This is a response to the second part of Jisu’s article about NFTs, which can be found here: https://jisuartist.medium.com/debunking-everything-about-nfts-cryptoart-part-2-my-ultimate-stance-68de77881d70
For context, I originally responded to the first part here. https://medium.com/p/e25e907dd3ed
In the first article, I stated that it was not a personal rebuke to Jisu, as at that time it was plausible that their view was misinformed, and there was no obvious motive for it to be deliberately misleading. This time, however, it is a personal rebuke of their writings; I feel it is now, in my opinion, beyond reasonable doubt that their article is either deliberately choosing to spread misinformation, or is so grossly negligent that it amounts to the same thing.
I do not say that lightly. I will explain in detail below why I make it; I will structure it as before, in a point-by-point address of Jisu’s article in the same format it has.
That said, Jisu should not be harassed or insulted. That would not serve any constructive purpose nor would it be right; I am writing this to criticise their articles and the lack of veracity therein. Criticism is fine; insults and harassment are not.
Quoted areas of Jisu’s article will appear in header quotes, such as the one directly below.
Section: I’m also going to skip over most of the ecological points because the internet has torn that topic to pieces. (A number of articles have come out debunking that too)
This doesn’t debunk anything, nor is it debunked in the slightest. For one, the concept of ‘NFTs don’t directly cause carbon emissions as they just use the underlying blockchain’ argument is malicious at best. How stupid would it sound if someone said, “my factory runs on coal-powered electricity, but the factory itself is absolutely green and has zero emissions!”. Ethereum only exists for purposes such as (but not limited to) the minting of NFTs; hype of NFTs making the currency seem legitimate is part of what has driven so much of its recent price rise. With this logic you could even claim that e.g. “The Apple App Store has no impact because Apple phones exist anyway”, a claim that would be delusional to put it mildly.
Secondly: The chances of Ethereum moving to proof of stake are astronomically low. I explained in detail in this article why no major cryptocurrency has moved to it; claiming they’ll move to it makes a very nice reassuring soundbite for investors concerned for their environmental credentials, but remains completely implausible in technical terms for any cryptocurrency wanting to retain a semblance of decentralisation.
In the first part of Jisu’s “addressing Key criticisms of part 1”, there is this:
Subsection “This article is biased”
I think this is a valid critique. I can openly admit I’m not an academic writer. I make it pretty clear at the beginning that I’ve been following crypto since 2015, so it’s safe to assume I’m pretty excited about it. That being said, I think Part 1 still remains largely balanced. I laid out most if not all criticisms expressed by my peers from within and outside the crypto community and provided sources from both sides, and will do my best to address ones I missed in this write-up.
I really do not see, at all, that you had sources from ‘both sides’. The only technical source you have is one with a financial conflict of interest; Ramesh Nair, according to his own website, has among other holdings investments in Bitcoin trading site LVL and is part of a startup that is dependent on Ethereum.
Impartial expertise on Blockchain is not that hard to find. The main underlying technologies and concepts of blockchain and consensus in distributed systems aren’t complex from a computing standpoint; any qualified professional in the computing field understands how they work and the fine points of their use in decentralised applications. (I am one such person.)
It’s easy to find people who are both experts on this subject and passionately against cryptocurrency, provided you care to look for them. (Note: blockchains themselves aren’t bad, they’re just data structures. It is their use in fully decentralised applications, requiring PoW consensus, that is bad.)
Subsection: “No matter the carbon output — NFTs do not provide real value”
In Part 1, I outlined that value is a malleable thing, and while you may find something incomprehensibly useless, it may be another person’s treasure. A good example of this is fashion. Have you heard of the Supreme Bricks that originally resold for up to $1000? There are numerous critics of hypebeast culture or high fashion where some scoff at the idea of paying $1000+ for one article of clothing, but clearly there’s a market. The matter of whether NFTs are actually valuable comes down to opinion. You can make the argument that clothing beyond function is a waste, but clearly expressing oneself in such medium is important to many.
This is a false equivalence. Fashion *can* have value, because when you pay for a $200 T-shirt or whatever, you are paying for the skill and time of the person who designed it. You are not doing that with an NFT; that is why artist commissions and NFTs have totally different prices. It’s perfectly reasonable to argue that a person might pay e.g. $2–5k for a fashionable pair of expertly crafted shoes by a professional; paying $2m for them is objectively nothing to do with any intrinsic value of any kind.
