The Worrisome Rise of NFTs

getmonero

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.

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.

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).

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.