So the Kickstarter site has made An Announcement, and the reaction from the creative community has been, uh…bad.
Just look at that ratio. Whoo boy.
Listen, I fully expect their plans to get some revision. But it brings home a broader point that Blockchain Stuff In General is getting more interest outside the crypto-insider community.
Which means Comics Fans In General should try to have some informed opinions about them, you know?
As a casual rubbernecker of crypto-community scandals, I’ve been picking up that information for a while now. Mostly in random chunks, based on what’s relevant to the latest scam.
For those of you who are not thirsty benches that live for drama, I’m going to try to organize the useful parts into a single post, which you can read and digest in one sitting.
(There will be lots of links. Reading all of those might take longer.)
“WTF is this blockchain stuff? I know Bitcoin is a thing that exists, but that’s about it.”
Full disclosure, I had the Wikipedia article on blockchain open as I typed this, just to make sure I kept all the terms straight:
Blockchain is the technology that Bitcoin and other cryptocurrencies run on. Also other stuff, but the crypto market is the most famous thing it’s used for.
At heart, it’s just a list of records (“blocks”). In cryptocurrency, these are mostly records of “Person A transferred X amount of Currency Y to Person B.”
The records are linked into a “chain” because each individual record includes information about the record before it.
So you can’t sneak in a new/altered block somewhere in the middle, because it won’t fit the information in the block that’s supposed to come after it. The system can tell it’s not a valid part of the chain.
Before all this, the problem with “digital currencies” was, what stops you from getting infinite amounts of it? If I have a JPG, I can email it to you (or as many other people as I want) and it’s still on my hard drive. If my account has 1 e-dollar, what’s to stop me from e-depositing it to your account, while still having 1 e-dollar in my own?
With a cryptocurrency, you can’t have a “this token stays in my account” block and a “this token goes to your account” block on the same chain. The next block will only accept one of them.
“I keep hearing that all this uses, like, apocalyptic amounts of energy. How is that supposed to work?”
Short answer: very badly.
Long answer: For a currency to have any useful value, the amount and production has to be limited somehow.
(Which makes sense, right? If we tried to pay people in leaves, nobody would go to work for 15 leaves an hour, not when they could go for a hike and pick 15 leaves off the trees in 15 seconds.)
(Either that, or we would do what Douglas Adams saw coming 40+ years ago and embark on a massive campaign to effectively re-value the leaf, by…burning down all the forests. Just a fun bit of satire from a comedy series that has no prescient relevance to the real world, I’m sure.)
For most of human history, the favorite way to handle currency was by using precious metals – gold, silver, copper – because the limiting factor is “this material is physically difficult to dig out of the ground.”
With US dollars, the limit is part “bills are printed with complicated techniques that you need special equipment to pull off” and part “it’s illegal to for anyone except the government to print new dollars, and we will take you to jail if we catch you at it.”
With cryptocurrency, it’s all digital, so there’s no naturally-rare mineral involved. And there’s no Bitcoin Police to control how people create it. That control, an artificial limit, has to be built directly into the base code.
I’m not any kind of expert in the technical details here, so please nobody get too picky about it…but the general idea is, the blockchain will only spit out a new Bitcoin in response to a computer running calculations (“mining”). And it spits them out at a fixed rate.
If I have the only computer mining today: I get 100% of today’s coins.
If there are 5 computers mining today, and I have one: I get 20% of the coins.
If I buy more computers, so now I have 5 computers all for myself, but there are 5 other computers mining today: I get 50% of the coins.
This is way more expensive — 5x the hardware for only half the output — but if other people are willing to pay real money for the coins once they’re mined? It makes sense for me to buy more. And for every miner, it makes sense to buy more to keep up.
More computers. More high-quality graphics cards and computer chips, so they can process faster. More energy on your electric bill. Enough computers that you buy a whole warehouse just to hold them. Storage rental costs of the warehouse. Internet hookup to keep the warehouse in touch with the blockchain. Electric bill just for the warehouse. Air-conditioning to keep this poor warehouse from melting.
I guarantee the warehouse you’re currently picturing is not big enough.
When the exchange rate for Bitcoin is at $10,000, that implies “the cost of the equipment, maintenance, and power bills to mint 1 Bitcoin is now so high that people would rather pay $10,000 cash than deal with it.”
This is a little oversimplified — there’s a lot of gambling and speculation involved — but you can see the general connection. Nobody would pay anywhere near $10,000 for a coin when the production cost was around $10.
There’s literally a global computer-chip shortage right now, driven by cryptocurrency mining. Defunct power plants are being reactivated just to meet the demand — not renewable power plants, either. This Arctic lake is being turned into a bathtub by the mining operation on its shore.
“Okay, that’s clearly monstrous — but I heard the environmental issues were getting solved? Or going to be solved soon?”
My days of regularly sharing this link are coming to a middle:
Here Is The Article You Can Send To People When They Say “But The Environmental Issues With Cryptoart Will Be Solved Soon, Right?”
That focuses on NFTs specifically (more on those later), but the problems are baked in to the general How Blockchains Work.
Sometimes you’ll hear that a currency is running on a “proof of work” system (the one described above), but is going to switch to a “proof of stake” system, which is much less energy-intensive. Don’t believe it until you see it.
Consider the case of Ethereum:
- How bad is the Proof of Work energy usage? “A single Ethereum transaction used as much energy as the average American household uses over 2.78 days. The carbon footprint of each Ethereum transaction is equivalent to watching 6,505 hours of YouTube or conducting 86,504 VISA transactions.”
- May 2021 article claiming a switch to Proof of Stake would happen “in the upcoming months”
- February 2020 article claiming it would happen by December 2020
- January 2019 article saying it was planned by the end of 2019
- Article saying it’s “finally starting to come to fruition” from November 2015
- That’s 6 years and counting of “but don’t worry about the energy costs, we’re right on the verge of switching to PoS, totally prepared to do it, any day now”
(ETA from late 2022: Earlier this year, the crypto market crashed, and the price of Ether went so low that the profit from selling it no longer covered the cost of mining it. Then, like magic, the chain finally switched to PoS. Which is a great example of a general principle in crypto: it’s never about what’s fair, or right, or good for humanity, or good for the planet. It’s only ever about a small group of insiders, and what brings them the most personal profits.)
Sometimes you’ll hear that a currency is already on PoS, so, wonderful, it’s better for the environment than PoW! Still worse than…uh, basically anything else.
Sometimes you’ll hear that a blockchain is “carbon-neutral”, or even “carbon-negative”, because they burn lots of fuel but they also plant trees. Don’t get too excited about that, either:
“[Carbon offsets] – some sold through respected environmental organizations – come with almost no rules: There is little regulatory oversight of them in the US, no enforcement of requirements to prove their environmental claims, no certain way of measuring the carbon savings being sold, and no guarantees that planted trees or other projects will be finished or continued long enough to work.”
“If it’s all so expensive and terrible, why does anyone do it? What’s the advantage?”
…a lot of it is hype.
Some winner makes the news by raking in millions in something crypto-related. (It doesn’t even matter what.) Scores of outside observers get convinced they’re gonna be the next winner. And instead, they end up joining the previous million people who lost their shirts betting money they couldn’t afford to lose.
The one real, valuable feature at the core of it is “you can’t spend the same Bitcoin twice.”
This isn’t usually a problem with traditional currency…but not because it’s technically impossible!
Sure, your bank has a bunch of hard-to-counterfeit physical dollars in a vault — but it doesn’t cover the balance of every account, and they don’t move around physical bills when you make a transfer. Those numbers are just a database on the bank’s servers. They could go in and edit the amount in your account to be higher, without transferring it from anywhere at all.
Same with your stock portfolio, your PayPal account, your credit-card balance, and so on.
The reason they don’t — at least, not on purpose — is part “we need to prove we’re trustworthy, or consumers will go to our competitors instead” and part “it’s super illegal and the government would come after us for trying.”
(Sometimes it happens by accident! Milky Moore racked up over a million dollars from a bank-transfer glitch. Dan Saunders did the same with an ATM database glitch.)
Because Bitcoin consists entirely of interlinked blockchain records, this isn’t a problem in the first place. You can’t add more Bitcoin to your account without a valid record of it being transferred from somewhere. Not on purpose. Not by accident. Not at all.
If your choices are “blockchain wallet” vs. “PayPal wallet” or “US bank”…to be honest, it’s not much of a difference. PayPal has earned enough trust that you’re not actually worried about this. FDIC insurance, even more so.
But if your only options are non-trustworthy services? Say, if the good ones don’t operate in your country. Or they banned you because you’re dealing in narcotics/steroids/stolen goods/sexual services/firearms/ponzi schemes?
Then yeah, it’s nice to have a service available that you don’t need to trust.
“So are we saying ‘we don’t need to trust the service’ because anything hosted on a blockchain is totally secure and unhackable?”
