Humans are very good at inventing commodities, and we’ve been at it for a long time. See that pebble over there? Well, that’s a better pebble than all these others, and if you give me something in exchange for it, I’ll let you take ownership. It’ll be your pebble, forever. And soon there will be a market in pebbles, a pebble community, pebble exhibitions and auctions filled with pebble speculators, pebble exchanges, and pebble artists.
The deeper, evolutionary reasons why we do this—or why any species commodifies objects or experiences—are not immediately obvious. It could be a trait that supports social interaction and cohesion, helping distribute food and resources more efficiently throughout a population. Or perhaps it supports the signaling of individual fitness or intention that can guide our reproductive strategies. A behavior statistically favored in an intricate web of Darwinian selection, eking out a tiny advantage for the genetic lineage of anyone who plays along.
If bits of data were more like Michelangelo’s marble, the whole notion of NFTs would be irrelevant.
What further complicates this (as with any such trait) is the cost incurred for individuals or a species; the expenditure of resources and energy. The most explicit, and worrisome, example today is the emergence of commodities like cryptocurrencies or Non-Fungible Tokens (NFTs). In simple terms, just as a cryptocurrency is meant to be infallibly secure and fair, an NFT is a way to assign secure provenance and ownership to a digital asset. That digital asset might be an image, a video, or some hybrid digital experience.
Already there’s been a lot of grumbling about the extraordinary energy demands of cryptocurrencies. Now there’s grumbling about the absurd growth in the market for NFTs. This is because both commodities use a robust system for tamper-proof bookkeeping: the blockchain. Blockchain technology is purposefully burdensome and computationally distributed, making it notoriously energy intensive. Estimates put the energy used to create and trade a cryptocurrency like Bitcoin on a par with the total consumption of a country like Sweden. And that’s without accounting for the environmental footprint of the physical computer hardware.
It’s possible to see a purpose for cryptocurrencies, but NFTs are (for now) almost comically bereft of anything most of us would associate with social or cultural value. Down the line there may be value in attaching permanent ownership or provenance to digital works of art. But at the moment it’s Pudgy Penguins for the masses, or a pixel-heavy version of Nyan Catgoing for an eye-watering $1.2 million for cynical investors. With an explosive growth of equally speculative and bewildering offerings appearing every day.
This represents a tangible planetary burden. Prompting the people behind the blockchains to try to improve their environmental image. The company Ethereum (that supports cryptocurrency as well as NFTs) has indicated it aims to cut energy use by more than 99 percent by changing its core methodology. That change will make it possible for aspiring currency “miners” to participate without so much hardware and electricity consumption.
That sounds great but understanding the nature of these changes is not easy, since the whole idea of blockchains is rooted in astonishingly arcane concepts like “proof of work” or “proof of stake” manifested in computer hardware and algorithms. It’s also far from clear that other companies will follow suit, or that the most energy-intensive pieces can ever be fully removed from the scheme without risking the innate reliability that makes the blockchain so appealing in the first place.
The much bigger question, though, has less to do with these emergent upstarts in our informational world and more to do with humanity’s overall trajectory. Any species that endlessly grows, and continually invents energy-hungry processes, may not be destined for a happy ending. At best, such a species will go through boom-and-bust cycles, with big corrective failures. At worst, a species like this simply won’t make it through to the future. NFTs and cryptocurrencies by themselves may not be the cause of a future collapse, but they are symptoms of what ails us. And like all symptoms, they can offer clues to a cure, because the root of the problem may be much deeper—in the fabric of digital information itself.
Nature consists of both fungible entities (identical and perfectly exchangeable) and non-fungible entities (unique, non-exchangeable). For example, you—fellow human—are a non-fungible asset. You are a complex, storied entity with your own unique history and a future of largely unpredictable twists and turns. In that sense, you are no different than pretty much any other living organism or system on Earth. Even endlessly reproducing bacteria or duplicating viruses are ripe with non-fungibility. Small variations in genetic sequences and circumstances create the magical diversity that natural selection acts on.
Yet, underneath all of this we think that the universe is built out of entirely fungible pieces. One photon of light can be completely identical to, and replaceable by, another photon. Even though some elemental pieces, like electrons, are strictly unable to occupy the same quantum state, any of them can still be readily swapped and no one would know the difference.
NFTs are comically bereft of anything we would associate with social or cultural value.
The extraordinary fact is that the universe is an engine that turns the fungible into the non-fungible. It takes indistinguishable atoms and assembles molecules of increasing complexity that become more and more distinct from each other. Each complicated structure having less and less likelihood of an exact match across the observable universe. In other words, nature has no need for NFTs to keep track of things—the ledgers are embedded already in any sufficiently intricate object.
By comparison, even though the 1s and 0s of our invented digital world are built out of transistors or magnetic dots containing tens of thousands of atoms, they are inherently fungible. We’ve effectively undone the non-fungible nature of the world around us. In digital form, data can be reproduced perfectly. A digital copy is just as good as the original. That’s a remarkable thing, and one key to the power we get from digitization. But it is precisely this quality that gives rise to the issues we face with security and ownership further down the line, and the burden that places on us, our energy, and our planet. A trail for easily-copied data can only be maintained with yet more data, and encryption, and redundancy, and more hardware, and more energy-consuming computation.
But what if we had built things differently from the beginning? What if a digital bit was more than just a 1 or 0, and contained a degree of uniqueness? Take, for example, Michelangelo’s statue of David. This was carved from a single block of Tuscan marble that originated in deposits of calcium carbonate from billions of microscopic marine organisms, and transformed into its smooth, slightly translucent form by high pressure and temperature. Every speck of this statue has a signature of unique provenance in its intricately crystallized makeup, its weathering, and its isotopic composition. Superficially, the statue can be copied, and has been innumerable times, but inspect it closely enough and it is entirely, automatically, non-fungible.
You—fellow human—are a non-fungible asset.
If bits of data were more like the specks of Michelangelo’s marble, the whole notion of NFTs would be irrelevant. Every bit would hold its own uniquely traceable fingerprint, with no need for some extra token of non-fungibility. This raises the disquieting possibility that in our exuberant adoption of the power of digitization, we’ve missed a trick, lured on by new tools and riches. Consequently, we’re now faced with the mother-of-all-patch-jobs, where we have to invent ways to create retroactive non-fungibility in our data instead of placing the option of being non-fungible at its core.
I can’t claim to know what non-fungible electronic bits would look like. Maybe someone has already invented them. Perhaps they’d be so cumbersome that it’d set our computational world back by decades. But we need to do something pretty radical. If we don’t, the environmental consequences of blockchain-use could be catastrophic because of the potential to outpace any efforts to transition to zero-carbon energy production. With the core issue of fungibility unresolved the same is likely true for whatever else we invent to buttress the shaky walls of our increasingly blended reality, where commodities in the universe meet commodities in the metaverse.
There is of course another solution: We stop reinventing things like currency or certification until we have a proper plan. This can sound like an oddly conservative position; having secure and decentralized ways of carrying out free trade or retaining data ownership is in principle a very good thing. Blockchains are clever and help fix that non-fungible digital shortfall. But it’s atrocious timing for us to create yet another fast-growth planetary burden. Putting a scheme like NFTs on hold (or rethinking and rebuilding those fundamentals of digital non-fungibility) until humanity has figured out a way to generate all our energy cleanly, from solar, nuclear, and so on, would make more sense. It would be a cosmic tragedy for Darwinian selection to prune our lineage out of existence for the sake of frivolous NFTs or crypto-greed. For the present moment the future is still a commodity that can be replaced with something better.