I wrote more about this in my original article addressing the first part of Jisu’s article. It can be found under the “Subsection: Do NFTs have any real value?” subsection.
On the topic of ecological impact as well, the fashion industry is actually such a public enemy that it’s pretty unanimous with young liberals and eco-minded groups to shop exclusively vintage or thrifted. That doesn’t stop fast fashion or high fashion from existing, where excess is so abundant that major brands even burn their excess stock in the name of “exclusivity”. So despite fashion taking real resources — fabric, trees, gas, electricity, etc . — it is still an art form that many artists — both pro and anti-NFT — love and cherish.
This is also misleading. This doesn’t imply young liberals or eco-minded groups hate high fashion; they hate companies that are wasteful with it, for the same reasons they hate fast fashion.
This attempts to call “high fashion” and “high fashion done by wasteful companies who end up burning excess stock” the same thing, when they are totally different things. People can get behind the art form without approving of the commercial practices used by many companies in it. This doesn’t apply to NFTs, where the technology it depends on — cryptocurrencies using blockchains — cannot operate without environmentally destructive proof-of-work consensus mechanisms.
(Yes, there are PoS and DPoS cryptocurrencies and NFT marketplaces. See here for a detailed explanation of why the underlying technological flaws prevent any of those from becoming widely adopted; the TLDR is that they have serious and unresolvable equality issues and security vulnerabilities.)
Section: “Cryptocurrency & NFTs are pure speculation”
Quoted from Jisu’s article:
I’m going to start by addressing that cryptocurrency is essentially speculation. It is an asset with an increasing and decreasing value — but so are many mainstream investments in life. Homes, cars, stocks, college degrees, etc. — the only reason why we differentiate these assets from volatile assets is due to longevity. Real-estate is typically cited as one of the safest investments, but it’s not immune to crashes. Higher education is also one of the most popular forms of “investment”, but should probably be cited more as a scam.
These are categorically, provably, lies (that were also stated in the first part of Jisu’s article). Longevity has nothing to do with why those assets are distinguished from volatile ones; intrinsic value is why they are distinguished from them. I use the word ‘lie’ carefully: it would take such astronomically high levels of wilful blindness and deliberate bias to state the view set out in the quote above after so much alleged ‘research’ (not only once, but twice) that it’s not plausible to call it ignorance alone.
Most things have a significant level of intrinsic value. Cars and homes have it because they cost money and skilled labour to build, cost a lot of money to research and develop initially (more in the case of cars), and require considerable money to maintain whilst providing a useful function to the end user. Stocks have value because a company owns assets, makes profits and thus increases those assets, and is valued for who buys from it and how well entrenched it is in its given market, among other factors. That is not to say speculation does not affect their value; it is to say they have an underlying intrinsic value irrespective of speculation that doesn’t depend on any investor’s opinion.
Higher education
To go on a tangent here, calling higher education a ‘scam’ in particular is delusional. It’s fair to say that art degrees/courses in particular are questionable depending on which university or college a person goes to — but that is very much an isolated subject in that regard.
Higher education is valued for many reasons, not all financial — but financially it is valued because a degree from a good university in an economically useful field invariably pays off, even with ridiculously high US tuition fees. A ‘good university’ is usually measured by the amount of citations its researchers have, the quality of teaching, and other factors. This is how rankings of universities are created; these matter because there is no ‘set curriculum’ shared by universities — the subjects are taught by the researchers in those fields.
Here are two of the well-known university rankings.
The fact that university and subject affect how financially useful a degree is can be seen worldwide, but in the UK for example:
As can be seen above, the so-called STEM subjects (Science, Technology, Engineering and Mathematics) are — and remain — the most valuable degrees economically, along with a few other subjects.
Pew Research center has this information about the US for example:
There’s a reason for this; it’s perfectly possible to be self-taught in art, and easy for a potential employer or client to measure your skill via a portfolio of your work. This isn’t possible in most STEM fields; higher education is generally the only entry point for these (including computer science; boot camps exist but are a very bad choice. It is too far beyond the scope of this article to explain why; I will write a separate article for that if people are interested).
Now for NFTs — this criticism seems mostly geared at the buyer side. I think it’s valid to critique buyers who seem only in it for the resale market, but that’s generally an unavoidable development in markets with scarcity. One good example of this is the sneaker resale market.