…okay, quick sidebar here: you don’t need to have a blockchain in order to say you have a blockchain. OneCoin raked in billions of dollars from people who thought they were buying a hot new cryptocurrency. They were…not. (Have a charming podcast episode about it.)
But for now, let’s go with the premise that you’ve gotten involved with a real blockchain.
Here are the security problems you haven’t escaped:
First: blockchains still have the one huge, unfixable vulnerability of every single system:
I don’t need to be a high-tech hacker to steal your Bitcoin. I don’t need accomplish the physically-impossible feat of “corrupting the chain with invalid blocks.” All I need to do is talk you into giving up your password.
(Podcast interview with a professional no-tech people-hacker, if you want some entertaining case studies. Transcript included.)
Then I log onto your account, change the password, and do whatever the heck I want with your Bitcoin directly! Creating totally-valid blocks the whole time.
A few of the greatest hits:
- The accounts of a Taiwan antiques dealer were hacked in September 2021, and the hacker made off with the cryptocurrency equivalent of US$3.1 million
- The main account of the Tether stablecoin was hacked in November 2017, and the hacker walked off with more than US$30 million
- Cryptocurrency exchange BitMart admitted to being hacked on December 4, 2021. From the users’ collective accounts, somebody grabbed the crypto equivalent of almost US$200 million
Look, hacking happens. My credit card details got stolen a few years ago. The thieves spent a few weeks using it to order takeout and buy Uber rides — not because they didn’t want to clean me out completely, but because Visa would’ve flagged it as suspicious if they tried.
Eventually they got flagged anyway (for a too-large takeout order). Visa called me to go over my recent charges, I ID’d all the fraudulent transactions, and got all my money back.
This works because Visa is a centralized company. They’re accountable for protecting users from theft like this. It’s in the TOS of their products.
If your Bitcoin gets stolen…nobody is accountable. There’s no central authority. Nobody has the power to reverse the charges and force the Bitcoin back into your account.
Not all cryptocurrencies are actually that decentralized. Tether, from that link above, is administrated by a single company. Back in 2017, the company was able to push an update to their code that threw a wrench in the $30-million hack.
But the $200-million theft from last week? (Across a whole bunch of currencies — as far as I can tell, about half was in Ethereum, about half was across this spread of lesser-known tokens.)
Yeah, that seems to be irrevocably gone. (video link)
Second: anti-scam regulations have not caught up with cryptocurrencies.
Look, I’m not going to sit here and tell you that every government is fiscally responsible, or every regulation is fair, or every law is made with the public good in mind.
But there are some actions that are definitely fraud. Points where the government should be stepping in, to protect the little guy from getting screwed over. And when you’re talking about traditional financial instruments — stocks, bonds, loans, mortgages, bank accounts — the law covers a lot of them.
With crypto? People can do things that would be 100% illegal with any other currency, and then skate away with millions, never getting arrested for fraud.
- Save The Kids Token: promoted as having special code that would prevent huge sell-offs from tanking the price, changed the code at the last minute, huge sell-offs immediately tanked the price
- Squid Token: hyped as skyrocketing in value, but the code didn’t let anyone sell it at all, meaning nobody could withdraw any of that “value” to actually use it anywhere
- OpenSea: promoted as a reputable NFT exchange, one of the staff was happily arranging it so the promoted “hottest NFTs worth spending the most money on” were the ones he owned
- Quadriga: promoted as a reputable Bitcoin exchange, the founder had a long history of scams, a ton of money was left inaccessible when he died under mysterious circumstances
- The “$500 million NFT sale”: shows up on look-how-much-people-pay-for-these lists, turned out to be between two wallets owned by the same guy
- Bitconnect: promoted as a cryptocurrency investment that gave great returns, was a regular old-fashioned Ponzi scheme the whole time
- Defi100: promoted as a crypto investment something something, anonymous developer walked away with $32 million leaving nothing but the all-caps announcement “WE SCAMMED YOU”
…have I mentioned I like rubbernecking crypto drama?
Third: a blockchain only guarantees the validity of the data on the blockchain.
Imagine for a moment that you own a restaurant. A nice one — clean, fresh, good food, no pests. You even keep a framed certificate from the Department of Health on the wall, testifying that you have no health code violations.
You go to the restaurant across the street and say “how much would you give me for this certificate?”
And you agree on a price, and you give the owner the piece of paper (they can even keep the frame), and they hang it up in their restaurant. Which is grubby and dusty and half the food is expired and there are critters living in the cupboards.
They have the certificate! They made a valid purchase, real money was exchanged, they are the legitimate owners of the certificate!
But the value is not in the certificate. The value is in things like “your chefs all wear gloves” and “you don’t put expired milk in your pizza dough.”
…which means, since you’re not selling the valuable thing in the first place, you might as well skip the Department of Health certification completely. Just print some certificates at home, based on no authentication whatsoever, and try to convince restaurant owners to buy those.
A guy in the late 19th century famously did this — hundreds of times! — with “deeds of ownership to the Brooklyn Bridge.” Which is where we get the phrase “if you believe that, I’ve got a bridge to sell you.”
When people talk about Great Potential Uses For Blockchains, a lot of them are like this.
They’ll say “what if this warehouse turned their inventory into blockchain records? Then, to confirm you shipped a couch from one warehouse to the next, you can transfer the Couch Token on the blockchain from Warehouse 1 to Warehouse 2!”
Yep. Good job. The blockchain can prove that you definitely, legitimately, with immutable security, transferred the Couch Token.
This does not prove a single thing about where the couch is.
Maybe you really did ship it to Warehouse 2. Maybe you left it in Warehouse 1. Maybe you put it on a truck bound for Warehouse 86! Maybe you dragged it home and set it up in your living room.
The blockchain has no idea what you did with the the Actual Source Of Value in this scenario. All it knows is what you did with the token.
“Okay, so…what if there’s nothing physical involved? What if you’re just trading digital goods? Wouldn’t a blockchain be secure for that?”
If the digital goods are tokens: yes.
If the digital goods are literally anything else and they’re only represented by the tokens: no.
“Is this where we get to talk about NFTs?”
“NFT” stands for “non-fungible token.” People have posted all kinds of wild metaphors and analogies trying to explain them, which tend to accurately convey how absurd they are…but don’t clear up much about what they are.
I took a shot at a more straightforward explanation here.
So it’s a cryptocurrency token, where the ID of the token contains a link to a URL, where some file or data is uploaded. This token isn’t “fungible” (interchangeable with other tokens of the same currency) because no other token in that currency will have the ID with the link to that specific URL.
The token is, therefore, supposed to represent whatever file is uploaded at the matching URL.
So it’s Couch Token all over again, but with a JPG of a couch.
The file isn’t on the blockchain. The file, the JPG or whatever else, is uploaded to a good old-fashioned Web 1.0 URL.
You don’t own the only copy of the file. You don’t have any special legal rights to the file. The site doesn’t have any security that queries the blockchain and blocks you from accessing the file unless you have the token. It doesn’t have any confirmation that the person who created the token had any rights to the file when they uploaded it.
There’s no limit to how many times the same file can be uploaded to different URLs, which can each be attached to a different token. No limit to how many times the same URL can be attached to new tokens in different cryptocurrencies.
You don’t own the server where the file is hosted. You have no guarantee the URL will keep linking to the same file! Maybe the creator will replace it with a different file (this artist, in a stroke of genius, replaced all their artwork — after the tokens had been sold! — with photos of rugs). Maybe the whole site will go down, and the URL will be a 404 error from then on.
But hey, you still own the token.
By the way, if you want to support my digital art, directly, without paying any gas fees? Go check out Nice Fun Tokens in my Gumroad store, from either BICP or Leif & Thorn.
These convey exactly as much ownership, rights, and control over the image as the blockchain tokens do. That is, none. All you get is a unique spot on a Google spreadsheet. But it’s a unique spot on a spreadsheet. What more could you want?
There’s no cryptocurrency involved, so there’s no cryptographic guarantee that Gumroad will take real dollars from you and send real dollars to me. But I’m willing to take the risk.
(Apparently the original concept for NFTs was “let’s try to encode the actual data of a file directly into a blockchain record.” But, well, records are short and files are large. The creators hacked together a substitute with nice short URLs just to see if something worked, and they’re baffled that anyone takes it so seriously.)
…In all seriousness, it’s not exactly a surprise that most “art” found in the NFT space has turned out to be hacky, ugly, mass-produced dollmaker sprites.
Artists, and/or people who buy art because they care about it, realize the value is in the creative talent and work that went into the image. In the interest and joy you get out of looking at the image. None of that is increased by “also, I have a token whose ID has a link to a URL where the image was at one point uploaded.”
The people left to trade in NFTs are the people who can be convinced “the value is in the token itself, none of that other stuff matters.”
