server farm and guzzling huge amounts of electricity, to achieve the same effect. If we continue on this mad trajectory, we’re soon going to turn the world inside out in an effort to mint funny money. 

Being the richest man on a burned-out planet is not, I hope, anybody’s ambition. In order to avoid an association with waste, Ethereum — the cryptocurrency that hosts NFTs on its blockchain — has announced its intention to abandon PoW and switch to a system called Serenity. If there’s a crypto-apologist in your life, you might have already heard about Ethereum 2.0, and the greener Serenity upgrade, and you may have been told that the cryptocurrency has already put in place a “beacon” chain that runs on something called proof of stake (usually abbreviated PoS, I kid you not). Unlike proof of work systems, proof of stake chains generate value and validate ledger transactions on the basis of your prior investment. In other words, if you hold a large amount of a particular currency, that’s a kind of leverage — you’ll generate rewards within the system, and you won’t necessarily need to nuke the planet while doing so.

The organ-grinders at Ethereum have been playing this verse for quite some time, and they haven’t once come to the chorus. You don’t have to be a cynic or a luddite to have noticed that proof of stake has been the carrot on the end of Ethereum’s stick from the moment the currency was launched (2015, if you’re keeping score.) The beacon chain, on closer inspection, isn’t a particularly load-bearing economic instrument.  No big transactions are happening on there.  It’s mostly a guide for steps that Ethereum wants its investors and coin-holders to believe they’ll take in the near future. Even the Ethereum website owns up to the fact that the roadmap to Serenity, as they call it, is no brief joyride.  By their own estimates, it’s going to take them another five to ten years to roll the system out.

Ladies and gentlemen: we don’t have five to ten years. We probably don’t have five to ten seconds. If we’re going to check the widespread habitat destruction that’s happening worldwide, we need to change what we’re doing and how we are living — right now. When Mr. Blockchain comes knocking with a deal with the Devil for you, you should politely decline. Even if Ethereum does switch to a proof of stake system, there is no reason to believe that it’ll be carbon-neutral. By contrast, there’s quite a lot of reason to be suspicious of every single thing that fintech people say. The crypto arena is the home field for the old bait and switch.  Don’t go for it.

I’m not a neophobe, and I know you aren’t, either. I, too, like technologies, and things that run on fossil fuels, and I’m hoping that all of this investment in science — including financial science — will yield real results in the ongoing battle to bring humanity into better alignment with the biosphere.  Given their horrendous track record, though, you’ll pardon me for doubting that greening the blockchain is a major priority for any of these currency salesmen and digital hucksters. No matter what Ethereum says, it’s unlikely that PoW is about to budge. My great fear is that in order to dislodge this horrific system, the cryptocurrency market is going to have to crash.

Currencies are either fixed to a standard or they float free. On balance, institutional investors and bankers prefer a free floating currency because it gives them greater creative latitude. Since the second Nixon Administration, the U.S. dollar has been a fiat currency, which meant that there’s nothing to support the dollar bill except the government’s word.  This has been a good thing for the government: it means the treasury has the ultimate control over how much money there is in circulation.  If they want to fund a war, or a social program, or a public-financed political campaign, they sell some bonds, phone the Mint, and start rolling the greenbacks off of the presses. Printing money doesn’t cause inflation — printing money is inflation.  In 1950, the average American home cost around $7,500. Today, that figure is more than $220,000.  Those homes didn’t get any bigger or better.  The value of the dollar has shrunk. If you held nothing but dollars under your mattress for the past half-century, you’ve watched as the purchasing power of that currency has whittled away, year by year, until there’s nothing left but chump change. 

This was one of the problems that cryptocurrency was created to address. In a PoW scheme like Bitcoin, there’s a fixed amount of currency that exists, and the escalating electricity costs of mining a new coin is a feature deliberately designed to generate artificial scarcity in a system that is wholly imaginary. The great benefit of this is that the currency does not inflate. Investors loathe inflation. It eats away at the foundation of their portfolios like a swarm of termites. As long as those computer servers continue to run harder and harder, and the necessary proof becomes more prohibitive to secure, the value of the coin will always be set by the market alone. This is the elegance of the system, and it is exactly that simplicity and purity that draws techno-utopians into the crypto trade. It is, in a scary way, incorruptible. This libertarian fantasy is only made possible by burning unspeakable amounts of fossil fuels. That’s usually glossed over by those who need you to enter the marketplace in order to ensure that the value of their original investment continues to rise. 

Proof of stake doesn’t guarantee anything like that. There are no equivalent safeguards against currency inflation. Because proof of stake rewards those who hold a great deal of cryptocurrency, a big PoS system is always going to be at risk of overheating. With mining costs eliminated, there’s no artificial check on the number of blocks that can be added to the chain. The brakes are gone. There are, no doubt, financial innovators who are cooking up ways to make PoS chains more appealing to investors than PoW chains are, and maybe they’ll succeed.  But in 2021, it’s not hard to see why most cryptocurrencies and their enthusiasts are sticking with proof of work. And if you need further evidence, consider that there are already many cryptocurrencies that are running on a PoS system, including Peercoin, NXT, and PIVX. You haven’t heard of any of those, you probably never will, and the NFT marketplace and its gigantic transactions is, unsurprisingly, right there on a PoW chain.

You may have heard it said that Ethereum will run whether or not NFTs are present. This is true. But it’s also misleading.  It misrecognizes the role of the artist in the planned popularization of the blockchain.  Artists who’ve pitched their tent in the crypto arena like to think of themselves as investments. They’re not. They’re advertisers. They’re fancy names, there to get more people excited about the possibilities of cryptocurrency, even though they don’t understand it, and to entice entertainment journalists, who don’t understand it either, to place stories in online periodicals with eye-popping dollar figures in the headlines.  The artists’ famous fear of missing out is getting monetized in a manner that passes that fear on to the general population. Investors encourage this to happen because cryptocurrencies are pyramid schemes. The people who hold the lion’s share of the currency know damn well that none of these invisible coins are pegged to anything.  If new investors stop entering the market, the coins will vanish back into the digital ether from which they were summoned by the illusionists of capital.  Sound investments do not need evangelists, and no ethical person should voluntarily participate in a bubble — especially one with such a steep ecological cost.

So: you don’t want any of this.  You don’t want to be a shill for institutional businessmen, you don’t want to dehumanize and depersonalize your work by turning it into a plaything for capitalists, and you don’t want to burn the world to a cinder. There’s nothing that the NFT sphere can give you that you can’t already get from the Internet, or, Lord help us, from an art or pop scene once the doors to the clubs and galleries are back open. The impressive new abbreviations and proper nouns that have entered the vernacular are only kept arcane in order to confuse and swindle people. There’s nothing novel going on here. A blockchain is just a ledger with technologically enforced security safeguards.  A cryptocurrency is just another speculative investment based on a standard confidence trick. An NFT is just a trading card. You didn’t want to go to business school for a reason, and friends, you are looking at that reason. If you’ve got a name, and even if you don’t!, they’re going to come calling for you.  Just say no. The gopher will thank you, and so will I.