Have you seen those giant lines of people waiting for the latest sneaker drop? While a good portion are definitely in it to own the sneaker themselves, a growing population are in it to buy and resell at a profit. There are many people who make their entire livings off of this and global sneaker resale platforms like StockX have become so mainstream that they now even offer exclusive items like Pokémon cards. Speculative buying is an old concept, with many traditionally using platforms like eBay to flip their items. Any market based on scarcity is going to develop a speculative market, and especially one where its value is tied to a currency whose potential to go up in value is probable.
This is, again, a false equivalence. That something has a speculative market or is based on scarcity doesn’t bear any relation to whether the item itself has intrinsic value or not. For example, due to cryptocurrency mining demand scalpers are buying NVidia RTX graphics cards to resell all over the place, but that doesn’t mean the cards are worthless and purely based on speculation. Their intrinsic value is self-evident in many genuine applications (games, academic research, mathematical modelling), and is based on the cost of researching them and producing them.
On the other hand, collector’s items such as NFTs or Pokémon cards are both good examples of purely speculative markets: the intrinsic value is negligible in the case of Pokémon cards and non-existent in the case of NFTs (not the art attached to them; just the NFT itself). The only value they have is the resale value you can try to convince others of; the greater fool value. (In the case of some things, such as high-price traditional artworks, there is an additional use as tax evasion assets, which is part of why they go for such high prices. This was explained in my previous article.)
Section: “Cryptocurrency and NFTs are still a pyramid scheme”
Jisu’s article states the following:
So I’ve seen a ton of people make the connection that because people are invested in ETH/NFTs/BTC — they want you to participate so it raises the value of their investment. On paper, this makes sense, especially if it is a small alt-coin or less established start-up NFT platform. For large, well-established cryptocurrencies like Ethereum or Bitcoin however, that argument doesn’t apply.
There are generally two categories of cryptocurrency: mainstream and alt-coins. Alt-coins are the random, volatile coins that pop up with inherently no value (eg. dogecoin). Even though Bitcoin and Ethereum essentially are the same thing technology-wise, they are categorized differently because they have enough history and investors where there is a clear foundation in value, and that value is spread out across enough invested parties that it essentially cannot collapse (or be manipulated without some serious collusion).
This is, again, provable lies. Pyramid schemes don’t stop being pyramid schemes just because they’re big enough; ‘history’ or ‘longevity’ does not stop something being a pyramid scheme. The very *point* of a pyramid scheme is that it needs to continue spreading out across more and more invested parties — and continue to spread in order to avoid collapsing — so to use this as proof that it ‘cannot collapse’ is completely false. Additionally, fundamental value isn’t created simply because enough investors are invested in something; fundamental value is objective and completely unchanged by the number of investors, history or longevity. (Gold has many uses that give it fundamental value — the oldest and most common use is jewelry, but it also forms part of many modern electrical devices.)
I say ‘lies’ rather than simply ‘false’ because once again, the idea that someone could fail to understand the most basic concepts of a pyramid scheme after supposedly doing this much research is not plausible.
It ought to be self-evident by now that “cannot be manipulated without serious collusion” in the context of cryptocurrency is complete nonsense. Singular tweets by Elon Musk have caused double-digit dips and rises in Bitcoin’s value; merely by tweeting he can, and does, manipulate the price of cryptocurrency at will (Bitcoin has fallen almost 40% in the last few weeks, primarily due to Musk but also due to Chinese regulatory decisions). It recovered purely due to Musk tweeting diamond hands, in reference to Tesla’s bitcoin investment.
Outside of trying one’s best to avoid being informed about any of this, it seems impossible that someone could think cryptocurrency ‘cannot be manipulated without serious collusion’.
I want to point out that not every invested party is an investor either. Many people develop technologies or industries reliant on cryptocurrency, which will cause the value to increase, but in a natural way. NFTs are one such development, but there are many others such as Defi. — Jisu’s article
That doesn’t cause value to increase unless the underlying mechanism has value — if you build something that is reliant on a pyramid scheme, it has no value no matter what it does.
Neither NFTs, nor DeFi, have any intrinsic value whatsoever (DeFi is a terrible idea for the same reasons all deregulated finances are terrible: when transactions go wrong or someone scams you, there is no central authority or regulator who can address it, which results in such systems being swamped with malicious actors).