Got to buy that collectible Couch Token! Is the couch any good for actually, you know, sitting on? Who cares. It’s not about the couch.
Got to buy that Brooklyn Bridge Token. Not even because anyone said “this gives you the power to set up a toll booth at the real Brooklyn Bridge and make lots of money off drivers.” No, they just said “this gives you the power to re-sell the token.”
“Okay, so NFTs don’t query the blockchain to give you access. But what if you had a site that did? Or, ooh, multiple sites that queried the blockchain — and you used that to securely transfer data/permissions between them! That would make websites more interoperable, right?”
The last person who asked me this, their suggested use case was:
“What if one of your Kickstarter reward tiers included a token, and then Discord queried the blockchain to confirm who had that token, and those users got exclusive Discord access?”
What if I told you…you don’t need a blockchain to do that?
Right now, here, on regular old Web 2.0, your Patreon account will connect directly with your Discord account. If you’re in a Patreon support tier that includes Discord access, Patreon will send that information to Discord, and Discord will give you the access. Simple. Easy. Done.
If Kickstarter wanted to let your backers’ accounts link to Discord — they could already do it.
If they wanted to link to Gumroad and Redbubble and itch.io so you could give your backers direct access to tier-specific coupons, they could. If they wanted to launch a Wordpress integration that let me post Kickstarter-backer-exclusive content on my own independent website, they could!
It doesn’t get easier if you put a blockchain in the middle. It doesn’t suddenly require less coding, or less negotiation, or less discussion and agreement between the various sites involved.
It also doesn’t get faster. Or more secure! There’s not actually a problem with fraudulent data getting passed between Patreon and Discord, here.
(And think about it. What kind of problem would they have that a blockchain could solve? If Patreon is sending couch invoices to Discord without shipping a couch, adding a blockchain just means now they’re sending CouchTokens to Discord. It still doesn’t force them to ship the couch.)
Decentralized, interoperable, open-source, multi-website standards already exist. OpenID, which gives you a single account sign-in that works across every participating website, has been around for more than 15 years.
The tech is already here.
The limiting factor is people.
The reason this isn’t already on every website is that the people who run these websites, as a group, cannot get together and say “yes, here’s a universal standard that all of us like and will agree to use.”
People, do you realize — there isn’t even one standardized version of Bitcoin that’s interoperable with all the other forks of Bitcoin.
If one single solitary blockchain currency can’t agree on its own standard — how do you think blockchain will miraculously produce a perfect universal standard for every website/app/game/platform in the world?
“…is this a bad time to ask what the Metaverse is?”
Nah, this is the perfect time.
“The metaverse” is a term from the 1992 cyberpunk novel Snow Crash, by Neal Stephenson. In the book, it was an immersive VR setting that you explored by wearing a VR headset. Also, it was accessed through your television network, because in the early ’90s even sci-fi writers hadn’t guessed what the internet would really be like.
It was the direct inspiration for Active Worlds, an online virtual world launched in 1995 and still accessible today. (Creepily abandoned, but you can log in and walk around.) In the decades since then, countless other video games and/or sci-fi series have used the same idea. You can probably think of a dozen just off the top of your head.
The way “the metaverse” is being used in gaming spaces in the 2020s, it seems to mean something like this:
Phase 1: ALL the video games — and website and apps and so on, but it seems like it’s mostly video games — link together with a perfect universal standard, involving blockchains and NFTs somehow probably
Phase 2: ????
Phase 3: we all live in Ready Player One now
(Substitute the Matrix, or the Futurama internet, or Sword Art Online, or…)
Last place I encountered the phrase was this deep-dive series into “Earth 2” (video playlist, unfortunately it’s in reverse chrono order, so it won’t make sense if you just let it autoplay).
Some sellers created an Earth-shaped digital setting, and convinced their customers it was destined to be the foundation of The Metaverse. So if you signed up and bought, let’s say, the Earth 2 Brooklyn Bridge, you’d be able to set up cryptocurrency tollbooths for everyone who wanted to cross the metaverse Brooklyn Bridge.
Note that, as of right now, you can’t build tollbooths on your Earth 2 property. Other people can’t drop in their avatars to walk around, either. It’s not an environment with actual gameplay, where you can build stuff or fight stuff or interact with the environment — it’s not Minecraft or Warcraft or Animal Crossing — it hasn’t even reached the level that Active Worlds was offering 30 years ago.
So….when are those features going to be added? When is Earth 2 going to be integrated with other sites and games and settings? Frankly, why should we believe these developers have the skill or interest to code any of that in the first place?
And if they did ever pull it off — why would users want to pay to interact with your Brooklyn Bridge, instead of making a proprietary VR setting they control, complete with their very own Brooklyn Bridge?
…I’m pretty sure anyone saying “the metaverse!”, for any project, doesn’t want you asking those questions. They want you to be dazzled by how shiny and cool the idea of The Metaverse is, not looking at the boring nitty-gritty details of whether any given shiny thing is, you know…possible.
Have an Actual Game Developer’s lengthy soul-nourishing vent about the technical, legal, and economic issues.
The medium isn’t one I work in, but the principle of “this creative work took a lot of talent and effort to put together, and you’ve got to stop taking that for granted, you need to appreciate or understand what’s actually functional and/or joyful about this” is universal.
“Okay, let’s bring this back to Kickstarter. Are blockchains being used in crowdfunding at all? Are they any good for it?”
Ohhhh, have I got a story to tell you.
In November 2021, a group called ConstitutionDAO did a blockchain-based crowdfunding project, raising cryptocurrency (specifically, Ethereum) to buy a copy of the US Constitution. Not a token or a link, this time — a real, physical object! The crypto was just the currency they would buy it with.
Not sure where was it going to go, once the crowd collectively owned it. On the wall of the organizer’s restaurant? In a museum, with a plaque saying “generously loaned for display by the blockchain”? Passed around to each person’s house for a week like the Stanley Cup?
Well, the question didn’t come up, because they didn’t make their goal.
Unlike with Kickstarter, the setup wasn’t “first we collect pledges, and if we have enough pledged money by our stated deadline, then we start charging everyone’s accounts.” You just sent the Ethereum directly to the central wallet, and hoped the organizers didn’t just cash out and run off to Bermuda.
Fortunately, it looks like they did not cash out and run to Bermuda! They are sending refunds. Or doing their best to. This was a legitimate crowdfunding operation.
“All the contributions were made over Ethereum, and Ethereum requires fees — often steep ones — to transmit currency (along with performing many other tasks). That was already a hurdle when it came to raising funds to buy the Constitution. These fees, known as gas, don’t meaningfully shrink when someone is sending a small amount of Ether, so small-dollar donors often had to pay large sums just to send their contribution in the first place, according to Alex Kroeger, an engineer in the crypto space. To send around $170 worth of Ether to the project, he had to spend around $50 in fees.”
Read those numbers again.
That’s non-scam blockchain crowdfunding.
Payment processing fees are a thing everywhere, but in most cases, they’re proportional. On Kickstarter, between “Kickstarter itself taking a cut to host the project” and “Paypal/Stripe/etc taking a cut to transfer the money,” the easy rule is to expect 10% of your funding to get eaten by initial fees.
On my last Kickstarter (for Leif & Thorn Volume 4), I raised $4598, and the amount transferred to my bank was $4211. That means about $387 went to fees. Not bad.
Now imagine if every pledge cost $50 in gas fees to transfer.
I had 100 backers. That’s $5,000. If the gas fees are coming out of the funding, now I have no funding.
If the gas fees are added to the pledges, that means someone who pledged $5 to get a PDF, now they’re charged $55.
This is horrible for the backer. It’s horrible for the planet. It’s horrible for me, because I still get less than $5 in the end, and now I get fewer people who are willing to back in the first place.
I mean, come on, I have plenty of readers outside the US who don’t back on Kickstarter because they can’t afford extra $50 for international shipping. And that “gas fee” powers a real airplane, to carry a physical box, over the real ocean! Even the ones who can afford an extra $50, if it’s all going to Digital Currency Transfer fees — who’s going to think that’s a fair deal?
The dollars Kickstarter transfers to your bank are real, valid dollars. There are plenty of risk factors and untrustworthy parties involved in crowdfunding, but blockchains will not solve any of that, because “what if the digital balance that ends up in your bank is fake?” is not the problem.
Here’s another case that someone tried to tell me would be a great use of blockchain:
Right now, if your Kickstarter backers like your project, they can give you a smiley-face rating. I have a “Backer Favorite” badge on my Kickstarter profile from collecting a bunch of those. (Not to brag, or anything.)
What if you turned those into Smiley Tokens?
