Debunking EVERYTHING About NFTs — The Controversy, Technology, and How They Affect Artists.
EDIT (5/7/21) ** Since publishing Part 1, a number of new developments (broken URLs, NFT crash, etc) have developed, and thus I’ve addressed those + criticisms of this piece in a Part 2.
If you are confused about the current controversy surrounding NFTs/cryptocurrency then please read. I know it’s long.
It is very important that you read the whole thing.
Who are you and why are you writing this?
My name is Jacqueline ‘Jisu’ Choe. I am currently 22 years-old and residing in Southern California. I got my start selling my work at conventions and competitive gaming tournaments. Many of my followers know me as a Gaming Personality/Content Creator, but I am transitioning from my old work to establishing myself within the Concept Art & Illustration fields.
As an artist who became familiar with cryptocurrency and NFTs back in 2015— it was apparent many people are learning what blockchain technology or cryptocurrency is for the first time. Back then, I took the time to learn the ins and outs (my friends even wanted us to build our own bitcoin mining rig), and with my platform — I want to help bridge the gap in understanding.
This started as my own personal post just to publish my own thoughts, but as the need for a comprehensive resource on the current NFT/Cryptocurrency controversy became apparent — I re-focused and realized this needs to be a thorough source of factual information.
I’ve run this by numerous people — artists, programmers, computer scientists, crypto experts, etc. — and have rewritten this multiple times. I am not being paid to this, this is purely for educational purposes. (For a list of referenced parties, please refer to the end of the document).
That being said, it needs to be acknowledged that cryptocurrency and NFTs are still new. Like with anything new, there is going to be a lack of data so there cannot be any real “academic” studies. Another point to address is the criticism of going to “crypto experts”. If you go to a marine biologist and ask them about marine life, they are more than likely passionate about marine animals. Similarly, if you ask someone who has dedicated a lot of time to studying cryptocurrency, they are probably very passionate about it. I know that doesn’t change that they may have bias — but just because someone is enthusiastic about a technology, does not change how that technology functions, or the cold, hard facts surrounding it.
With all that being said, my goal is NOT to spread a message — I believe in the right to everyone’s own opinion, and only want to provide the necessary information for you to come to your OWN conclusions. You may have an opinion already, but it is not valid until it is an informed one. And due to the unprecedented hate associated with this topic, it is especially inappropriate to viciously attack others without doing all your research.
I will do my best to explain the technology and current state of affairs in an unbiased manner, without oversimplifying important intricacies.
Why should I care about NFTs/Cryptocurrency?
Whether you like it or not — cryptocurrency and NFTs are NOT going away. This is not an opinion, it is a fact. Cryptocurrency was invented first in 2008 by an anonymous party who goes by ‘Satoshi Nakamoto’. The first currency they created was Bitcoin. Bitcoin has a volatile history, but as of 2021, most analysts can agree that it is an established player within the currency & investment world (CNN, TechCrunch). There is a lot of debate about the rate of which bitcoin will increase in value, but almost unanimously the sentiment is not a matter of if, but when.
NFTs are also an established technology and have existed as far back as 2012. Over time, they established an ecosystem through various marketplaces, which almost exclusively operate on another cryptocurrency called Ethereum. NFTs might be new to the Concept Art & Illustration scenes, but they are certainly not to the mainstream world. Since I even started writing this, a number of celebrities, brands, and mainstream artists have hopped onto this trend, and it doesn’t seem to be going away. Another huge market within NFTs is the collectible marketplace. There are already huge platforms using artists’ work and distributing them. Collectibles as a concept have existed for centuries, and will not go away.
You can choose to ignore this. No one is stopping you from pretending these things don’t exist — that will not stop them from existing, nor will that stop how it may affect you. Whether you support NFTs or not — as a responsible artist, let alone a human being, you want to be able to understand these technologies and how they can either help or hurt you. It is not even mine or anyone’s responsibility to help you with that — if anything, the unprecedented divide and pure hatred spewing from within the larger digital art community is what pushed me and others to write this.
So how did this all even get started?
Somehow, NFTs made their way into the limelight within the Illustration & Concept Art communities. This topic immediately became associated with heinous ecological damage and predatory capitalist traits as artists quickly latched onto these three posts:
- HERE IS THE ARTICLE YOU CAN SEND TO PEOPLE WHEN THEY SAY “BUT THE ENVIRONMENTAL ISSUES WITH CRYPTOART WILL BE SOLVED SOON, RIGHT?”
- The Unreasonable Ecological Cost of #CryptoArt
- CyptoArt Is a Pyramid Scheme That Will Harm The Most Vulnerable (The viral twitter post of it here)
There are other articles being circulated, but most of them cite Memo Akten, and his website (http://cryptoart.wtf/) as the reference for the ecological mindset we should all take, and how exactly we should calculate the carbon output of NFTs. We will get into more detail about the accuracy of all three posts and their claims later. The important thing to note now is that all three of them have very clear stances (that NFTs need improvement & should NOT be used) and are very vocal about their stance — in other words they are not primary sources.
Primary sources are raw data and facts, whereas opinion pieces like these are interpretations of that data. In the academic world, it is unanimously understood that you should NOT be using someone’s opinion as a source of fact — not even mentioning how Everest Pipkin and Patata Cabeza’s posts contain glaring lies — however, this was many artists’ first exposure to these technologies and so it is understandable that many well-meaning people overlooked this.
Another important note is that it should be clear that nobody should be attacking artists. Since the initial outcry, Memo Akten himself even removed the carbon output feature of his website and published this instead:
“I support artists, and we should support each other.”
This is another statement that he made in his INITIAL article which I believe MANY people grossly overlooked.
“I want to express caution once again, against pointing to the artists. They are not the problem.”
It is my belief that most of the animosity is coming from the other two viral posts, but again, both of those are rife with so much misinformation that for anyone who is informed in this space, it is hard to take them seriously.
With all of that being said — dissecting any post about NFTs/Cryptocurrency is impossible unless you know what you’re talking about. So without further ado, let’s dive into that.
So, what actually is an NFT to an artist?
What actually is an NFT?
An NFT (non-fungible token) is a digital representation of a unique item on a blockchain, typically the Ethereum blockchain. Importantly, it’s a representation that you can own, and where ownership can be transferred from one party to another.
Anyone can make a digital copy of a piece of artwork but only there can only be one owner of the artist-minted NFT which represents that artwork. This is why an NFT is considered scarce and people are willing to pay money for it.
One useful way to think of an NFT in the context of art is like a “certificate of ownership”. However, generally speaking an NFT doesn’t have to just represent art. It can represent any digital data and even contain its own programmable logic which can be triggered.
Blockchain? What’s that?
Blockchain technology is basically a way of recording information lined up in chronological order over a network of computers. A new block is formed when a transaction of information happens, and that information is tied up nicely into a little block and added on as a new link. Each block uses encryption technology so it cannot be tampered with. (Encryption = a way of using randomized characters or code to conceal information, it is the modern solution for keeping data private in today’s digital age).
The biggest reason why it is so revolutionary is because the blockchain is decentralized, meaning it is spread across a large network of computers that no one person owns. This is important because decentralization is the solution to bias and majority ownership of data, which can be used for nefarious purposes in the wrong hands.
The way a computer becomes a part of this system is if you yourself participate in a transaction involving anything that uses that blockchain. Once you do so, your computer becomes another point of processing within the entire chain.
So why are blockchains important?
Blockchain technology was made to fix huge problems with large data stores. For one, since not everything was encrypted, data could easily be hacked. Secondly, if all information is stored in one place then it could easily be lost or destroyed (or wrongly manipulated). This is how people get hacked. Companies like banks or credit cards not utilizing some sort of encryption or decentralization can potentially compromise their customers’ information, which has happened multiple times.
How are blockchains related to NFTs/Cryptocurrency?
Cryptocurrency and NFTs use blockchain technology to create and store their data. There are different types of blockchains in use, for instance, bitcoin does not entirely use the same blockchain as ethereum. The blockchains function essentially the same — using encryption on a decentralized network to store data — but the algorithms or conditions that the computers use to “officalize” the data can differ. This is why you will see discussions about different types of blockchains (Proof-of-Work v. Proof-of-stake) which will be addressed later.
Do NFTs have any real value?
This is probably the most important question to those who are not already enthusiastic about the technology. It’s important to clarify that value is a malleable thing. In a sense, NFTs are just a digital certificate, and you are allowed to value that in whatever way you want — HOWEVER, this does not stop other people from valuing it.
Many people have criticized the objective value of NFT technology itself, reducing it down to a scam and volatile investment. The reality is that it’s too early to say what the true value of it is. When Bitcoin was first established, it went through numerous cycles of being worth absolutely nothing to climbing up to almost $20,000 and then crashing back down to the bottom — back to $60,000 where it is today.
It’s impossible to say what pattern NFTs will follow, but the reality is that real artists are making real money off of them right now (Beeple, Grimes, Musicians). And as an emergent technology from the already established cryptocurrency space, it’s value will most likely stay tied to what the value of cryptocurrency evolves to be.