“I am a foreign resident of a developing country and I decry NFTs & Cryptocurrency”
That’s a valid belief. I can’t tell you how to feel about how the world is affecting you. On one hand, a lot of people in developing countries are excited about these technologies, but it’s totally valid to disagree. It is a new technology where its true implications are not understood and won’t be for awhile.
This constant message in Jisu’s articles — that the “implications of this new technology are not understood and won’t be for awhile” — is one of the most nefarious ways to promote something harmful, particularly as technical expertise in this subject enables you to see otherwise.
It is possible to claim with absolutely any new policy or action, in the face of any evidence, that maybe it’s just not fully understood yet. Considering that PoW cryptocurrencies’ environmental damage (and damage potential) is quite literally proven fact, as opposed to some possible ‘wait and see not yet conclusive evidence’ situation, the assertion that it’s valid to disagree is — in polite terms — complete bullshit. It is as invalid as disagreeing on the earth being round, or the existence of man-made climate change, or the efficacy of vaccines. It bears as much weight as the old argument from tobacco lobbyists that tobacco had ‘no proven conclusive causal links’ to lung cancer and premature death.
We see this message being peddled here again:
“Cryptocurrency & NFTs are NOT here to stay”
If you do your research on cryptocurrency and believe that it will fail, then you are free to have that belief. Likewise, people are free to believe that it will succeed.
The reality is though, nobody knows. Just know that if you see these opinions being thrown around, they are as simple as that — opinions. It’s up to you as an investor to come to your own conclusions and make your own plays.
This is a grift as old as history itself; the “nobody knows, I’m just asking questions, come to your own conclusions” grift. Demagogues, fraudsters and snake oil salesmen throughout history have used this strategy to present a one-sided view of a subject, whilst pretending to be neutral and pretending not to be trying to influence the listener’s views. It also — as seen here — then goes on to discredit other views as ‘simply opinions’, as though the opinions of experts and the opinions of any random person are completely equal in credibility on any subject.
Just because you “do your research and decide cryptocurrency is here to say” doesn’t make your opinion accurate in the slightest, nor one to be respected. You’re also free to believe that unicorns exist, but that doesn’t make your opinion equally credible to any other opinion on the matter simply because you hold it.
“Nobody knows” — in the context of cryptocurrency — is false, as PoW cryptocurrencies are doomed due to their environmental credentials, and PoS and DPoS currencies are not viable. Like all pyramid schemes, however, peddling the view that it is here to stay is imperative to keeping the scheme intact; if too many people lose confidence in it, it will collapse before the earlier investors can take their profits and run.
My Ultimate Outlook
Technology and Art
If it weren’t for cultural and technological rebels, we would not be using a computer or even finding each other on the world-wide web. For artists, we wouldn’t even be drawing digitally or utilizing the unified efforts of software like Krita or Blender. When music became synthesized, traditionalists scoffed and decried “digitized music”. Disruptive technology has always gone hand-in-hand with cultural rebellion, ESPECIALLY for creatives, and I will always support these movements.
This statement is a prime example of survivorship bias, something frequently seen in blindly optimistic ‘innovators’: listing all the good things that have come out of cultural and technological rebels, and pretending all the bad ones don’t exist or are totally unrelated.
Were it not for ‘cultural and technological rebels’, we also wouldn’t have, among other things:
- Leaded petrol
- CFCs
- The Agile Manifesto
- The DDT pesticide
- Buildings with Asbestos
- Musician-exploiting record labels
- False anti-vaccine narratives
- Edison’s propaganda war against AC electricity
This is an addition to countless other horrendously damaging innovations and ideas — most of which were preventable without hindsight. The term ‘disruptive’ does not and never has had any correlation with being good, no matter the context. It would be wiser to recognise that change and cultural or technological rebellion can actually be bad as well as good.
Innovation itself is fine. Careless, blind innovation with no thought as to the consequences — particularly in cases where it’s easy to see the innovation was bad without any hindsight — is something the world could use a lot less of.
The real scope of NFTs
Beyond just the one-to-one fine art market-esque sales — I think a large portion of us are missing the bigger picture. Companies like Gucci and Epic Games are already entering the space.
This means absolutely nothing. Companies will generally enter any profitable space irrespective of any moral or ethical concerns, as no end of company conduct ought to show by now.
Not one part of that means that somehow we ought to accept cryptocurrencies as legitimate.