Now, instead of clicking a free smiley-face button, the backer has to mine or purchase a Smiley Token for their blockchain wallet. And then pay the gas fees to transfer it into my blockchain wallet. And then I can convert my Smiley Tokens into value somewhere else — say, I cash out, sell them for USD — and now some other Kickstarter creator, who maybe hasn’t done anything to earn smiley-face ratings from their backers, gets to hang my Health Code certificate on the wall of their dirty restaurant.
…I mean, uh, put a Backer Favorite badge on their Kickstarter account, with all my Smiley Tokens they just bought.
“Okay, uh. Is Kickstarter actually proposing to do that? Or…to deal in NFTs? Or accept cryptocurrency? Or make their own cryptocurrency? What exactly is this blockchain-related thing Kickstarter says they’re getting into?”
It’s not totally clear.
Their announcement post is a lot of buzzwords.
Creators should “have more robust tools to assess the trustworthiness and viability of a project,” they declare, even though blockchains do nothing to guarantee whether a project is trustworthy or viable. (Evolved Apes, Meerkat Finance, Zeonis, NiftyMoji, Wall Street Market, Compounder Finance, Iconics, etc etc etc…)
It should be “possible for people to launch and fund creative projects anywhere, whether it’s on Kickstarter.com or someplace else on the web,” they say, even though it already is! Before Kickstarter, every crowdfunding project was decentralized. Webcomic creators would take their own independent website, put up a Paypal donation button, make a little thermometer graphic that they manually updated as it got closer to the goal, and shill like crazy.
This wasn’t great. Creators who used to do that have switched over to Kickstarter. I’ve never heard of a single person who went back.
Kickstarter works because it’s a centralized authority. It reviews projects before they go live. Can charge a creator’s card for refunds. It’s far from perfect or scam-proof, but it’s put in the time and effort to build up a base level of trustworthiness, and that’s a huge part of why backers are willing to use it.
“Protocols like [SMTP or HTTP] make up the unseen infrastructure of the internet. Imagine that, but for crowdfunding creative projects,” they say.
They’re talking about the Internet protocol set (TCP/IP). The other one I’ve used the most is FTP. If your website URL starts with https://, you’re using a combination of HTTP (the communication protocol for websites) over TLS (the protocol that encrypts it for extra security).
Kickstarter runs on HTTPS. Every crowdfunding site from Patreon to IndieGoGo to Unbound to DonorsChoose runs on HTTPS. (Every website you visit today, have a look and count how many aren’t using HTTPS.)
All of them are, as far as I know, doing just fine. And no wonder. HTTPS has been built up over more than 3 decades, through the time, effort, experience, and knowledge of the brightest luminaries in Internet development.
And one single company thinks in a year they’re going to whip up a personal homebrew protocol that does better?
Not only that, so much better that it’s worth ripping up their entire site and moving it? (Keep in mind, sites can easily crash and need major support just from upgrading their software to a newer version of the same software.)
None of the vague positive things brought up in the post are things that “having a blockchain” would improve.
They say they’re making it “available for collaborators, competitors, and independent contributors from all over the world to build upon, connect to, or use.” Why wait for a blockchain to do that? Kickstarter could, today, release their current code as a free/open-source web application, so anyone could install their own version.
This isn’t new. This is a staple of Web 2.0. My webcomic runs on a local installation of Wordpress. I use my own installation of Piwigo for image galleries, and my own installation of DokuWiki for a wiki. You could do your own installation of Livejournal, ffs.
Would I run my own installation of the Kickstarter code for crowdfunding?…Probably not. Again, a big part of their success isn’t the code at all, it’s the central authority and accountability of Kickstarter-the-company.
But if the company really has this principle, and it’s not just some pretty words they’re throwing around as a smokescreen for what they’re really doing with blockchain?
They can prove it. Live up to their principles. Throw the Kickstarter code on GitHub. Right now.
There’s a theory going around Twitter that maybe Kickstarter’s real goal is to circumvent some new EU regulation, by having a blockchain anonymizing where their traffic comes from, in a way HTTPS doesn’t?
Not sure if that’s true. For one thing, the regulation is supposed to apply to “crowdfunding services entailing a financial return for the investors,” such as stocks, bonds, and loans. You can’t do that on Kickstarter at all — their TOS ban you from offering financial instruments in your rewards. Backers can pledge to get a board game, they can’t pledge to get a share of your board-game company.
All I feel sure of at this point is: there’s something shady going on here that they’re not being upfront about.
And I don’t like it.
A constant refrain from crypto fans is “why don’t you actually do your research, before getting mad and dismissing this?”
The trick is — they say that no matter how much research you’ve done already. No matter how many specific, concrete, serious problems you can describe as the reason for your dismissal. No matter if you’re a technical expert who’s been working in this field for years.
They start with the conclusion “there is definitely something worthwhile here” and work backwards to “therefore, if you don’t see it, you haven’t looked enough.”
It also doesn’t require them to have any counter-evidence to say “but what if we did, tho?” ad infinitum. Any snake-oil salesman can do the same thing.
(How do you know this won’t work? Sure, the last thirty bottles I sold didn’t cure anyone, but maybe there’s a condition out there it will cure. Don’t be the sheep who takes marching orders from a “doctor” with a “pre-existing treatment” that’s “more effective” based on “multiple clinical trials”! Be the open-minded person who’s willing to keep exploring the alternatives that just happen to turn a massive profit for me. Also, stop worrying about the environmental cost, I only kill a few endangered snakes per bottle…)
A bunch of publishers — both independent creators, and heavy-hitter collectives like Hiveworks — have already announced they won’t work with Kickstarter any more, if this mysterious blockchain-protocol-integration goes through.
Are they justified? Yes. Absolutely. They’re familiar with all the same problems I’ve spent the past 6,000+ words writing about. That’s more than enough to legitimately drive anyone off. Backers and publishers alike.
For me — I don’t know. I’m not committing yet. Not out of any real expectation Kickstarter will reveal some miraculous new information that redeems everything…I’m just still willing to hold out hope, I guess.
But it sure isn’t looking good.
(Unless you’re a well-programmed but currently-low-traffic Kickstarter competitor, in which case, your prospects are looking great.)
Maybe, as the situation changes, I’ll come back and update this post with new details and reactions? Maybe I’ll just make new posts.
Guess we’ll find out.
Not to encourage you to spend more time on this bull, but I do love reading your crypto/NFT takes. They’r… https://t.co/uqKr1J9kMq
Hmmm… i could do research and spend days to get a confusing answer instead i contacted a friend of mine that did start selling NFTs because he has no job anymore and needed funding. (he was one of those art teachers laid off during the pandemic)
I bought 1 NFT from him via for 0.0666Ξ (hey, if you have to sell your soul to the devil, might as well make it a joke, obviously what i bought were 2 cyber demons 😂 i love them, if nothing just because of the whole silliness of it) and one i paid for via normal paypal money and so the transaction appears as 0.0000Ξ to be sure he got the maximum profit he could get i bought the ethereum directly from him. So instead of converting ethereum to real money that you can spend for groceries via other means he converted it to real money via me and then got part of it back.
So he got the pay for the initial ethereum, then the ethereum i used to pay him, then the other money i paid his art with.
What did i learn? Preeetty much what you said. In 5 transactions. Because i’m the kind of Thomas that has to put the finger in the wound.
You can see them here, they are the same files i downloaded and that the artist produced and sold to me. So you get to have the full size art that i bought. Along with full records of the entire transactions.
How does that differ from normal “i buy this art from you” deal? Well… it’s essentially like going to a notary to get a certificate that you bought art from a person… regardless of how inexpensive the art is. In this case we are talking about a person selling art for about 300$ (the 0.0666Ξ i talked about before)
I sent him 1 initial transaction of 400$ then 2 transactions of 100$ because i am an idiot and did not load the various prepaid cards i use online properly) he also did get back the 0.0666Ξ of transaction 1 because that is how it works. the total real world money exchange was therefore 600$ plus whatever he gets back from the NFT contract after it jumps hoops to get in his wallet instead of being in the NFT contract wallet (no, the NFT contract wallet cannot be your wallet. It has to be a contract.). So… yeah. Instead of getting 0.1332Ξ from selling 2 NFTs he got 600$ and part of his money back.
How much expensive was all of this? Oh, boy. Well… you can actually read all of it online, because… well… the *only* one good thing i see about all of this is the openness of the system.
the transaction went as follows.
1) I bought ethereum from him:
AT THE TIME it cost him 9.68$ to send it to me OF WHICH 8.71$ were “burned” because ethereum is deflationary so there is always a bit less in the system with each transaction.
so while i paid 400$ to him he actually sent me about 401.44$ worth of crypto currency because that is how it works. (you can click on the prices to switch between the price at the time and the price today)
the 9.68 price is what was paid *to some random stranger somewhere* that bought time on a virtual server to check out our transaction.