So…how does this all tie in together?
I have seen MANY artists use the term NFT/crypto/blockchain interchangeably as if they are all some conglomerate entity. Each term is its own respective technology that should be addressed as such.
Blockchains are the digital ledgers used to encrypt and record data on a decentralized network.
NFTs developed AFTER blockchains as an additive technology. They simply add one extra layer of data that gets processed. Think of them as just the digital version of certification, except since it is on a blockchain — unlike physical/conventional digital files — that certification CANNOT be disputed or destroyed.
Cryptocurrency uses blockchains as their ledger. Just like how banks went from paper records to digital — cryptocurrency just happens to use blockchains to record their data. Due to the nature of blockchains, there is no one bank or authority you go to keep record of transactions, it is all processed on a large, decentralized network.
They are all revolutionary technologies in their own right, and serve as solutions to huge problems in society.
So why are people mad?
Most of the criticism comes from these main points:
- Ecological impact
- Predatory/Capitalist Claims (Pyramid Scheme Accusations)
- No Real Future For (Ecological) Improvement
Claims about the ecological Impact of NFTs/Cryptocurrency
We have all seen the numbers floating around — “minting one NFT equates outputting the electricity of a small country” — etc, etc. To even discuss this, it is important to understand how that number could even be calculated.
For one, we always have to assume that every number is an estimate. It is truly impossible to quantify such large-scale calculations when every possible action by any system or organism is not 100% recorded.
Secondly, it is well-known within the climate change community that there are different methods to calculate carbon output. The reason why there are different methods is because of fundamental disagreements in where things start and end. (eg. Chicken or egg), or to what extent data is accurate to use.
“They are as accurate as they can be based on the current data and research, which does have many unknowns.”
Fundamentally in this space, everyone understands that these numbers are NOT facts. They are again, estimates. Memo is not a climate scientist, and while he cites his sources and has clearly done a lot of research, no one should be taking these as FACT. He even goes on to state that there are known critics to the method of which he uses to calculate his numbers so even within that there is clear debate about how accurate we can be.
Memo uses the Carbon.FYI Methodology which has garnered criticism due to its misuse from the public and thus rapid spread of misinformation, but ironically also encouraged to be used by SuperRare, one of the biggest curated-NFT art platforms. Again, it is impossible to know real figures, but we will move forward using Memo’s numbers since that is what almost all articles are referencing.
Estimated Carbon Output of NFTs
“A single NFT can involve many transactions. These include minting, bidding, cancelling, sales and transfer of ownership. If we were to break down the footprint by transaction type, we get:
Minting: 142 kWh, 83 KgCO2
Bids: 41 kWh, 24 KgCO2
Cancel Bid: 12 kWh, 7 KgCO2
Sale: 87 kWh, 51 KgCO2
Transfer of ownership: 52 kWh, 30 KgCO2
This generally pushes the footprint of a single NFT into hundreds of kWh, and hundreds of KgCO2 emissions, and often higher.”
“1 single-edition NFT = An EU resident’s electricity consumption for 1 month”
Seems really scary right? Well, in an abstract sense, it is. However, this is focusing on one example of waste within the world at large. And, to point back to how Memo’s article clearly has an agenda (I’m not saying it’s a wrong agenda, just an agenda), Memo himself states that this article exists within a vacuum and ignores the many other factors of climate change:
“This post has attracted a lot of criticism for being too “one-sided”. This is absolutely true, it is intentionally so.”
He also states in the very beginning that Bitcoin itself (a much larger crypto ecosystem than Ethereum) is a VERY small portion of the world’s entire carbon output. And while fundamentally, as a climate change activist myself, I believe even 0.5–1% is a ridiculous amount, if climate change is your entire angle you should not be ignoring the entire discussion.
“Bitcoin (BTC) is estimated to have annual energy consumption in the range of 80–120 TWh, which is about ~0.45% of the world’s entire electricity production.”
So why focus on the bitcoin/crypto community?
It is a known issue within the crypto/blockchain community that erecting and maintaining such large data farms through blockchains costs a considerable amount of energy. There have been many critics from both within and outside their communities, and many people have either made improvements or are actively working to reduce crypto’s carbon footprint.
The biggest culprit is bitcoin — Bitcoin is the largest cryptocurrency which as of now (3/18/2021 12:39pm PT) is $57,906.40 per one bitcoin. It is the pioneer of combining decentralization, encryption, and scarcity to produce the theoretical perfect currency. Unfortunately, the blockchain it uses is very energy intensive as the way a computer joins is through a process called mining.
What is bitcoin mining?
Bitcoin mining refers to the process of electing your computer to serve as part of the bitcoin blockchain in return for fixed amounts of bitcoins. This is NOT the same as “printing money”.
Traditional money has no real value — and neither do bitcoins — except there is a theoretical infinite amount of paper money that can be printed whereas bitcoin was created in a limited amount. This means that bitcoin is scarce and objectively invaluable.
The reason why bitcoin mining has become such a hot topic is because mining has entered the late stages where it is essentially only large companies who are running huge mining farms who are able to profit. Because bitcoin is a limited resource, much like gold, as an individual you can only cash out on mining if you were one of the first.
As bitcoin rises in value, mining will continue to be a lucrative endeavor and as of this year with huge institutions investing huge amounts into bitcoin the value will only continue to rise. This has led to a number of popup mining farms, which all use the most powerful computer parts to generate the most efficient mining rigs as possible.
What about bitcoin mining/blockchains make them so energy-intensive?
The biggest issue is inefficiency. Simply put, the blockchains which bitcoin and ethereum use operate at about ~90% waste. They operate on a “Proof-of-Work” protocol, which has garnered a lot of criticism from even the founder of Ethereum.
What is the “Proof-of-Work” Protocol?
Proof-of-Work or ‘PoW’ is a series of algorithms the computers use over the decentralized network to validate information and come to a consensus. To break it down, in order to approve any new information, all computers on the network have to solve a series of complicated algorithms to complete the transaction. This means that any and all computers on the network are continuously working to solve these algorithms and as cryptocurrencies scale to a huge size, the amount of energy being used to validate anything is enormous.
There have been a number of developments however (Proof-of-Stake blockchains, layer 2 technology, etc). that show promise in reducing these problems, which we will touch on later.
So how bad is it?
While bitcoin/crypto mining is bad, it still outputs a relatively small amount of carbon relative to all tech.
Another important note to make is that the vast majority of bitcoin mining is in countries that are largely coal-powered.
This is not to single out any race or country, it’s just to point to the reality that these economies that are largely reliant on gas/coal are using those to power their mining. With that being said, it’s not mining that’s so much the issue as where we get our power from. There is already speculation within the scientific scene that as technology progresses and society switches over to renewable sources, bitcoin mining will be significantly less impactful. There is also debate about how much mining is done on renewable energy (CoinTelegraph, Finextra) Until we are for certain though — just like for every other harmful industry — concern is warranted.
So…what does this have to do with NFTs?
This was something that confused me as I saw a lot of people attacking cryptocurrency and blockchain technology as a whole as if NFTs were a large part of it.
Even if the ecological impact of cryptocurrency was devastating (remember, it is miniscule compared to our largest pollutants), NFTs operate using a type of cryptocurrency called Ethereum which accounts for less than 12% of the entire crypto market. (This was calculated from finding the percentage of ethereum’s current market cap $206.48 Billion from the entire crypto market’s market cap $1.72 Trillion). And even then, not all ethereum transactions are within the NFT market, (Defi is the largest player) so it is even smaller than conceived.
Even then, you are still allowed to be concerned. The world is dying. It’s only a matter of time before we have to find a new home, which is currently not an option. However, if you believe in climate change, then it is important to be properly educated on what that actually means.
The total overview of climate change
At this point many of us have probably read this article which contains this pie chart, which shows the global Co2 emissions by source:
The article itself has drawn criticism for being biased since it was circulated by a big artist who was selling an NFT, but their point was to demonstrate how much bigger climate change is than just cryptocurrency.
To anyone who has been part of the climate conversation — this is not new. It has been known for a LONG time that industries such as transportation are our biggest hurdles when it comes to climate change.
Some lesser known but HUGE factors of climate change that need discussed:
- Agriculture (farming/livestock) (NPR, EEA)
- Concrete (BBC, The Guardian)
- US Military (The Conversation)
- Fast-fashion (Wbur, Washington Post)
- Manufacturing (C2ES, Aljazeera)
If this is your first time learning about this, it’s not your fault. Climate change education (particularly in the US) has lagged for decades now, and has gotten so bad that it’s up to vocal activists/scientists to better educate the public on a non-partisan issue in a partisan world. Here is a pie chart to show what industries are changing the climate in the US alone (source):
In order from highest to least:
- Transportation: 28%
- Electricity: 27%
- Industry: 22%
- Commercial & Residential: 12%
- Agriculture: 10%
Another important fact is that it is estimated that “YouTube and the entire Ethereum network have a similar carbon footprint”. Which points to another point of the conversation — the carbon footprint of our digital lives. While the influence of tech may be smaller than say transportation, it is still important to know that every tweet, picture, video, etc that you watch or send is being run on powerful machines that use copious amounts of energy.
