The worrisome rise of NFTs (non-fungible tokens)

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EXCERPTS: Humans are very good at inventing commodities, and we’ve been at it for a long time. [...] The deeper, evolutionary reasons why we do this—or why any species commodifies objects or experiences—are not immediately obvious.

It could be a trait that supports social interaction and cohesion, helping distribute food and resources more efficiently throughout a population. Or perhaps it supports the signaling of individual fitness or intention that can guide our reproductive strategies. A behavior statistically favored in an intricate web of Darwinian selection, eking out a tiny advantage for the genetic lineage of anyone who plays along.

What further complicates this (as with any such trait) is the cost incurred for individuals or a species; the expenditure of resources and energy. The most explicit, and worrisome, example today is the emergence of commodities like cryptocurrencies or Non-Fungible Tokens (NFTs). In simple terms, just as a cryptocurrency is meant to be infallibly secure and fair, an NFT is a way to assign secure provenance and ownership to a digital asset. That digital asset might be an image, a video, or some hybrid digital experience.

Already there’s been a lot of grumbling about the extraordinary energy demands of cryptocurrencies. Now there’s grumbling about the absurd growth in the market for NFTs. This is because both commodities use a robust system for tamper-proof bookkeeping: the blockchain. Blockchain technology is purposefully burdensome and computationally distributed, making it notoriously energy intensive. Estimates put the energy used to create and trade a cryptocurrency like Bitcoin on a par with the total consumption of a country like Sweden. And that’s without accounting for the environmental footprint of the 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. Down the line there may be value in attaching permanent ownership or provenance to digital works of art. 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. With an explosive growth of equally speculative and bewildering offerings appearing every day.

This represents a tangible planetary burden. Prompting the people behind the blockchains to try to improve their environmental 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. [...] That sounds great but understanding the nature of these changes is not easy ... It’s also far from clear that other companies will follow suit...

The much bigger question, though, has less to do with these emergent upstarts in our informational world and more to do with humanity’s overall trajectory. Any species that endlessly grows, and continually invents energy-hungry processes, may not be destined for a happy ending...

[...] Nature consists of both fungible entities (identical and perfectly exchangeable) and non-fungible entities (unique, non-exchangeable). For example, you—fellow human—are a non-fungible asset. You are a complex, storied entity with your own unique history and a future of largely unpredictable twists and turns. In that sense, you are no different than pretty much any other living organism or system on Earth...

[...] Yet, underneath all of this we think that the universe is built out of entirely fungible pieces. One photon of light can be completely identical to, and replaceable by, another photon. Even though some elemental pieces, like electrons, are strictly unable to occupy the same quantum state, any of them can still be readily swapped and no one would know the difference.

The extraordinary fact is that the universe is an engine that turns the fungible into the non-fungible. It takes indistinguishable atoms and assembles molecules of increasing complexity that become more and more distinct from each other. Each complicated structure having less and less likelihood of an exact match across the observable universe. In other words, nature has no need for NFTs to keep track of things—the ledgers are embedded already in any sufficiently intricate object... (MORE - missing details)

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