I compared it to a notary. A notary won’t even look at you without you plastering them with random amounts of money. But this was the least costing of the 5 transactions that happened here to buy these 2 NFTs.
so now we go to transaction #2.
2) i bought the first NFT *from the contract* holding the NFTs which he created
As far as contracts go this is about as solid as buying any art from any marketplace. If the marketplace has the art and you can buy it you get it. Period. Everything else i already said still stands.
Here i spent 69.28$$ for the transaction, of which 60.51 were burned by the deflation. Having bought at a bad time of the day it costed 8 times what the other person spent to send money to me. 😅 So yes. You also have to account for that. I litterally spent 10 hours waiting to buy the thing then i said “$%^&^%$ IT!” and bought it because i was tired of waiting for a better price to get the NFT.
Onto transaction #3
3) the dude took one of the NFTs *from the contract* so he could assign it to me.
He actually did a “bulk buy” there so he could give some to his friends too. Which does not exist (obviously). So he paid for every single transaction, but it still counts as a single transaction “holding” the 20 transactions.
He literally spent an ungodly amount of money to get the NFTs he wanted to give to his friends and family because he cannot just take the NFTs. Of course he can take the money he transferred to the NFT contract back later but all these “20 transactions as one” just cost him the equivalent of 759.50$ OF WHICH 718.75$ which have just been burned by the deflation.
Onto transaction #4
4) he… uh… hosted the NFT so he could set the price to 0 and send it to me.
This costed 24.40, of which 22.05 were burned by deflation. machines give you no discount even to set your price to 0. 😅
Final transaction #5
5) he sent the (now 0 value) NFT to me.
this costed 26.97$ of which 24.37$ were burnt by deflation.
So. What did i learn? I honestly want to put the ending of “burn after reading” here because between all this talk of literally burning money and the general feeling of “yeah i have no clue but i should probably not do this again” knowing full well that i fully intend to buy at least 1 custom art from that ex-art teacher friend of mine via this system to see how it goes so of course i will do it again (i expect exactly 0 differences, but i kinda *need* to know because i am the kind of person that after touching the hot stove needs to touch it again to see how the numbness of the finger affects the sensation).
You said it is an arcane system that burns money and destroys the environment, but… you said what you buy has no value. Compared to most of the art i buy online it has about the same value, if an artist sends me stuff 90% of the times they even delete it right after they sent it to me, if i want them to send it to me again in some cases the artist themselves did not have it anymore. Why? They needed space or their hard drive broke or other stuff. This is pretty much the same, but at least i know somebody is holding onto it that has better and more archival space than a random artist.
So i do not see this as particularly worse or better than any “custom” art i buy online. Of course i don’t normally pat 600$ for randomly generated art. But… uh… see above to why i was doing it and why the dude needs the money. Is it also “eyebleeding”? Yes. That’s pretty much *the point*. At least the dude is very honest.
For the price i paid for those 2 NFTs (600$) i have bought in the past this kind of stuff https://www.furaffinity.net/view/42117632/ which was custom made to my request.
But… uh… yeah. Only i can certify i sent that money to any artist because nobody can watch my transactions on paypal, so you will have to take my word for it, while for NFTs it *has* to be open, you will not have to take my word when i say “i paid this and that”.
So… now that we have talked about what is expected and what is not expected, how it works and everything else… what is the downside? Well… the downside is (as i said) that you normally do not pay for the equivalent of a notary stamp on your every transaction. Not only that you don’t lit a cigar with a bunch of 10$ bill after the transaction like some evil overlord with money to burn.
By the way… if anybody wanted to know what “mining” is… it’s literally the difference between the money paid and the money burned. Those 2$ to 5$ transaction fees are what people get paid to confirm the transaction and are therefore “mined” to their accounts. A normal server to decrypt and confirm a transaction uses 510W and the transactions need about 5 to 15 second to happen, so make that single transaction i wasted about 1.50 watt per hour on average per transaction, you can check how much that costs in your bill but if it’s anything like italian prices we are talking about 0.75$ worth of electricity. Per transaction.
Which is why so many people are into cryptocurrency. All you need to do is count somebody else’s money and you have a net profit of 1.25 to 4.25$ every 10 second.
If you don’t see me talking about the environmental costs of all this… uh… transacting on paypal does not exactly cost much less to the environment, the hours of work spent on the art did not cost any less on the environment and the work i did to get that money… well. I work with photovoltaic plants so maybe that *did* save a tiny bit of the environment.
What i *do not like* is that those servers are not getting used for something more useful that “making money by counting money” because we already have enough systems that do that making more for more currencies is just silly.
People say “the blockchain could be used to cure cancer, instead it gets used for NFTs” what they actually mean is that if you pay with cryptocurrency all of it has to be open and visible to everybody because it cannot work any other way, as in: “if you use the blockchain it has to work like this” so all those researchers who have to put their stuff behind a paywall could be paid in bitcoin and therefore they could put their stuff visible to anyone. I guess… that is one way of seeing it?
In general: is the cryptocurrency bad? Yes. Does it waste electricity that could be used in other ways? Not particularly more so than all the other alternatives. does it destroy the environment more than all the alternatives? Not really? I’d say no. Will it become the norm? Anything can happen, but for now this is a rich man’s toy that is robbing server time that could be used for more useful stuff. Those servers would have been there and destroyed the environment anyway, but right now they are being used for this and i honestly do not like it.
Thank you for sharing all the detailed numbers!
Stop sending your friend cryptocurrency.
Of course the art is valuable. I agree the art is valuable. What’s not valuable is “a token with a link to a URL where a JPG of the art was once uploaded.”
You said “i know somebody is holding onto [the file] that has better and more archival space than a random artist” — no, you don’t know that!
Whatever server is hosting the JPGs, there is no guarantee it’ll stay up. You were not promised that as part of the transaction. The whole thing could disappear tomorrow.
So stop burning extra money on tokens that include links to URLs. If you want to buy art, just buy the art.
If you think your friend deserves money, I’m all for it. If you think they deserve eye-bleeding amounts of it, I have no objections! More artists should be sent eye-bleeding amounts of money.
There’s nothing stopping you from sending that in dollars. (Or euros, or whatever else is in a person’s bank account.)
You said “transacting on paypal does not exactly cost much less to the environment” — uh, yes, yes it does. Remember “The carbon footprint of each Ethereum transaction is equivalent to 86,504 VISA transactions.”
I don’t have exact numbers for PayPal or Venmo, but they’re on the same general scale as credit cards. If you insist on dealing in crypto instead of just sending your friend dollars, the transaction is doing 86,503% more damage to the environment.
Scroll back up and re-read the article about the defunct power plant that got re-activated to power Bitcoin. It was not just “already there destroying the environment anyway.” It was down! The environmental damage had stopped! It got reactivated, specifically, for cryptocurrency.
You say “nobody can watch my transactions on paypal, so you will have to take my word for it” — the artist who received the payment won’t have to take your word for it. They’ll know if they got a payment or not.
Who else’s opinion matters, here? The artist is the one you’re buying from.
You say “all those researchers who have to put their stuff behind a paywall could be paid in bitcoin and therefore they could put their stuff visible to anyone” — this is a weird tangent, and I don’t know where the idea comes from.
If researchers were paid in Bitcoin, only the Bitcoin transactions would have to be visible on the blockchain. Their research could stay exactly as paywalled as it was before.
I’m confused here- you just admitted it was a bad deal but instead of going for a simpler and more efficient exchange you’re going to do it again? It seems like you sent proofs of purchase back and forth and around and around instead of simply giving over the money, and paying exorbitant fees for the frustration. Having it be “more secure” doesn’t seem to have any tangible benefit. Which is the same for the Kickstarter thing. PayPal is already pretty secure.
Making the art itself definitely uses less energy. You pointed that out yourself when pointing out the fees- that’s where a good chunk of the money disappears. A tablet or computer on an art program is nothing compared to these calculations. Sending a PayPal transaction does not require as much processing power, and that is what costs energy. There is absolutely no way that is the same amount of energy. An art program does not make your computer work as hard as it can unless it’s very old in which case it’s nowhere as near as powerful as an NFT server. If you’ve ever seen those Minecraft videos where they strain their computers to the limit it’s more like that level, which is much more extreme. And they go 24 hours a day.
My friend is currently into that. And is not taking commissions the old way. I like his style and if i want to support him i will have to do that again.
That is the only reason.
To be fair i think it’s silly.
You don’t have to, though.
You can tell him “This racket is costing you more money than you make, and sending an unreasonable cut to a power plant along the way, and I’m not going to enable that. I like your art and I want to support you! But only if I get to send you money directly, no blockchain in the middle. That’s the deal.”
