Since joining VR I have been around discussion groups and attended events discussing Blockchain, NFTs and everything crypto. I would say I have a comprehensive knowledge of these topics but wouldn’t say I’m expert level. But I did my due diligence a few months ago to work out if NFTs were feasible as a source of additional income as a side hustle, after all, everyone was talking about it and despite my initial reservations, I explored the internet. I looked at pro-crypto and anti-crypto arguments on YouTube and several websites reading how much the first Twitter tweet cost and trying to wrap my head around why the Nyan cat also sold for as much as it did when I could argue I can screenshot the cat.
You can learn more about the challenges that NFTs face which discuss pros and cons discussing mainly the cons. Although I have seen plenty of videos promoting NFTs and the crypto world I am hopeful that the tech can be used to help better the world and improve living standards for all humans. However, there are some genuine concerns.
Some of the concerns include:
- Security of data stored on the Blockchain (can’t be deleted easily) one argument that was made is that if someone posted your nudes on the Blockchain or child pornography it would be impossible to remove. And if you had any illegal content in your NFT wallet you would have to technically ‘transact’ to get rid of it and it needs to go somewhere.
- Malicious malware concerns
- Risk of being scammed because it is particularly difficult to prove people’s own assets genuinely
But the main one that I wasn’t fully aware of carbon footprint impact that the NFTs were making and was my initial understanding that crypto-mining was ‘transacting’ NFTs for people in a loose sense but according to this video the crypto energy usage combined is the output of Nigeria and Argentina yearly as an estimate (source video below).
NFTs are really bad for the environment
I didn’t consider myself either a fan or a hater of the crypto world and although I understood crypto mining to be resource-intensive I didn’t understand the immense overhead increase that NFTs required for this network to be operational.
Thankfully Tezos is one of the blockchains trying to address security and environmental impacts to reduce the cost which records to be significantly lower than Ethereum’s network.
What makes NFT’s really bad in a nutshell if I want to view my NFT and have a giggle and a flex, there are computers and carbon emissions being produced just because you wanted to view it, not just your NFT’s but anyone or anything that is stored on a Blockchain. Traditionally if you wanted to view an image of the Nyan cat you could connect to many websites that have the same image. There is only an exchange of a file from one PC network to another typically.
With NFTs, the data isn’t stored as a complete file anywhere on the Blockchain so there is crunching involved for any task, any transaction, any data that needs to be read. The carbon footprint is the main concern and already widely known that crypto mining is not rewarding as before and the cost/benefit ratio is not constant due to the economics of energy supply and supply and demand.
Some of the less spoke about concerns regarding crypto
Should you be anti-NFT/Blockchain?
There’s no reason to cancel or throw away your crypto wallets just like most networks that have existed on the internet, people jump ship and no doubt there will be more efficient technology developments that reduce the carbon footprint. There is progresses being made but it may take a few more years for this issue to be addressed as there is already a diversity of different cryptocurrencies and these groups need to ‘agree’. If one Blockchain was to be decommissioned there would need to be an exit-migration process to allow existing assets and cryptocurrencies to be transferrable to what would be considered a different technology type. But this has a ripple effect due to the fact that if less cost is required to transact that means the value of the currency will drop, and there will be more supply than demand with people taking advantage of a more economic currency which in return dilutes the value overall.
I consider crypto to still be in beta. We just have too many issues fundamentally with the system and with the diversity of different networks and currencies it kind of feels like it’s the same as traditional currencies now.
Unless you have a burning desire to partake it might be better to wait and do research to find out which crypto network works for your needs. For me personally, I would choose one that is growing and is sustainable energy-wise. Although there are still security concerns and a whole range of issues, it is probably fair to say it’s no different to FaceBook keeping your data for what would be questioned as permanently. So I think a balanced perspective on the issues is needed and an over-reaction and calls to cancel the crypto are also not helpful.
I am optimistic that this technology can eventually address these sorts of challenges.