NFTs are all very popular today, but it has gotten in the way of what’s healthy for society and our environment.
Block chain generation requires a massive amount of computing power energy to do so. Images of warehouses lined with racks of 30 series graphics cards all running at full capacity is a common sight online and has rightfully sparked outrage from many.
Running these cards at maximum capacity constantly creates a great deal of carbon emissions from the power needed. Not only is it environmentally unfriendly but it draws power away from communities of everyday people on top of this, and has caused power outages in the past.
NFT is an abbreviated term for a non-fungible token that is backed by cryptocurrency and the blockchain.
These NFTs have been trending the past year, with celebrities and athletes following the craze.
The cryptocurrency space on top of this while growing has also fallen in several ways. NFT means non-fungible token, yet the token has already been fungible.
To simplify, fungible currency would be a dollar bill while a non-fungible currency would be a house. In terms of fungibility, two parties would agree that a dollar is a dollar and that it could be exchanged for something determined to be of the same value. However, both parties are unlikely to agree on the value of a home or a used car.
Locally, a restaurant in Long Beach called Bored and Hungry opened on April 9th. The owners of Bored and Hungry used a Bored Ape Yacht Club (BAYC) NFT to brand their restaurant.
According to an interview with Hypebeast, one of the owners of Bored & Hungry, Andy Nyguen, hopes to bridge a gap between the digital and real world.
Nyguen said, “The reason I did this was to make a statement to the public, letting them know that this jpeg could be utilized to turn into a brand and ecosystem for the restaurant world.”
An NFT isn’t necessary to own an image, especially as a company when you can just trademark something made through normal means with far fewer emissions for a much more reasonable and not as explosive price rather than upwards of $75,000.
Another part of NFTs that is simply a practical reason why to not use them is that if the site hosting your NFT goes down, you lose your NFT as it needs to be held on the block chain code online and verified. Or if the currency used to buy the NFT crashes and doesn’t recover, your NFT loses its value whereas a normal image paid with a fungible means would retain its dollar value, sometimes even adjusted for inflation.
At that point, it’s worth is determined by how much that amount of money can get you rather than just how much is this money worth. After all, the USD is the strongest currency in the world alongside the Euro.
While Bored and Hungry found a way around using the NFT by trademarking and making physical prints of their NFT to run it on products for branding, at the same time what prevents someone from making similar branding that doesn’t require so much money, resources, and all the block chain fluff or from their branding losing value just due to the NFT and rather than the company’s value.
In the online space, large companies such as Valve which runs the Steam platform for games recognized the issues NFTs and cryptocurrency present, the main one being volatility.
Earlier in the year Gabe Newell, one of the founders of the platform explained to Dexerto, “Why did I spend $497 one day to buy a game, and the next day I spent 47 cents, what’s going on here? Volatility is a bad thing in a medium of exchange.”
This statement sums up the entire crypto and block chain space accurately and is why NFTs in the grand scheme are not the way forward. The USD is rooted in value from physical objects, availability of physical money, the state of the economy, and so much more. Cryptocurrency doesn’t follow this formula and is the main problem.
Just because we can do something with the tools we have now doesn’t mean that we should.