This is the same advice given to people whose friends have gotten sucked into an MLM. If they’re going into debt buying leggings/vitamins/jewelry/etc that they can’t re-sell, don’t let them sell to you, that’ll only encourage them to keep putting their hopes in the pyramid scheme. Which means they’ll lose more money in the long run. Offer to help them out in any other way! But not by supporting the scheme.
To be fair we discussed it at length unfortunately i found him after he had disappeared for nearly a year so. He is really invested a lot into this.
I literally told him that this looks like setting up an online site with all the hurdles and costs one went through in the 1990s except this is 2021.
I can only do so much.
First, thanks for the article. It really seems you did some research.
Regarding the currency: Yes, crypto-based currency is useful in case you can’t trust governments. There are LOT of people who can’t trust governments. Just look at China. Also, if you are banned. You cleverly hide sexual services in middle of various “evil” stuff, but don’t worry: it’s just question of time before some overzealous self-proclaimed protector of moral will look at your “Leif and Thorn After Dark” and bans YOU. There are plenty of people who did nothing evil and are already in problems because they were banned.
Regarding the Proof of Stake: Yes, converting existing currency to it is harder than creating new one.
Regarding Kickstarter: The difference between your snake oil salesman example and Kickstarter is that the technology won’t make Kickstarter sneaky by itself. If you trust them to manipulate with fiat money for you, why don’t you trust them they can do the crypto correctly?
Sure, their article is just marketspeak and I don’t know what they could use blockchain for to make it worth it either … but they deserve the chance to tell us more. Unless it’s Celo you don’t trust.
(I still wonder if they didn’t started working on it because Visa or other card companies decided to limit them somehow and forbid them to explain it publicly.)
PS: Meanwhile, Cryptoart – and possibly whole NTF – are so stupid idea I’m surprised it actually exists.
Most of this comment consists of you trying to pick weird fights over points where I already agree with you.
I’m aware that there are people who can’t trust their governments. That’s why I explained that as an actual, non-hype benefit of cryptocurrency. Not sure why you’re repeating that to me as if I need my own point explained.
I didn’t get into the details of sex work legality, because that deserves a whole extended discussion of its own, and this post was long enough. But yes, there’s a community — whose rights I respect and support — of non-evil people who do Actual Sex Work. That is, not “drawing sexy pictures”, but work that has gotten them banned from traditional fundraising channels. The people who all got kicked off Patreon, whose big refuge for now is OnlyFans, and who were recently threatened with being kicked off there as well.
And yet! In spite of all this trouble and harassment they go through! You know what the non-evil sex-work community has not done? They haven’t all moved to cryptocurrency.
If it was actually a worthwhile tool for the people who provide that service, they would’ve figured it out by now.
Next: We both agree that “I don’t know what Kickstarter could use blockchain for to make it worth it.” So it makes no sense that you’re getting confrontational about whether I trust Kickstarter and/or Celo to use the tech “correctly”. It doesn’t matter whether the usage is “correct”, if it doesn’t do anything worthwhile either way.
And finally: nobody has claimed Kickstarter doesn’t “deserve the chance” to tell us more.
I would love for them to tell us more! I’m on the edge of my seat, waiting for them to tell us more.
Their total radio silence (as of this writing, anyway) is on their own heads. It’s not because they’re meekly waiting for my blessing.
I was going to write a whole essay tearing your critique of Erin’s view of the situation apart. Then I realized that it’s 1:30AM and I have work tomorrow. So I’ll have to do it in three words.
You’re a moron.
Have a nice day.
Look, I appreciate the spirit.
But a conversation that devolves into “you’re a moron” “no YOU’RE a moron” “actually it is YOU who is the–” doesn’t do any good for anyone.
Companies do that ALL the time though. And an EU regulation is unlikely to be taken back that fast, as would most government regulations in a well-run government. I don’t know that this specific regulation is why they are doing this but it’s not completely out of the question that they’re putting this in place before that. Plus they seemed to not have expected this backlash. Which is silly in my opinion but there it is. So they obviously would not be expecting to walk it back even if the regulation ends up not affecting them. There are supposedly (currently ill-explained) benefits for us, the consumer, so why would they?
The fact that Kickstarter was so vague in the first place does make me suspicious there’s something up. Using the Celo platform alone isn’t sneaky but we don’t have any evidence it is not for some darker reason. Also there is NO way they would limit Kickstarter only AND they wouldn’t be allowed to talk about it. It would have to affect other platforms, like IndieGoGo or GoFundMe.
And I think you made a very large assumption, having read this comic, that the sexual services part was meant to be a jab at sex workers. I understand it’s a touchy subject but you got awfully aggressively personal there and it’s not even the same thing.
Just want to clarify one thing for you Erin:
Mining serves dual purposes. On one hand mining is the process through which new coins are generated. On the other hand, mining is the process through which each current token is validated and each transaction is crosschecked affirmed.
The math problems being solved by bitcoin miners are theoretically necessary for bitcoin transactions to process and the number of currently in existence bitcoins is theoretically limited by the amount of processing power needed to perform a reasonable number of transactions per day.
So, if bitcoin got unprofitable and a whole bunch of people brought their mining rigs offline, the number of transactions that can occur per day drops, which would probably have negative effects on the market.
Frankly, each time a new country bans or restrictively regulates crypto I cheer.
I didn’t actually need this clarified 😉
And yes, I’m a fan of getting more bans/restrictions on crypto mining too.
As a side note, I’m not 100% convinced that Fuel Cells are as good for the environment as advertised. It’s a local form of power generation with roughly 85% efficiency if the waste heat is also used for heating the house, yes, but hydrogen based fuel cells depend on using electricity to split water into oxygen and hydrogen, thus lowering the ultimate efficiency, and natural gas fuel cells rely on fossil fuels.
Ultimately, I feel like first vastly improved insulation and solar protective shingles is my very best way to improve energy efficiency, followed by solar water heaters and home wind generation, which is probably my best bet to juice up the energy efficiency and eco-friendliness of my house on the electricity scale (I’ve already set up LED bulb everything. Not a single incandescent nor CFL. Also my LED bulbs have followed me through three moves and seven years and refuse to fucking die, so I love them), and grey water recycling is a good way to improve my water efficiency.
All of my LEDs are older than my marriage (4 years since my spouse and I got married), and 4 of them are older than my relationship (10 years since we met). (Each time I’ve moved it’s been to a place with more light fixtures)
While mining and verifying transactions are coupled, the amount of energy spent per Bitcoin block does not really correlate to the amount of transactions in that block. And (for Bitcoin) the difficulty is auto-adjusted so you’ll get a block roughly every 10 minutes no matter how many miners you have.
So with less miners active, the network could spend less energy on mining, but still verify the same number of transactions.
(I have no clue how that works for Ethereum and other block chains.)
The solution to the pollution here is just a world-wide CO2 tax, which makes it more expensive to run polluting power plants (for every purpose, not just cryptocurrencies).
In general i literally produce electricity in a clean way for the environment, so knowing stuff like power consumptions coverage and similar things is… literally my job. I also happen to be a programmer and electronic engineer and i literally showed you the calculations.
The site you cite makes a rather bold statement as the energy combined from all the cryptocurrency transactions in the world… uhm… literally consumes according to that 2.5 times the entire consumptions of all world-wide data centers and also all the company servers for hire.
Doing “mining” via a normal computer is doable, but nobody does that because the transaction fails as you need to do it in 15 seconds as that is the required time. I did not pull out the 500W randomly, that is the power consumption of an average server capable of doing the transaction in the 10 seconds i saw, but you can literally look up online that the average transaction takes around 7.5 seconds which is (probably) why the 15 seconds margin to do a transaction exists.
So i gave you why i reasoned like that… but those people telling me why they think the power consumption of crypto did not give me a single motivation on how they puller their number. Their low estimates are at around a bit more than 50 terawatt hours which is still the occupation of most of all the data centers in the world doing that thing alone.
So that is the reason why i am skeptic.
All the rest you said? 100% true.
I don’t know if a random artist is more careful with their data than a data center that just spends time doing nothing but holding onto the jpeg (a PNG in my case) the link points to. But since that stuff holds many cloud services that already store data i am pretty sure they are more careful than a random artist who deletes their very own art as that has happened to me in at least 4 occasions and i have seen several artists tell me in their ToS that they are not responsible to what happens to the art i bought once they sell it to me and i should not assume they keep a copy of it.
I don’t know if a visa transaction costs less for the environment, because (unlike cryptocurrency) there is nothing i can use plainly and openly to estimate that in any way.
I don’t think i will insist on spending more money on crypto for the plain reason that all the prices you said in your article above… while highly exaggerated from what i literally saw doing those 5 transactions above… are totally still there and are a ridiculous thing. I don’t see those 80+thousand transactions but i do see 5 transactions to do stuff i literally could have done with a single transaction.