So what can I do?
It has been long known by climate change activists that the best ways to reduce your carbon footprint on an individual level are to go vegan, go thrift shopping, or reduce your flights, etc. Everything else is almost entirely up to corporations. We, as individuals, cannot stop large corporations from spilling oil into our oceans, or from razing the Amazon forest.
There are a number of things we can do to discourage such activities via voting with our dollar, but the top 1% owns 40.3% of the world’s wealth, and even if they are not all consolidating their power, their interests typically aren’t yours. Historically they have and will continue to use all their wealth and power to use tactics like lobbying to keep policies in place that prevent innovative technologies/policies like renewable energy from ever taking place. (Fun fact: Only 100 companies are responsible for 71% of the world’s total emissions). So if you are an average middle-class American or poorer, the game is clearly stacked against you, thus it is not inaccurate to say you might have little to no chance in changing things.
So how did NFTs/Crypto and their ecological impact become such a hot topic?
As I stated above, most artists in the community only saw the three viral posts, and latched onto the calculations that Memo stated.
What ended up getting filtered out through social media somehow were the other points we covered — specifically how Memo himself states that he is aware of how small crypto/NFTs are in the greater scheme of things. He is AWARE that his stance is of a minority and clearly states that he wants to start a conversation that no one was having.
I am re-posting this to emphasize that he wanted to start a conversation no one was having.
What is most interesting is that the conversation he was starting was for the NFT art community which has long existed before social media artists became aware of it. One of the only other sources I could find on this topic was one of Memo’s friends, Joanie Lemercier, who is another outspoken voice within the NFT community and has made a number of efforts to change/stop his practices in order to reduce the carbon footprint of himself and others. Together they sparked a conversation within a community that social media artists had no idea of, and somehow their passion for more ecologically-friendly NFTs spilled into a whole other world.
Some additional criticisms of Memo/Joanie’s Articles
There have been a number of people from both the artist and crypto communities that have dissected their claims.
The first counterpoint is that minting NFTs does not add to the energy usage of Ethereum. Essentially, because NFTs are just adding another data point being calculated onto an already existing and operating blockchain — minting an NFT does NOT change whether information is going to be processed or not. This information is going to be processed on the Ethereum network regardless.
The second counterpoint has to do with Memo/Joanie’s philosophy on how carbon output should be calculated in the first place. Many have said that it is disingenuous to take the entirety of what it takes to output a single NFT and use that as the single measure of carbon output. That is like saying anytime you buy a pencil, you need to think about the entire journey of the tree being planted, to being cut down, to being transferred, to being manufactured and distributed to stores right into your own hands.
There is also a lot of criticism surrounding the attitude behind their social campaigns. Both Memo and Joanie paint this picture like NFTs are causing the world to die, with very strong personalities backing it. They also do so in a way that to some seems like they are promoting their own work. Joanie also implores artists to reduce their carbon footprint, near shaming them if they continue to use PoW systems, and actively criticizes huge platforms for not doing more, despite having already minted and sold many NFTs on it himself.
Wait, so if crypto/NFTs aren’t so bad, and I can’t change anything? Why do I care?
No matter how you look at it — the planet is dying. I think we all agree that we need to do whatever we can to help stop that. However, we all make our own decisions on how to deal with this. After all the drama started, I actually reached out to Memo himself and he agreed that it is indeed — an ideological issue. What that means is that you have to ask yourself what you care about, how you’re going to care about it, and what you are willing to do to stand up for it.
However, doing the “right” thing is easier to do for some than others, which leads us to our next topic.
Ecological Activism and Social Class
Something that is ALWAYS sorely missing from every single discussion surrounding climate change is the impact of social class on one’s ability to carry out activism.
We are all familiar with the image — a white, upper middle-class, sheltered mom/dad — who shames others for not feeding and surrounding their children with all-natural, organic goods.
This is the most common trope of how ecological activism is in and of itself a sign of privilege. I don’t drive an electric vehicle, simply because they are too expensive. I am not vegan, because I lack the time to cook my own food or the funds to eat at expensive vegan restaurants. For many people lower on the socioeconomic ladder, pursuing social causes is a luxury simply because they don’t have any other options. This is a well documented phenomenon and should be addressed with as much thought. (i-D, Sagepub)
When artists like Joanie — who are well-established and have exhibited at large, prestigious events such as the Sundance Film Festival — I cannot help but wonder if someone like him understands the position of, say a struggling college student who is not white, not a man, and not in a first-world country. It is easy to forgo NFTs or any opportunity as a whole if you have the option to.
Memo is no different. They are very well-established, white/white-passing men that are somehow dominating a conversation within the comic/concept/illustration space, which all have much more diverse backgrounds and socioeconomic points of view than your average field. Digital art is significantly more accessible with low barriers to entry, which allows for huge diversity and people from any background. Even the bluechip fine art industry has taken note as fine artists are turning to NFTs as a way to cut out gallery and agent fees.
This isn’t to point fingers at them as bad. (Note: I actually talked to Joanie directly via Discord and he himself stated that he acknowledges his privilege and views it as a powerful tool to enact change). Everyone leads different lives. Privilege, status, or race is NOT a valid reason to attack anyone. We all have our experiences that lead us to our own conclusions, and it should be acknowledged that the lives and perspectives we have can be very different.
But what about less-developed countries?
On the other hand, a very important discussion that is ALSO sorely missed is how climate change mostly impacts those in less-developed countries.
One big point of criticism towards NFT/Crypto enthusiasts is that they are failing to consider that their actions are affecting those who are forgotten the most. It’s no secret that climate change is disproportionately affecting tropical and island states — almost all exclusively third-world countries inhabited by people of color. This is a sorely missed point of conversation as most popular discussion surrounding climate change is circulated on Western platforms via social media. This shouldn’t be a point of shame, none of us chose to be born into the life we would have. It is simply a conversation point that should be considered when examining climate change at large.
I think it’s safe to say many of us want to be more eco-conscious. The reality is though, unless you are wealthy — it can be hard. Even in developed-countries, things like sustainable-fashion remain a status symbol because of the difference in costs ($20 jeans v. $200). Similarly, many of us cannot even fathom the actions we can do as an individual (installing solar panels, going vegan, buying an electric car, etc). On top of this, we as an individual have to bear the psychological weight of fixing the shortcomings of large corporations (Which, by the way, largely stems from a campaign launched by BP to place environmental disaster on the consumer’s end).
So….what should I do?
This boils down to an ideological battle more than anything else. What do you believe in and stand for?
On a pure philosophical level, if you are going to attack another individual for something you believe in, then you yourself should be doing the utmost to uphold that.
The energy I’ve seen so many attackers come with towards artists would lead me to believe they are passionate about climate change in every way. I have to ask then, are they vegan? Are they driving an electric vehicle? Do they reduce, reuse, and recycle every single thing? Do they shop only at thrift stores? Many of us are probably living in a first-world country and producing a carbon footprint exponentially higher than lesser-developed countries. There is also an argument to be made that the hypocrisy exhibited within the art space is almost as bad as people decrying plastic straws but not plastic cups. You can be concerned about the carbon output of NFTs/Crypto/anything, but please, if you are going to attack anyone, walk the walk.
We can all hold our beliefs, but the fact is that many of us simply do not have a choice. We are all subject to this broken, unfair system. We all hold different levels of power and resources. You can care about the environment and not have the funds to do anything about it. There is so much hatred and divide within the digital art community. The current atmosphere is such that somehow, if you participate in crypto or NFTs of any kind, you are the complete scum of the earth. Going around harassing/viciously attacking others for disagreements is bordering radical violent behavior, and as we’ve laid out, ecologically that’s not the full picture. And on a purely technical level — is so dismissive of what problems NFTs/Cryptocurrency fix in the first place.
The real benefits of NFTs and Cryptocurrency
A conversation that needs to be had for any and all crypto skeptics/enthusiasts is why it was even created in the first place.
Is Cryptocurrency just another Silicon-Valley scheme?
Firstly, cryptocurrency is NOT a silicon valley invention. There have been numerous attacks alleging that it is some “tech bro” scheme, but major silicon valley players (Square) and major banks have only really started to invest in it within the past few years. It is a global phenomenon with many of its enthusiasts being international. The origins of Crypto also began with an anonymous person who goes by ‘Satoshi Nakamoto’, who cannot be traced and does not align with any country or culture. The only assumption that can be made is that they founded it to address the deep flaws within our financial system.
The first notable trait of Cryptocurrency is that it is a finite resource. Almost all major currencies in the world are FIAT — meaning they are not backed by any finite resource for real value. If you have played the stock market, you know the numbers on your screen are as valuable as dirt and it is all speculation (making bets on the potential risks/rewards of an investment). Inflation has been such a huge issue for decades (centuries even), and with costs only rising while wages stay low, printing more money only helps those at the top as they get to spend it before it reaches the bottom.
