Humans are very good at inventing commodities, and we’ve been at it for a long time. Is that a pebble? That’s a much better pebble than any of these, so if I give you something, I’ll give you ownership. It will be your pebble, for ever. Soon, there will be a pebble market, a pebble community and pebble auctions that are filled with pebble speculators and exchanges.
The deeper evolutionary reasons we do this, or why any species sells objects or experiences, are not immediately apparent. It could be a trait that promotes social interaction and cohesion. This would help distribute food and other resources more efficiently across a population. It could also be a signal that a person is in good health or has a positive outlook. This can help us to plan our reproductive strategies. This behavior is statistically preferred in a complex web of Darwinian Selection, creating a small advantage for anyone who follows it.
If bits of data were more like Michelangelo’s marble, the whole notion of NFTs would be irrelevant.
This is because cost that individuals or species incur; the cost of resources and energy. The most explicit, and worrisome, example today is the emergence of commodities like cryptocurrencies or Non-Fungible Tokens (NFTs). An NFT, which is simply a way to give ownership and provenance to digital assets, is similar to how cryptocurrencies are meant to be fair and infallible. An image, video, or hybrid digital experience could be a digital asset.
Already there’s been a lot of grumbling about the extraordinary energy demands of cryptocurrencies. There is a lot of grumbling now about the ridiculous growth of the NFT market. This is because both commodities use a robust system for tamper-proof bookkeeping: the blockchain. The blockchain technology is notoriously energy-intensive because it is computationally complex and burdensome. According to estimates, the energy required to create and trade cryptocurrencies like Bitcoin is equal to the total consumption in a country such as Sweden. This is without taking into account the environmental impact of physical computer hardware.
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. There may be some value in attaching permanent ownership to digital works. But at the moment it’s Pudgy Penguins for the masses, or a pixel-heavy version of Nyan Cat going for an eye-watering $1.2 million for cynical investors. There are a lot of amazing and speculative offerings popping up every day.
By Iyad Rahwan
My legions were ready to go the instant the digital analog of the starting gun was fired. People from all over the world frantically dropped scanned pieces of paper onto a virtual canvas and raced to reconstruct the shredded document. It was reminiscent of the…READ MORE
This represents a tangible planetary burden. This has prompted the people behind blockchains to work to improve their environment image. 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. This change will allow currency “miners” who are interested in mining to participate in the market without consuming as much electricity and hardware. This sounds great, but it is difficult to understand the nature of these changes. The whole idea behind blockchains is rooted within astonishingly obscure concepts such as “proof-of-work” and “proof-of-stake” that are manifested in algorithms and computer hardware. It’s also far from clear that other companies will follow suit, or that the most energy-intensive pieces can ever be fully removed from the scheme without risking the innate reliability that makes the blockchain so appealing in the first place. The bigger question is not about these new upstarts in the informational world, but rather humanity’s overall trajectory. A species that continues to grow and invents energy-hungry methods may not have a happy end. This species may experience boom-and-bust cycles and major corrective failures. A species such as this will not survive the future. While NFTs or cryptocurrencies may not cause a future crash, they can be symptoms of the problem. Like all symptoms, they can provide clues to a solution, as the root cause of the problem could be deeper than the digital information.
Nature consists of both fungible entities (identical and perfectly exchangeable) and non-fungible entities (unique, non-exchangeable). You, a friend, are a non-fungible asset. You are complex and richly storied, with a unique past and an uncertain future. In this sense, you are not different from any other living organisms or systems on Earth. Non-fungibility is possible even in endlessly reproducing bacteria and duplicating viruses. Small variations in genetic sequences and circumstances create the magical diversity that natural selection acts on. Yet, we believe that the universe is made up of completely fungible parts. One photon of light can be completely identical to, and replaceable by, another photon. Although some elements, such as electrons, cannot be confined to the same quantum state, they can all be swapped easily and no one would notice the difference.
NFTs are comically bereft of anything we would associate with social or cultural value.
The amazing fact is that the universe acts as an engine to transform the fungible into non-fungible. It takes indistinguishable elements and creates molecules of increasing complexity, which become more and more different from one another. Each complex structure has a lower chance of being exactly matched across the entire universe. In other words, nature has no need for NFTs to keep track of things–the ledgers are embedded already