I literally sent that artist 600$ to help him cover the costs of not having a job anymore and he had to spend 700$ to get 20 NFTs for his family and friends, And then he will have to spend more money to set the price of those NFTs he wants so give down to 0 and then he will have to spend more money to send them. If that is not the *very* definition of “ridiculous” i do not know what it is.
Switching between the current “proof of work” to the better “proof of stake” which just means people can run cryptocurrency on a potato computer, since you are literally doing just the equivalent of holding a ticket in line… could solve the problems of cryptocurrency… by removing crypto from the market.
The only reason why crypto is currently “hot” market wise (aside from the legitimate uses) is because of the mining itself and how lucrative it is, if for every 1$ of server time i buy i get 2 to 10$ of revenue, obviously anybody will do that, but the mining becomes unlucrative because you have to keep a server turned on doing nothing, and waiting in line… instead of buying server time just to do a quick transaction… well it becomes unlucrative as that is literally the definition of “wasting energy for little to no gain”.
I could just plug in fanless a 100$ computer with its power supply of 12.5 W and do the same transactions of a 500W server, and that is environmentally friendly. But then if the transactions get paid next to nothing because everybody knows you can do exactly that… and the crypto will fall. Because the money gain and margins have just become incredibly small.
In general i do not like crypto at all, from the mentality down to a lot of other stuff… but the environmental price i see is …well… far less than what i was told. And it’s literally my job to do these kind of things. And i’ve literally shown you how to check them.
It’s 80+ thousand times the electricity for each transaction, not 80+ thousand times the number of total transactions.
…You know, back when I was in high school chemistry, every student would get a set of equipment and some chemicals, and we would work out the numbers for how much energy the chemical reaction would produce. Use all the laws of nature we’d learned in class, plug in the information we knew about those specific chemicals, calculate the results.
Then we would put the chemicals together, and measure what the reaction did.
If the actual measurements didn’t fit the numbers we added up, that didn’t mean the measurement was being unreasonable or unrealistic. It meant we had left something out of our numbers.
I don’t know enough about power consumption and electrical engineering to be able to say “aha, here’s the exact thing you’re leaving out! And that’s why your calculated estimate for crypto power consumption doesn’t match any of the measurements from multiple independent sources (including the ones that are trying to argue for crypto being worth the cost).”
All I know is, they don’t match.
If you want to debate it, you’re gonna have to take your arguments to someplace like the Cambridge Center for Alternative Finance, don’t bring them to me!
Okay, i double checked where those numbers came from.
And now i can understand why those numbers are there and they are uh… actually rather decent numbers for what it is being counted.
What worries me is that the cambridge paper who set down the calculations… uh… never intended them to be used to compare one transaction to one transaction.
Let me explain.
The way things are calculated in the cambridge paper is “here are transactions, here are the users connected to those infrastructures, here is the infrastructure needed to allow the users to operate, here is everything that allows that infrastructure to operate.”
That is… uhm… yeah. That will give you a small nation indeed. I wanted to make sure they were not saying improbable stuff… but uh… that…
Yeah the best way i can compare this to is that XKCD comic you quoted. Somebody said “we have all these nations with all these currencies, why don’t we make a currency that interoperates with all of them? => now you have +1 currencies and +1 virtual nations”
What is comparing there is the carbon footprint of EVERYBODY involved in ALLOWING the crypto to exist. That is not to say that that is the carbon footprint of JUST the crypto to exist. Hmm… what is the best analogy? It’s like saying that you are a market that works in a nation. That nation is “data centers” you trade in “data centers currency” which is server time and maintenance and the paying of the pieces of the manufactoring of those pieces and the etc. etc. etc.
Normally we call those “taxes” except the “taxes” of the “data centers” are added on top of real world taxes.
Not only that, since the market *HAS TO BE OPEN* and stuff… it needs to be run in a very specific way and that way means that you have to upload your art online, set a price attach a contract to it and do a lot of steps that with the normal procedure of buying art are… “implied” at best since everybody agrees to those beforehand.
So it works backwards.
Now what is the “common person example” i can use? Well… Amazon. To sell a digital good on amazon, be it …whatever… and you will have to jump through hoops and loops before even landing on a page that lets you sell stuff and you will have invested quite a bit of money for the “privilege” to sell a digital good on amazon.
People buying the digital good will have to pay their nation’s taxes upon whichever price you set up.
You will get a cut taken out by amazon before it gets put on your amazon account and you can cash it later or you can set up periodic cashing of the money, where another cut will be taken out to get … whatever you are trying to get.
Now. Amazon is normally shown to have a carbon footprint that is 2/3 of that figure above… but that is because the carbon footprint calculated for amazon does not include ALL the stuff that is included in the cambridge paper
As amazon mainly works in shipping an deliveries of goods and well… just the shipping and delivery are normally accounted for in that figure instead of what is being done with the cryptocurrencies in general which is… all the infrastructure needed for them to operate and all the entire lives of everybody who sold a piece to repair a server or does maintenance on the servers or sold insurances to the people who work to maintenance the server or do bureaucratic stuff so that the server can operate, most of which uh… is shared with everything else who uses those same servers.
And no you buy time on a server, you do not buy the server, in 2021 we are back to how things were in the ’80s where most stuff “on the cloud” is done in time sharing.
So the 60 million metric tons of CO₂ normally shown for Amazon are about the equivalent of my thought experiment above where i checked the power consumption of the servers. That is “the barest minimum needed for them to operate”. Whereas, if we account for… uh… everything that is accounted in that 90 million metric tons of CO₂ i see in that cambridge paper… and apply it to amazon… we get… uh… okay i really do not wish to think about it if i am being honest because let us just say we are talking about something like 2 orders of magnitude above. 2 orders of magnitude. Not 2 times. Yeah i do not wish to think about it. We are talking about 6 gigatons or 1/6th of the entire world’s carbon footprint. And amazon “only” does about 4x the daily transaction of crypto at its worst.
But with amazon, just like with crypto it would be assumed all that infrastructure serves amazon, and amazon alone, which… is not the case.
To be fair it reminds me of these ukrainian artists i commission from time to time, where they cannot “officially” get paid so in order to get paid i have to go through a marketplace where they sell an “art print” that (would you look at the coincindence) is exactly the commission price. 😅
In any case the thing stands where you have a cantankerous system where you have to jump through hoops and looks, you are forced to openness so anybody can see what you sell and also so several steps on top of other steps. It is expensive. It requires you to divulge a lot of information. You cannot avoid but to get the art displayed openly either you want it or not.
It’s like asking for a commission and at the end of the commission getting a dropbox link with an invoice attached except the dropbox link points to an open space where everybody else can also see what you commissioned and download the full resolution of it and buy what you just commissioned before you pay for the commission you asked.
Which is why NFTs exist.
This way all art is interchangeable and what you get is an invoice that you paid for art and you can download said art. Yes. You could download said art without paying. Unlike amazon, you CANNOT give people a lower resolution version of what they buy, once they buy … whatever it was … now stays like that. You technically can upload an higher resolution thing there and then re-upload a lower resolution, but it’s “1 transaction” every time you do that and the person you sold the art has to sell you the art back so you can change it and then sell it back to them once they have downloaded it.
If you are facepalming at the idiocy of it all… i agree.
It’s stupid. It’s a bad system. And (in general) it’s utter crap.
There are many ways in which i can see why NFTs are bad. It’s like seeing marketplaces for digital goods as they were in the ’90s but with a dudebro collectionist enthusiast mentality of the 2020s and it’s… uh… 💩.
But i can tell you the carbon footprint is not as bad as it is getting portrayed. Unless you say “okay so this is the footprint of cripto plus accessories and the rest of the footprint is the rest of the world that uses normal money” because that is the comparison you have to make. Not “a transaction”.
And what you get is exactly equivalent to a link to an amazon marketplace with a dropbox link. Displayed in that amazon marketplace for “what you receive”. Anybody can buy the “1 available” before you and what they get… is the same dropbox link you saw on the page.
Is it stupid? absolutely!
You’re still trying to argue about the numbers with me, and I already told you not to. If you want to argue about them, go talk to Cambridge!
One point: you said “once they buy … whatever it was … now stays like that…the person you sold the art has to sell you the art back so you can change it and then sell it back to them once they have downloaded it.”
I can’t repeat this enough: you didn’t sell the art. You sold a token with the text of a link to a URL where a PNG is uploaded. You might as well have sold a postcard with the text of the URL written on it. It doesn’t give the buyer any special control over the server where the PNG is hosted.
There’s at least one link in this post about a seller who sold a bunch of tokens, and then, post-sale, uploaded new images to all the URLs those tokens pointed to.
If I sold you a token that had the text of a link to a Leif & Thorn strip, it wouldn’t magically block my admin access to edit that strip whenever I wanted.
Okay if you wish to argue like that i can understand your point of view.
For me NFTs suck because of different reasons.