Cryptocurrency also addresses the issue of centralization where only major banks control ALL the money in the world. Do you remember the economic crash of 2008? That was caused because major banks overspeculated the housing market and burst the HUGE bubble they were building in the first place. Do you know how many people went to jail over that? One. Do you know how many families, lives, and futures were destroyed? Millions. Decentralizing money in an unbiased system where no one person can overplay/underplay the market prevents such crashes and ensures that the money you have is yours and no one else can play with it.
Unifies the Global Economy
As it is right now, there are numerous different currencies, all with different exchange rates, all dependent on very intricate geopolitical factors. When you buy something from another country, you are subject to a multitude of different laws, taxes, import fees, etc — all varying from country to country. The same item also carries different prices depending on where you live. Even within the US alone, a bunch of bananas costs considerably more in New York City than it would in Columbus, Ohio. These differences come back to geopolitical and socioeconomic factors, but using a global currency that is race/culture/nation-agnostic fixes that.
A largely overlooked benefit of cryptocurrencies is how they actually empower less-developed countries. Many underdeveloped countries have unstable economies and lack the proper infrastructure for a national banking system. Many of their citizens thus cannot seek out financial ownership or freedom and are subject to unethical occupations and working conditions simply to make ends meet. Cryptocurrency solves that in multiple ways — stabilized currency, true ownership, accessible through technology, and absolved of politics/corruption. Many smaller countries are already adopting it in their ecosystems and building upon it. (Defi is actually one of the biggest players on the ETH marketplace and has huge promises for uplifting those in Africa).
Due to the nature of how blockchains work — everything is recorded. You cannot tamper with this, and you cannot destroy it. This solves the problem of potential manipulation and fraud, and removes the flawed aspect of human trust.
What about NFTs?
NFTs share a lot of the same benefits as cryptocurrency does as they operate on the same technologies. As a concept, they were made to provide real value to digital work. They are NOT a means of stealing or devaluing your work — quite the opposite.
Provides Legitimacy to a Digital File
Digital files are inherently replicable. There is no difference between a file you duplicate and distribute to others. NFTs solve that by adding an indisputable certificate that you nor anyone else can destroy.
You may scoff at the idea of a digital token being the difference between one .jpeg being authentic over the other, but this concept has existed for centuries. There are many Mona Lisa’s in existence, but only one true Mona Lisa. This is no different from distributing many Nyan Cats, but only one owning the true Nyan Cat. To come back to the idea of how value is malleable — just because you do not value it, does not mean others feel the same.
Adds Value to Digital Art
Have you ever created a digital work, only for someone who is not educated about how digital art works to question the authenticity of it simply because you drew it on a computer? Someone who spends their time in a digital software creating a one-of-a-kind work shouldn’t be put on a lower rung in society just because there is no physical original to all their copies. NFTs solve that and now you can sell/auction your work as an original.
Actually REDUCES the carbon footprint of artists
Many artists traditionally would have to sell physical merch online or at conventions — which the entirety of that pipeline (printing, traveling, etc). Produces a large carbon footprint, especially if you are accounting for how there’s multiple artists doing this multiple times a year. Minting and selling one NFT has the potential to generate income equal to that of many conventions, and since it is completely digital, cuts out the ecological costs of mass-producing merchandise and traveling.
Funnels money from OUTSIDE the community to within
I think a huge problem we don’t realize is that most of the art community generates income from each other. Most big opportunities for artists to make money involve art education and selling our merch to our fans (a big proportion being artists). Artists can also seek freelance gigs and work at studios for fixed income, but that is reliant entirely on how businesses value art, rather than real art enthusiasts and collectors. Any chance to introduce real money from outside is always a plus and only grows the overall wealth of the entire community.
Are NFTs just another Silicon-Valley get-rich-quick scheme?
NFTs shouldn’t be thought of in this way either. They are a legitimate technology that does not have origins within Silicon Valley, and has carved itself a legitimate market which has existed for a long time. The concept of selling limited edition copies of work has existed for centuries — except now it can be done digitally. And now it can be done through a decentralized currency that no one can devalue because they said so. Similarly, once you own the copy of an NFT, no one can deny that, because every computer on the blockchain will validate that for you.
This may not resonate with the greater public since it can be a lot to grasp, but there’s already a community of collectors and artists exchanging their goods, and most importantly — there is real money being exchanged.
The benefits of NFTs to artists who are lesser-known or are from developing countries
Many crypto artists actually hail from places like Africa, Eastern Europe, and Latin America — all regions rich with histories of political and economic instability. This shouldn’t be a surprise as cryptocurrencies are a global phenomenon and are a powerful tool for providing opportunity. I’m not going to list any artists in particular, but if you do a deep-dive into their social networks you’ll find many of their artists (and collectors) know English as their second language. This is real-wealth distribution, and again, agnostic of any culture or race.
Discussions such as these always seem to occur from the point of view of western communities. It is often overlooked that they are global issues. Artists who live in countries that are run differently are often overlooked when perspectives are being shared. For the advancement of any disruptive technology, it is important to consider the perspectives of these communities. This section was a collaborative effort and provides unedited perspectives from international artists:
Real Perspectives from International/Marginalized Artists
“South Africa is a developing country. Most of us [are] living just to survive. We have the financial resources but because of corruption, they [are] not allocated to the right places.
The government is letting a lot of other bigger ecological costs go over their head , they just don’t care :)
NFTs are providing the youth ‘a way out‘ of poverty. Also another thing is that our youth unemployment rate is so high so most of us are forced to look for alternative ways to make a living. A lot of students sit at home for 5–6 years after graduating because jobs are so scarce mainly due to corruption.
To make it more personal , I decided to pursue a career in art. The appreciation for art in this country is very little and mostly due to the fact that there is no money. Most people simply can’t afford art so that appreciation is lost. I have only sold 4 prints in South Africa and all my other clients live outside of Africa.”
- Lethabo: South-African Artist
“Climate activism is a first-world concern, in my opinion, can’t lie. Like, to me, regardless of how you spin it, you can’t tell me, a citizen in a country where majority of our people are starving, poor, and uneducated to magically look up at the sky and start thinking of this environment when basic needs haven’t been met yet. And then, there’s the problem of why are people coming at artists playing a role in this game that corporations run? Total, Shell, and co have ruined our environments for years and we’ve rationalised it because we consider it a necessity. But when artists are just trying to make a fraction (a tiny fraction) of this money to keep themselves afloat, suddenly they’re devils.
To me, the conversation has been hilarious, can’t even lie. Because a lot of people just want something to fight against and/or are mad that they can’t make headway in the space.”
- Anthony Azekwoh: Nigerian Artist
In a Gizmundo article, Ameer Carter, artist and advocate for inclusion in the space, wants to ensure that erasure is minimized in the NFT community. Ameer mentions that if the space is largely dominated by a few groups globally, then it will only be those people shaping the collective future of crypto. He stresses that we can’t expect to think that we are the only participants that have ideas for this space.
On Crypto and the Environmental Costs
“As a person who has lived and worked in a diesel-dependent economy, it just seems kind of silly for you to ask me to consider individual carbon neutrality when it comes to people who live in similar places,” says a Nigerian artist (she wishes to remain unnamed). Anthony Azekwoh, another Nigerian digital artist, further agrees, “Climate activism is a first-world concern, in my opinion.”
For context, the Nigerian government only provides electricity for less than 9 hours a day. Some areas do not even see this power. This means that for the remaining 15 or so hours, most households and businesses are burning insane amounts of diesel using backup generators. And this is the only affordable alternative means of obtaining power.
Burning diesel in a country like this is not a choice. This is the case due to bad infrastructure and corruption, (both of which are largely bolstered by the influence of more powerful countries — an entirely new topic for another day). South African artist Lethabo, who lives in a similar situation, also notes, “The government lets a lot of other bigger ecological costs go over their head. They just don’t care.”
On Financial Empowerment
Lethabo further mentions that the local appreciation for art in her home country is very minimal. In an international scene that can be highly exclusive against artists in developing countries, anybody can create their own audience and participate. NFTs have uplifted many small artists — both traditional and digital — to finally be able to participate in the global art market. They get to interact with people from all over the planet. Crypto levels the playing field for them.
This international aspect also offers a real way to wire money internationally, bypassing huge barriers and security issues. Money-transfer services like Paypal have traditionally been used by western artists to collect payment, but these services are not available to every country (particularly LEDCs) — and many artists have been barred from wealth distribution in this way.
“Let’s not gloss over the fact that my own currency itself is highly volatile and far less valuable than Ethereum,” Another Nigerian artist mentions. In her home country, Nigeria, those that can manage it use cryptocurrency as an investment tool. Many express their frustrations with government policy and the decline of the economy and trust cryptocurrency more than they trust their own government. “So when people say it’s fake money, I’m just like, is my currency real money? What is real money?”
However, the general opinion about cryptocurrency is not one sided. The trend in volatility is acknowledged and artists and adopters are cautious of this. “ I guess I’m wary too, crypto is always spoken in a “be careful” manner because you never know what will happen.“
Financial empowerment crypto offers to artists is praised, but the capitalistic aspects are also further criticised :
“Crypto doesn’t make me very enthusiastic. I don’t like the feel of it pressuring artists to join, even though I am happy for artists selling and all. The fact that popularity is also a factor with it actually selling in some places like SuperRare also makes me roll my eyes. At the end of the day, the smallest artists will still suffer.”
- Anonymous (Did not wish to be named)
There are just too many things to consider in a discussion that seems to become more convoluted every day. The fact that it is so complicated is only further evidence that the global financial system is already imperfect, and failing to consider the experiences from people — not just artists, but all well meaning cryptocurrency adopters from developing countries — is erasure.
Further Additions On This Topic
It should NOT be downplayed just how valuable it is that there are new, democratized opportunities for money to flow into less developed countries. We’ve already addressed how Paypal dominates the freelance artist sphere, but imagine being an international artist who simply cannot access this market just because of where they live. Similarly, even if you can access Paypal, if your own country’s currency remains volatile and almost has no real market value, then receiving money from USD to that currency may actually just devalue your work. Cryptocurrency solves this which is why, again, many smaller countries have already embraced it with open arms.
There are also large groups that already exist to help poor or marginalized artists with the startup costs to participate in the NFT market. These groups operate solely on educating artists and providing even necessary funds to smaller artists. So it is safe to say that NFTs/Crypto are actually enabling real positive change.
It’s not going to be perfect however.
The real downsides of NFTs and Cryptocurrency
You may have already seen the twitter blocklists to prevent your work from being tokenized. In today’s fast-paced world, it almost feels like eat or be eaten — and in some cases this is true. This is especially true in hyper-capitalist markets where it’s a free-for-all and there is little to no regulation. It is a real issue and is quickly compromising many artists’ work.
NFTs are no different from the real marketplace in the sense that you cannot replace trust. Trust is the fundamental bridge needed to convince someone that you are credible and can be trusted with their money. There are already marketplaces such as SuperRare and Nifty that require several levels of authentication before any artist can list their work. There are still a lot of flaws however, as other platforms such as Rarible and Opensea allow anyone to upload work, allowing thieves the opportunity to steal content and profit.
I have read articles about the uses for Crypto Art as a means to launder money. It is true, and unfortunately, you can’t stop it. While many digital artists are appalled, fine artists will know it’s been happening in the real world for centuries. That doesn’t mean that there aren’t legitimate collectors who sincerely just want to own cool art, but it is uncertain what percentage of money is actually being used to genuinely collect art v. launder funds. A recent controversy surrounds the latest sale of Beeple’s work for $69 million, which cemented his name as the world’s 3rd-most valuable living artist, but possibly unearthed a nefarious underhanded scheme.
Cryptocurrency and Crime
On the topic of cryptocurrency and drugs — criminals have only moved on from the last non-traceable currency (cash) to the next (crypto). People have been using cash as a means to conduct tax fraud, do drug deals, and launder money for centuries.
I am sure we’ve all heard about the war on drugs, but regardless of your stance, people are going to do them. Traditionally you would have to meet up in-person to conduct drug deals. This made it very dangerous as there was significantly more risk of being harmed or scammed. What cryptocurrency allows for is online marketplaces on the dark web to function essentially as open markets, but for drugs. These markets operate like any online retailer — reviews, storefronts, etc — and remove all the risk of meeting in-person since your goods will be shipped and the money sent immediately with no risk of chargeback (Once bitcoin is sent, you cannot return it).
Despite Bitcoin’s roaring success, it has a long history of being unstable. Its value fluctuates by the second, and while that is true for almost any currency, because it is NOT widespread, and is mostly valued on speculative estimations — there is no real telling what it’s actual value is. It could drop today, next week, next month — or even right now. And historically, it has. Due to its volatility, it is classified on your taxes as an asset (like a stock) rather than tangible capital. There are some arguments to be made as big institutions buy into it that the money might end up collecting towards the top — but, crypto as a whole now is mostly decentralized and spread out to the point where no one holds a majority share. The only situation where that could happen is if huge mining farms or institutions decided to collude and pool their funds, but that is highly unlikely as it is so spread out and every party has their own vested interests.
I think it’s important to address how to fight the negatives because like we’ve established, cryptocurrency and NFTs probably aren’t going away, so you need to know what to do.
Fighting Art Theft
There are already groups of artists afraid of posting their work online out of fear of being tokenized, and rightfully so; however, that never stopped people from printing your work out physically and selling it at conventions (Which many of my friends have personally fallen victim to).
That being said — should we ban conventions? No, and just like conventions, NFTs are just another marketplace where the more it is legitimized, the more you as an artist will have to learn how to protect your work and prevent it from getting in the wrong hands. I am not saying that you should just accept this thievery, but as long as the world continues to adopt this new type of market, it’s only going to get worse. On the other hand, the more it is legitimized — the more regulated it will be.
The current platforms (Nifty, Rarible, SuperRare, etc.) that uphold a verification process are long-established and growing. There is also the aspect to which real collectors would only want to purchase from certified sources. This is no different from when a professional art history expert verifies the validity of an original 18th century painting. There are also organizations that large companies work with to release their assets as a verified brand.
There is also discourse surrounding implications about copyright law. Large media conglomerates (Disney, Marvel, etc.) may get involved in this space (or already have) so it is of EVEN more importance that artists wield the proper knowledge to navigate this new space. The next time you are making work, you might have to consider now that it can be used within the NFT space and know your rights within that.
It is exhausting as an artist to fight all of this. I understand. We are constantly fighting against twitter tshirt bots, Etsy thieves, convention art thieves, instagram reposters, and even huge companies like Urban Outfitters stealing our work — and now this.
Thieves and con-artists have existed since the beginning of time. While it is unfortunate that they have infiltrated the NFT space, it is important as a digital creative to know the right tools to protect yourself. In general, many artists already utilize tactics like watermarks, low-res copies, anti-distribution clauses in case of lawsuits, etc. You can also block any account that you know steals artwork. Unfortunately, this probably will not be enough as the speed of which bot accounts can be created is faster than the rate you can regulate them.
That is even more reason for why artists need to push for better platforms and development within the technology so that our work can be protected. This all being said — this is still not a direct negative of NFT technology, and we as artists need to apply pressure to existing platforms to fight this.
One important note to make is that if you yourself decide to put up your work, you are 100% receiving the money (and all following royalties). While the other party could possibly write it off as some sort of tax expense, the money from the sale goes to you. The concerning cases of money-laundering involve multi-layered schemes (such as the allegations involving Beeple) where an entity lists a piece of work and then bids on it themselves as if they were two independent parties. This however, does not really affect you, and if anything drives up the value of your work as they contribute money into ETH/NFTs.
Another point is that the vast majority of crypto artists and collectors sincerely just believe in NFTs as a concept and want it to succeed. That means legitimizing it as a real marketplace, and buying/speculating as a real world marketplace would. There are numerous legitimate art collectors who sincerely just want to collect cool work. Likewise, the majority of artists are legitimate creators who sincerely just want to share and sell their work. They are aware of the money laundering, and probably dislike it as much as you.
I also want to note that a huge proportion of money laundering within the fine art world (and likely to transfer to NFTs) is actually from banks. This was largely exposed by the FinCEN files and is a HUGE topic everyone should be educated on. Numerous corporations and banks create “shell companies” which essentially act as a separate entity to push money through, under the guise that it’s a legitimate transaction. This is actually another big reason why cryptocurrency/NFTs are important, as they prevent fraud since all transactions are recorded and cannot be tampered with on a blockchain network, and decentralization keeps all the money from pooling into the wrong hands.
How Cryptocurrency prevents crime
While crypto undeniably helps people get their drug fix, what people fail to mention is that it’s actually made doing drug deals considerably safer. Because the crypto market is anonymous and online, there is NO physical meeting — meaning, there is no possibility of threat or violence. Physical drug deals are notorious for being dangerous — and especially for lower-income neighborhoods where that is one of the only ways to generate income — there is a high violence and mortality rate.
There is also the risk that physical drug deals are done mostly on pure faith and word-of-mouth. This is because drugs are outlawed, meaning the customer cannot go to the police in case something goes wrong or else they risk being arrested. This results in many drug dealers giving shady products to their consumers, which can lead to a number of health problems and even death.
In online sales, the worst that could happen is that either party gets scammed; however that is largely countered by a review system where users can warn others if they receive a bad product. Additionally, for the seller, there is no possibility of a chargeback, unlike credit cards, since once cryptocurrency is sent, it cannot be taken back.
How Cryptocurrency SOLVES market volatility
While cryptocurrency is in its infancy, it will probably continue to fall up and down. It should be noted that economies/markets in general follow that trend, and the overall trend should be observed, not a short time period. Cryptocurrency generally has an upward trend, with a very bullish (positive) outlook moving forward. That doesn’t mean it’s not going to drop down again, but most experts are pretty confident that it will bounce back and even higher. This is why many big players are now investing into it themselves, and in doing so, further stabilizing and legitimizing crypto’s value.