I’ve bought exactly 2 of them and i don’t plan on this being a major investment or anything. Just supporting a friend. He went into NFTs so i used that as a way to learn more and look into it from a technical perspective.
Bottom line is: they suck because they are highly impractical and take steps atop of steps with steps on the side and everything costs money to the artist.”
Mostly because when i buy art i get given an invoice and a dropbox link so as an end user of art what i get is 2 emails one with the invoice and one with a link to a PNG.
I don’t have any control over the dropbox link and many have already expired.
In fact i had a major breakdown in december 2019 (lightning strike destroyed my PC and all my backups) and had to re-ask several artists to re-send me their arts.
For some of that art i do not have anything anymore that i did not upload online as the artists never answered.
So i don’t honestly see what the big difference is between being given a link to art and… being given a link to art.
Gonna be honest, what I got from that is that if you account for all the externalities Amazon is even worse than you think it is. I’m not sure that’s a counterargument to “NFTs aren’t actually as bad as you think they are”. We SHOULD be accounting for externalities for a lot of things! And yes, we should be mindful of what we want to include or exclude but excluding these things is how greenwashing happens. Amazon also has its own dedicated servers. So if your argument is based partially off of “well they share that part of the load with other groups” they do not. (Including externalities in environmental cost calculations is something I’m passionate about).
I mostly know about the environmental and policy side of production (I don’t currently work in the field but I have a Master’s in Environmental Policy) so I can’t speak to the accuracy of the actual calculations but people are literally making computers big enough to fill warehouses to power this stuff. That alone, even without the hard numbers, should be an indication that they’re using vast amounts of power. The cooling requirements ALONE use enormous amounts of power. If that’s part of the infrastructure you’re talking about then yes, you MUST include that. It is impossible to mine crypto without that. The computers would, very literally, melt.
The problem with that is assuming the computers are used only for that sole purpose.
When you rent a service on a data center you literally rent “time” on that data center.
Because in 2021 we have gone back to the ’60s with the main service being bought is time sharing.
The data centers are being used for a variety of reasons and they constantly “run hot”, but the assumption being made here is that they are only and solely used for crypto, which is not the case.
As of 2021 59% of the rented time data centers are used to handle cloud storage. Then after that, in order from major to minor time usage come:
• IT and Telecom
• Entertainment and Media
That’s literally from october 2021.
While Crypto might look like it should be part of BFSI because you’d think it falls into that … it’s actually part of that miscellaneous “other” which is less than 2% usage.
I’ve already explained at length why Crypto sucks, but everybody seems to think it sucks because of the environmental impact.
I have no clue how to explain this in any other way.
So. I believe i can now summarize my NFT experience.
Selling NFTs is like selling digital goods on amazon, you have the same bureaucratic and tedious form filling to do, and you have comparable pre-selling costs.
But once you set it up Amazon controls everything and for any change you have to ask amazon to do that change. For a fee.
On that amazon page is now displayed the art, it has a dropbox link so that anybody can download the original. Also it displays the amazon account of the artist, what is the balance, how many digital art pieces the artist is selling, how they are sold, for how much, if they have or have not been sold, how much is the share of the artist, how much the artist has paid to get them set up on amazon.
Each digital good has a total quantity of 1, you can download the digital good because on the amazon page you have put the dropbox link to the digital good and the amazon page will have to stay up.
After the digital good has been sold to you the amazon page updates to display (in addition to the dropbox link and the amazon account of the artist) a full receipt including who you are and when you bought the digital good and a link to your credit card showing the balance, where you spend your money, how you spend it, how much you spend and everything else. Also it tells everybody the credit card or bank account of the artist, how they spend their money, what they spend it on how much, what is the balance and everything.
If you want to sell the digital good. You have to go trough all the bureaucratic stuff, paying fees and filling forms as the original seller. Because you are now the owner of that good. Which is still displayed as a dropbox link on the amazon page and everybody can download the original art there.
Once you sell it the amazon page updates to show everybody who you have sold it to and tells everybody who that person is and links to THEIR credit card too, all previous info stays there. So now it tells everybody how much money is on that credit card, how they spend their money how much they spend etc. etc.
Also it add a bit on how much the original artist got from you selling the art you woned to the new person who now owns it.
No other private information is removed from that amazon page.
The dropbox link is part of the amazon page which shows all invoices connected to that. As well as the amazon account of the artist. You cannot remove the amazon page without removing amazon itself. You cannot avoid to tell people who you are.
The only difference i see is that… the entire cryptocurrency market of which NFTs are a small percentage is about 2 orders of magnitude less impactful than amazon. Which is to be expected since no physical goods are traded. 😅
I think you’re forgetting that most of that information is connected TO the credit card but Amazon doesn’t hold it- the bank does. You could use that information to access the bank info, of course. So your analogy doesn’t quite work but I get the point you were trying to make.
But it’s also not accurate because technically anyone CAN download the “digital good”, they just won’t have the proof that it belongs to them if they want to sell it. The NFT is actually a receipt. The picture itself is just a symbol that you bought it. If you steal art from a museum someone can buy it but it won’t have a legitimate backing. Downloading an ugly monkey avatar on twitter that was bought by NFT doesn’t mean you own the NFT- just the picture. If I sold that picture it would not effect the information it was representing. Unless you’re talking about simply downloading the URL itself and that’s like the ebook. Except unlike an Ebook the URL can be changed. And if you’re talking about the core information that’s probably more like changing the ownership of the actual transaction on Amazon? Because otherwise you’re saying the ebook itself is the currency, not the currency and transaction that the ownership of the book is proving.
Huh I’m not sure this actually replied where I wanted to. I meant to reply to Simone Spinnozi’s comment above…
I was making a simile to explain how NFTs work by using a “fantasy amazon-like service”.
It was deliberately silly. BECAUSE. NFTs are silly and impractical.
Here’s a great breakdown that even shows how it compares to other countries and lays out how they got their numbers pretty neatly: https://digiconomist.net/bitcoin-energy-consumption
>When the exchange rate for Bitcoin is at $10,000, that implies “the cost of the equipment, maintenance, and power bills to mint 1 Bitcoin is now so high that people would rather pay $10,000 cash than deal with it.”
>This is a little oversimplified — there’s a lot of gambling and speculation involved — but you can see the general connection. Nobody would pay anywhere near $10,000 for a coin when the production cost was around $10.
This is sort of backwards, and at first I wasn’t going to say anything, because the difference seemed academic, but thinking about it, it kind of gets to the heart of the matter regarding Kickstarter: Bitcoin doesn’t trade so high because it costs a lot to mine; it costs a lot to mine because it trades so high. The difficulty of mining a block is tied to the timestamps of the previous blocks to keep them coming out roughly every ten minutes, which has the effect that if it’s valued at significantly more than it costs to mine (taking into account the risk – “mining” works more like a raffle than what you describe), just like you say, people will start mining, which, since the blocks, and hence the rewards, are being held at a steady rate, will decrease the return on mining.
The reason this is important is that, if the reward hadn’t been on the open market, this explosion of mining never would have happened, so I don’t see why it would be expected to happen with whatever Kickstarter’s doing.
Yeah, I debated on which way to put it, because it’s a cycle. They feed into each other.
I don’t see why you would expect that “whatever Kickstarter’s doing” won’t be on the open market. Every other time someone’s announced they’re doing a new project involving a specific blockchain network, the goal has been to increase the perceived market value of using that network.
Not gonna lie, crypto strikes me like how banks used to print their own paper currencies back before the US standardized paper currencies. Values would fluctuate between banks, and if it went under then have fun with that cheap kindling in your safe. The fact that it’s being so heavily pushed by what I can only describe as “wanna-be tech bros” only further pushes me away.
Honestly, I’ve started to realize my attitude toward crypto is “I won’t even understand this shit with research, but I can still buy my groceries with the cash in my bank account.”
Boy, that Kickstarter announcement sure was some delicious buzzword salad. God, it’s almost as ridiculous as that iced tea company that decided to pivot to blockchain.
I am desperate to read more about this. Do you remember the name?
The link is this https://www.kickstarter.com/articles/the-future-of-crowdfunding-creative-projects
If you mean the iced tea summary, it was the Long Blockchain Corporation (formerly Long Island Iced Tea). Here’s a story about the initial change, and a follow-up story about what happened afterward:
*iced tea company, not summary
And this is before you get into the fact that darn near every artist who had work on DeviantArt or another generally accessible public site is having to send MASSIVE numbers of takedown notices for NFTs being made. NO NFT is guaranteed to be the work of the artist if you don’t know the artist in person (eg, Simone above seems to know this artist, and can be pretty sure the work is the artist’s own.) And this adds at least two other layers of likelihood that the thing you buy (The URL pointing to the image which could be stored in a hundred other URLs…) is either a scam or will disappear on you in short order.