The long term outlook is that eventually, once crypto is mainstream, your money will actually be absolved of REAL market manipulation. If you have ever invested in stocks, you should NOT be a stranger at all to this. The majority owners of any market are always pulling the strings — this being the hedge funds, banks, large investment firms, etc. Without getting into too much detail, it is generally impossible for the retail trader (everyday people) to manipulate markets. Since cryptocurrency is decentralized, it builds a case for itself for why we need to adopt it on a large scale so we can change that.
Addressing the misinformation in Viral Social Media Posts
Now that we’ve covered what exactly blockchains, cryptocurrency, and NFTs are and what they stand for — we can dissect some posts.
Towards the beginning, we outlined the main three reasons for outcry against NFTs:
- Ecological impact (Already covered)
- Predatory/Capitalist Claims (Pyramid Scheme Accusations)
- No Real Future For (Ecological) Improvement
We are going to skip over anything involving the first point as we’ve already explained those topics in-depth. The remaining two points largely have everything to do with these two posts.
CyptoArt Is a Pyramid Scheme That Will Harm The Most Vulnerable (The viral twitter post of it here)
Let’s start with Everest Pipkin’s as that was the most shared that I personally saw.
I think an important distinction to make here is the difference between an academic essay and an opinion piece. Their piece is very strongly an opinion piece.
An opinion piece is an article, usually published in a newspaper or magazine, that mainly reflects the author’s opinion about a subject. Opinion pieces are featured in many periodicals. (source: Wikipedia)
“Academic writing is clear, concise, focused, structured and backed up by evidence. Its purpose is to aid the reader’s understanding.” (source: University of Leeds)
Academic articles focus on the science and facts of a situation, whereas an opinion piece takes those “facts” and writes a stance on them. I put “facts” in quotations because many of their claims on blockchain technology, as well as just the pure definition of what digital files and pyramid schemes are were just completely false.
I also need to highlight that it’s been pointed out that Everest is actually a fine art curator.
“Everest Pipkin is an American curator”
A fine art curator is basically in charge of selecting and interpreting what works (typically physical) should be exhibited in a gallery. Fine art galleries make money by charging artists fees as high as ~50% of profits, while also giving a percentage to curators. A bulk of Everest’s article focuses on their opinion that digital art should NOT evolve to be like the fine art market. It can be speculated then that as digital art grows in value, it can diminish the value of physical fine art spaces, which can be a direct conflict-of-interest for any curators or people who work in the industry.
I am sure many of us have read their article already but if you haven’t, here are its main points:
- Cryptocurrency (Bitcoin) is an irrefutable evil on society and the environment
- Crypto/NFTs are never going to improve (or not fast enough)
- There is no middle-ground for any of this
In all honesty, it was really hard to boil their actual points down because so much of their language was rife with emotion and sweeping generalizations (eg. “We are doomed”). Instead of making real, factual counterpoints. Almost every point they make is to push the reader into believing their moral compass on how we should navigate this new world:
“The only total viable option is total moral rejection.”
If you are learning about a topic for the first time, reading a very passionate opinion piece as your first introduction is probably not the best start. Unfortunately, for many, this was their first introduction to crypto/NFTs and it will probably take a lot more than this google doc to help undo that.
Let’s address their points in order.
Cryptocurrency is an Irrefutable Evil for the Environment/Society
Their main reasons for why cryptocurrency is an irrefutable evil are because of:
- Ecological Impact
- Cryptocurrency/NFTs are a Pyramid/Ponzi Scheme
- Links to Crime
- Devalulation of Digital Art
Almost all of their points about ecology are piggy-backing off of Memo and Joanie, which we’ve thoroughly discussed already.
The only new point about climate change brought up is a study done linking bitcoin mining to a monetary value of health damages.
I think we have outlined in enough detail all the inefficiencies of bitcoin mining/NFTs (PoW blockchains in particular) to understand that it is an issue, and has been thoroughly criticized by both crypto and non-crypto enthusiasts alike. I understand the concern, and while it is undeniably bad that bitcoin results in health damages, it shouldn’t be ignored that this type of carbon-output-into-health calculation could be done on virtually anything that puts out carbon or wipes out the environment.
Crypto/NFTs are a Pyramid/Ponzi scheme
First off, they use the terms ponzi/pyramid scheme interchangeably. There is a difference:
Ponzi schemes are when someone gives money to an investment manager, and when asked for that money back, the investment manager goes and collects money from another customer looking to invest, and uses that to pay it back instead. This continues to happen until inevitably more money is asked to be withdrawn then they hold, and thus the pyramid collapses.
A pyramid scheme (typically an MLM) is when someone recruits you to invest your own money into buying inventory/stock that you can then resell for profits. The recruiter typically takes a cut of their sales, and over time creates a pyramid where the top is receiving a percentage of every tier’s sales.
Now let’s look at how Everest defines cryptocurrency as a pyramid/ponzi scheme:
So the claims here are just false. In a pyramid/ponzi scheme, a person invests their own money directly to the recruiter/investor. That money is immediately lost and pocketed by the other party. (A mutual of mine actually fell for this where they sent money to their “friend” as an investor with promises of huge gains, note she directly gave him her money).
Another VERY important distinction here is that Everest themself even admits that “there is no guarantee that it will all collapse someday”. In many investor’s books, that is the key difference between a legitimate investment, and a ponzi/pyramid scheme. Unlike ponzi schemes, NFTs/crypto is founded on legitimate value (you can exchange your crypto for USD/other currency at any time), and unless EVERY single party on the decentralized network decided at one moment to completely pull out — it’s not going to collapse. (Which, by the way, that is also the case for any company, or investment).
When you buy into BTC/ETH, you are not giving money to anyone. You do not even have to be recruited. All you are doing is increasing the overall value of what BTC or ETH might be. This concept is no different than say if an economy in a foreign country had more money flowing into it, and thus the value of that country’s respective currency increases.
The same goes for the NFT marketplace. When someone is encouraging you to join — there is no direct monetary benefit to them. You are not giving any single human money to join. There is a fee to mint your own work, yes, but that isn’t going to anyone except for increasing the value of ETH. Yes, ETH will grow in value as NFTs grow, so in a sense that is benefiting anyone invested into it, but again, that makes it an economy like anything else, where value increases when there is more demand.
Also remember, cryptocurrency is NOT owned by any single entity. It is spread out on a large, decentralized network. When you do anything to increase the value of it (eg. joining the NFT marketplace), and it is not being pocketed by anyone. That is a HUGE difference from pyramid/ponzi schemes where there is very clearly a benefitting party at the top.
NFTs are a real marketplace, with speculative buyers, real collectors, and most importantly, real people making money. Even though buying and reselling may be on speculation, this means other resale markets such as eBay are pyramid schemes too.
While we are discussing Pyramid/Ponzi Schemes, let’s discuss the other viral social media post.
I also want to note that just because you draw up a graphic with cute squiggly lines and approachable pastel colors does NOT negate their sweeping allegations. This post could have easily been dressed up in a sharp, non-friendly neutral color palette with authoritative font, but I believe a lot of artists resonated with the friendly demeanor, especially as their first introduction to the crypto world.
I’m going to condense the claims of this post:
- The money is coming from long-time crypto investors and (naive) new artists buying art from other artists to support them and buying into a “scheme”
The accusation of cryptocurrency being a scheme is yet again — false. Again, it was not founded as that, nor does it function as one. Cryptocurrencies have real value and at any point, you can choose to cash out to USD or other currencies. (Which this post actually acknowledges at the very end, but only after they’ve used multiple slides to convince you it’s a scheme).
The implication that cryptoart collectors are mainly the ones chiding naive artists into minting their work = pyramid scheme is just false. We already discussed how paying the fees to mint your work doesn’t directly go to anyone. Also, implying that you shouldn’t participate because you will be manipulated by more experienced traders is a hit towards your intelligence and should be offensive to long-time crypto artists and you.
- “There are no real art collectors in the cryptomarket right now”; just long-term investors hoping to resell the art at profit
This is a sweeping allegation towards every single crypto collector, and is offensive to both collectors and artists. There ARE legitimate collectors who simply want to own and collect cool work. There are even galleries made entirely for this purpose. It’s extremely radical to accuse “every actor [of being there] there to make money”.
- One person has to lose money for another to make money
This allegation is completely based on their assumption that NFTs/cryptocurrencies are a pyramid scheme, so — completely ignoring how minting art or any of this actually works — they just want to feed you the idea that because you’re not at the top you’re going to lose money. This is again, false, and your money isn’t directly going to anyone or any single entity.
- The fine art market survives because there are legitimate collectors unlike in cryptoart
They are just reiterating their first point which is that there are no real crypto art collectors. They then explain how fine art markets survive because people legitimately do want to own and share cool work, so the overall flow of currency balances out. Now with people already comparing NFTs to the fine art market, it should be easy to realize that even with speculators, the genuine collectors balance it out.
- Cryptocurrency is volatile/gambling, so therefore you should not participate
You should realize that this piece of advice is purely their opinion.
Sure, if you don’t want to deal with volatility, then don’t participate. It’s not up to them to decide that for you. Many people participate in cryptocurrency and the stock market as a whole because of its volatility. There are viable ways to invest passively with little to no risk (Robo-investors, index funds, etc) but those options take tremendous amounts of time to grow. Investing by definition means to see promise in something and putting money into it in the hopes for growth. It is never guaranteed, but a small pastel infographic should not deter you from seeking what means you are willing to take for financial freedom.
- Supporting friends within the NFT marketplace is exclusively bad and does not generate real value
The example that they use for that (Diego and Lucy) is misleading. They claim that your friend buying your work, and then you buying their work would in theory generate value as you are increasing demand and the overall value of ETH. They then point out how this isn’t real value as all you really did was exchange artwork, while incurring a 3% fee on the buyer giving a 15% percentage to the platform used to host it.
First off, these are random percentages. They don’t list a source, so I can’t verify what platform they might be referring to, but every platform is different, and I even went on Nifty (one of the largest-curated marketplaces) to verify their percentages — which are vastly different from what the infographic claimed.
“As an artist, you get to choose what percentage this is — it could be 5% of every secondary sale, or 50%. Nifty Gateway takes 5% + 30 cents of every secondary sale, to cover credit card processing fees and to keep our platform running.”
It should also be pointed out even if NFT platforms take a fee — traditional fine art gallery fees are MUCH worse. They are anywhere from 30–50% (usually 50%) and also involve a number of middlemen (curators, agents, etc.) to showcase even one piece.
Secondly, almost any pathway to selling your work involves some fee. Even convention artists pay NUMEROUS fees to exhibit — table fee, printing, hotel, travel, food, etc — and to say that you should not support artists within an ecosystem where some entity receives a portion of your money is borderline fantasy and ludicrous.
And on the topic of how you are buying into a system just to inflate the value of ETH/NFTs — we have addressed this multiple times. Cryptocurrency IS an investment, YES there is volatility, YES there are people who might be buying in just for speculation, but that DOES NOT negate that there are genuine collectors and at any point you can choose to convert your ETH to physical currency so there is real money being exchanged.
- Cryptoart checks off all points on the SEC (Security & Exchange Commission) Pyramid Scheme list
No, it doesn’t. We have covered this numerous times already — nobody is forcing you to join. There is no real “recruitment” — and even if there was — none of that money is going to anyone. The money is spread out on a decentralised network, and as we’ve covered, only contributes to growing the value of said currency (ETH), which is legitimately the same as growing an economy. There is also no foreseeable collapse as the value of ETH and other cryptocurrencies are founded upon intricate real-world market factors. There are legitimate companies who have huge stakes in cryptocurrency now, and as time goes on, crypto will most likely balance out and become a legitimate currency.
- Even though there is no guarantee of the crypto market collapsing, protect yourself
So after spending multiple slides convincing you that cryptocurrency is a scam — NOW they want you to learn how to protect yourself. They even go on to acknowledge that cryptocurrency is investing and that you should follow basic principles like “don’t invest more than you can lose”.
If they had started this entire infographic explaining that cryptocurrency is an investment, and therefore volatile, INSTEAD OF painting it as a pyramid scheme — then their post would hold weight. Unfortunately, their complete misunderstanding of how NFTs or the NFT marketplace works completely destroyed the validity of their post. I understand wanting to caution artists from participating in something they don’t understand, but that makes it even more important to actually understand what you’re educating artists about in the first place.
Now that we’ve covered this post, let’s move on with addressing Everests’s claims.
NFTs are killing the value of digital art
First off, let’s just clear out the utter lies — digital files are stable. The only time they aren’t is if the technology for reading it is VERY old or when a conglomerate owns a monopoly on the software that is necessary to view/publish said file — say Adobe flash — — and decides to discontinue it. Otherwise, we are all pretty much using the same things (.pngs, .jpegs, .gifs, .mp4s, etc).
They also note that not everyone agrees with them and a huge portion of digital artists are excited about NFTs. It should be clear that all of this is just their opinion and should not be taken as fact. This comes back to how we define value as a malleable thing, and so we need to recognize that the true value of a digital file can mean something different to everybody.
To touch on their personal take that the true value of digital files is the experience you have with it — what if I told you that the same is true for physical art? No one person has the same experience looking at a painting, or touring through an exhibition. That can be your own personal value for why you find something — whether it is an experience or a tangible object — valuable.
One of the only consistent indicators of true value is scarcity. Whether it is gold, silver, precious gems, limited-edition sneaker drops — we value things that are scarce. Everest makes the argument that this aspect of an NFT is not valuable at all, which is just false, and demonstrably so since so many mainstream brands advertise limited-edition NFTs and sell out.
In their article, they also dive into how NFTs mimic the fine art marketplace in that a large portion of sales are through bidding wars on speculative value to see if someone can resell or own very lucrative, exclusive pieces — and they hate that. That is totally fine. You are allowed to have your opinion on fine art marketplaces. I do think it’s important though, to come back to the idea of value, in which just because you do not value something in some way, does not mean that everyone else shares that opinion. If people want to buy and sell art this way, then so be it. You cannot change them, and forcing them to stop or screaming at people to agree with you on your stance is borderline radicalism.
Links to Crime
As we have discussed, there are cons to cryptocurrency, one of which being its use for crime. We’ve already pointed out that if not crypto, it’s cash, and as far as I can tell, crime isn’t going away. They clearly bring this up just to paint crypto in a negative light, without talking about how its positive like preventing violence and murder.
Now, to address their second to last point:
Crypto/NFTs are never going to improve (or not fast enough)
So, to say the technology that NFTs/ETH use is never going to improve is false. There already are improvements, and a ton on the way. Now, the argument for whether it’s fast enough leads us to the next and possibly most important topic.
The ecological future of ETH/NFTs
We are going to focus on developments for ETH (not bitcoin) because that’s been the crux of this whole discussion.
There are 3 main points of improvement:
- PoS over PoW blockchains
- Layer 2 technology
- ETH 2.0
So let’s talk about PoW v PoS blockchains (Proof-of-Work v. Proof-of-Stake)
How do PoS blockchains solve things?
Remember, both BTC and ETH operate on blockchains that use Proof-of-Work protocols. Switching over to Proof-of-Stake protocols would reduce the current operating costs of PoW Blockchains to just 1%. This means that it is almost 99% more efficient, GREATLY reducing electricity costs.
The point of contention has been when that will happen.
Many artists have already discussed and even said they are holding off until there are real PoW solutions. What if I told you they already exist?
- Joanie’s Post on Clean Alternatives (contains many I will list here)
- VIV3 (NFT Marketplace operating on Flow, a PoS blockchain)
- Somint (A black-owned PoS NFT Marketplace)
- Hic et nunc (Brazilian-founded PoS NFT Marketplace)
Many of these platforms use alternative currencies or utilize layer-2 technologies (more on that later) to bypass the PoW hurdle. While they do not use ETH, the reality is that artists already have options to be more eco-conscious. Granted, these platforms are not as established as say Rarible — but they are the first to the game and as time goes on, will continue to grow.
Another important point is on the topic of ecological activism and social class — switching over to PoS blockchains reduces the gas fees to mint artwork and make ETH transactions to virtually zero — which GREATLY benefits poor artists in developing countries. This is something artists and devs from smaller nations are VERY passionate about and are always working on.
What is Layer-2 technology?
Layer-2 technology is basically the term used for any secondary technological development that builds on a primary technology. A good example of this would be bank accounts and credit cards. Bank accounts and transferring money is layer-1. Layer-2 would be debit and credit cards which greatly expedite the process, and greatly reduce the energy behind any transaction.
The catch with layer-2 technology is that there is a greater risk of security breach. When you are adding any secondary step to a process, you are objectively adding another opportunity for something to go wrong. This is a concern within the crypto community since one of the paramount pros of cryptocurrency is its uptight encryption and security.
Moving forward with this compromise, L2 technologies generally solve the problems with PoW blockchains, while still allowing people to transact with ETH. It is even said that the current state of L2 technologies actually fix this problem and thus are effectively L1 with PoS blockchain. (To save confusion, I am not even going to bother to explain how they achieve this, it gets pretty technical and if you’re interested, the link is right there).
General sentiment within the blockchain scene is that L2 technologies being deployed on a large-scale is either imminent or within the next year.
Some current projects that are already succeeding with applying L2 technologies are Sidechains and Optimistic Rollup. Some other projects that show great promise within the NFT space are also Polygon and NEAR protocol (L1 new type of blockchain), with new platforms either coming out on them shortly or currently existing platforms switching over processes to them. (NEAR has actually even been verified by the Swiss company South Pole to effectively remove all issues with PoW protocols on ETH, and reduce the ENTIRE blockchain’s emissions to only 172 tons per year, which is the equivalent of 5 people using a cellphone for a day).
So if we already have these solutions, why are people waiting for ETH 2.0 and what is it?
Remember when we mentioned that even the founder of ETH hates how inefficient PoW blockchains are? ETH 2.0 aims to fix that, and many other problems.
As it stands, every solution so far still comes with some compromise (distribution, scaling, etc). And with most established platforms still exclusively using ETH — there’s no telling when platforms or if all platforms will adopt these changes.
Additionally, ETH 2.0 is not a fix-all. While ETH 2.0 itself will be revolutionary and a huge feat, it will still be an entirely different currency from ETH 1.0. Basically — platforms will have to switch over to ETH 2.0. This isn’t such a huge hurdle, but people need to be aware that it’s not as easy as downloading a patch.
Most importantly, crypto enthusiastic and blockchain devs remain awaiting ETH 2.0 because they agree — we are in a climate crisis and any ounce of wastefulness is unacceptable. While there is still ambiguity about when exactly it will come out (current time estimates are within the next ~2 years), people are definitely hard at work on it.
I want to note that a lot of this knowledge came directly from the NFT/blockchain space. I actually listened in on a live discussion surrounding these matters which you can reference here. Crypto artists, blockchain devs, and huge NFT platforms have BEEN passionate about these problems, and we as artists are finally joining in on their conversation.
So having listed all these points, let’s address Everest’s final claim.
“There is no middle-ground for any of this”
I think it’s important to note that if you exclusively only list the bad side of any topic — almost everything is an irrefutable evil. I’m not a crypto expert but I was able to list at least several major reasons why crypto/NFTs are good for society. It’s not fair to write a hit piece under the guise of trying to educate people. Hit pieces are traditionally used for propaganda/campaigning and it is very clear that a lot of people have fallen for it.
If even after you’ve read everything, you decide you hate crypto with a passion — that’s fine. There’s a lot of things I hate that other people love, that to me are arguably a black and white situation. My only goal here was to provide as many facts as I possibly could without getting into too much detail. I am mature enough to be able to disagree and am always open to discussion so long as it’s coming from an informed place.
That all being said — I hope you can see that this IS more than just black and white. As with any complex issue, problems need to be solved at the core, just most of us do not have the ability to do that. It is extremely unproductive to even censor the discussion of this, and you should NOT be discouraging people from doing the research to come to their own conclusions.
The true scope (My point of view)
I don’t think many artists are truly grasping the scope of these technologies. There’s a reason why when I first learned about cryptocurrency and blockchains, I continued to follow them.
Do you hate that Adobe switched to monthly subscriptions? Do you hate that wacom tablets are so expensive? Do you hate that you work so hard to save up x amount of money just so some billionaires and banks decide it’s time to completely ruin the market? Decentralization is a direct reaction to that. My own family was devastated in 2008 when it bankrupted my dad. I’ve had to deal with adobe and wacom’s monopolies and just fork over the money while I’m waiting for viable open-source alternatives. Open-source technology goes hand-in-hand with decentralization ideals, and it is almost always the same groups advocating for these positive changes.
NFTs are no different. It is an emerging technology that will evolve it to where it should be. There are already people on the cusp of releasing ETH 2.0 — a much better ecological alternative — and several other developments such as NFT marketplaces operating on cleaner blockchains. It is finally an opportunity for artists to free themselves from taxes, inflation, middleman fees, and working under the man so they can pursue their own ideas. (Note: taxes are largely a problem in the US due to government mishandling, but it should be noted that they are not always bad and have been used for the right purposes elsewhere).
As creatives, we should also not be tearing down any opportunity to cut out the middleman and really find true value for a craft we spend our entire lives honing. While it is true that NFTs, as a concept, are not perfect at the moment, we should encourage further developments so we can achieve the perfect solution. This is an opportunity for artists to really support themselves, and supporting the arts should always be celebrated.
I myself am a believer in climate change and an advocate for better alternatives. I am also a huge advocate for decentralization and have been passionate about the solutions to society that cryptocurrency and NFTs offer. I’ve been supporting myself off my art since I was 15, and the hustle never changes. As a child, I’ve moved from house to apartment to nearly the streets multiple times, and I am going to do whatever I can to prevent that. To me, NFTs are just another marketplace to try and make ends meet. I even feel so strongly about my cause that I’ve even taken radical routes like dropping out of highschool and foregoing normal college just to avoid playing into student debt and the objectively flawed school system.
Probably the biggest cause I am an advocate for though is education. If you are going to discuss anything you need to do your research. There are far too many people (especially on social media) who sit on their high horse without actually doing anything. I respect people like Memo who have done their due diligence to look into the topic, address it from all sides, cite sources, and then come to their own free-thinking conclusion. I would even respect Everests’s opinion if they were actually correct about how the technology even works. It’s just so clear that people would rather do the easy thing and just fling mud from the sides and not the RIGHT thing — which is seeking the truth and advocating for a real meaning.
When I have the financial means, I want to take the necessary measures to reduce my carbon footprint. I want to install solar panels, buy sustainable produce and clothing, and drive electric. That being said, I do NOT condemn people in general for their choices. It’s impossible to know what goes on in another person’s life, and no one is perfect. If you do not want to support me or any artist who chooses to participate in it, so be it, I just hope it’s because of your own due diligence and not because of the loud opinions of others.
I understand that it is impossible for everyone to dedicate so much of their time to these topics such as individuals like myself or Memo; however if you have the understanding that you do not know what you are talking about, then stay silent or else you are muddling a very important conversation.
This concludes my document. It was an arduous process but I hope this helps to serve the greater art and crypto community.
Thanks for reading!
Addressing minor additional points
These are just some random points I’ve seen. I might add more as I get replies.
NFTs are only profitable if you are a big artist
This is a criticism that applies to capitalism. NFTs are just like any other marketplace — you still have to make a desirable product and market it. Attacking larger artists who have poured their lives into their craft and claiming they do not deserve any wealth from the fruits of their labor is also asinine. The reality is though that NFTs are a great demonstration in democratization as we’ve discussed, and actually help uplift MANY small artists with less than 5k or even a thousand followers. Go outside and actually research the scene, there are plenty of them.
You’re not a true artist, you are just greedy!
Lol. This one always makes me cringe. You should study art history and try to find any “true” artists. Even Sargent painted his soul away for money. Art has always been at odds with finding means to provide, and for once we have one.
NFTs are a goldrush and only few will profit
We touched on this a bit explaining how NFTs are essentially a marketplace. In the initial stages, people who were there first will profit, while many will notice their profits and then rush to cash in. This WILL create losers as there will be a sudden surge in artists and thus more competition. Over time however, since NFTs have already been established, the growing pains will even out as cryptocurrency grows. Again, there is no objective guarantee of this — since cryptocurrency is still an investment — but if you are going to participate in the NFT marketplace, you should be thinking long-term like any other market. You are still producing and marketing a product, and you should not be minting your valuable work as just a cash-grab.
You are only buying the token, not the art! You can’t do anything with the art
But that’s the same thing with physical art. Buying a physical painting is NOT the same as buying copyright to reproduce. The fact that buyers only buy the proof of ownership as a token in the digital world is the exact same as what it is in the physical (source)
“I will say: describing NFTs as the “author’s autograph”, vs ownership of the data itself, is a much more honest description of what all this is. If something like that is worth thousands of dollars to you, I won’t try to insist otherwise. It’s painfully obvious that many NFT enthusiasts don’t understand what they’re buying. Right here in the SuperRare ToS: You do not own the art you buy.“ — says Matt Hodhes, Engineering Director for Joe Biden.
Crypto/NFTs are a cult
Honestly any small passionate community at some extent is probably a cult. I understand that it can feel like that, but have you ever had someone try to get you into their fandom? Yea, same thing, except at least crypto/NFTs are a legitimate technology with real reasons to be hyped.
Anyone can write an article on Medium, this has no credibility.
Yes, anyone can publish an article. Everest Pipkin’s was also published on Medium. The difference between this article and most of the other ones (even on legitimate publications such as WIRED and The Verge), is that I have circulated this to NUMEROUS experts within their respective fields before posting. This is the difference between real journalism, and pushing something out just to cash in on the latest story. While this article may not be perfect (I am not a professional journalist) I can at least safely say a tremendous amount of effort went into this more than the other posts I’ve seen.
This document has been reviewed by multiple people for the purposes of accuracy and addressing it from all perspectives. I am eternally grateful to each and every one of them and we should be thanking them for their time. This is not the full list, just the parties who wanted their names to be published.
- Jen Bartel: Illustrator & Comic Artist
- Memo Akten: Computational-Artist, Passionate eco-friendly NFT/Crypto-Art advocate
- Ramesh Nair: Programmer of 10+ years, Blockchain Dev from the UK
- Karla Ortiz: Puerto-Rican Concept Artist, Illustrator, and Fine Artist
- Juliet Nneka (nkjuls): West-African Digital Painter
- Stefen Deleveaux: Caribbean Blockchain Enthusiast, Founder of the Caribbean Blockchain Alliance
- Loopify: Crypto-Artist, Collector, and Crypto Enthusiast
- Jose Andres: Creator of XR Artist Toolkit, Author of Ecologically-sound NFT Solutions Spreadsheet
- Lethabo: South-African Artist (pending approval of including profile)
- Anthony Azekwoh: Nigerian Artist (did not wish to include profile)