The unintended consequences of bitcoin
A couple of weeks ago I talked about NFT's (nonfungible tokens). They're a non replicable digital asset. Having mostly given crypto currency cursory attention, it was the concept of creating digital scarcity that had me intrigued. I was wondering if and how it might help you create alternative sustainable income streams. Or be a creative way to own more of your own cow.
NFT's have received so much hype recently with millions spent on unique digital assets hundreds of millions spent on NBA video clips and assorted digitalia. It seems everyone (including myself) is writing about them. Like a gif Mark Cuban sold for $81,000. Or a jpeg image that sold for $650,000. It doesn't mean others can't see the thing. Just means the owner holds the file and the right to say they hold the file. Ethereum manages NFTs and charges a 10% fee.
What I didn't realize until this week was the heavy environmental cost of NFTs. In short, they're really bad for the environment as the energy required to register and manage the blockchain is huge and growing rapidly. In fact, cryptocurrency, which includes bitcoin requires more energy than the entire country of Argentina. A 2018 University of New Mexico study that every $1 of Bitcoin value creates $0.49 of health and climate damage in the United States.
Why exactly does cryptocurrency need and use so much energy? The key is that the more that’s mined the more computing power required for ‘proof of work’. In other words, to create and ensure digital scarcity requires a lot of computer horsepower. Which requires more powerful computers which need more cooling. And it’s all unregulated. No carbon offsets in cryptoland.
Talk about unintended consequences. This dark side of cryptocurrency isn't something much discussed amidst the hype. I just learned of it this week and until now it wasn't something that crossed my mind. Let alone something I thought would have such devastating impacts on the climate. As if we need to pour anymore gas on that fire.
Coupled with the hype which makes it less likely that most of us would see significant value from an NFT, I'm thinking the opportunity for you and I is on how can we help the climate. Despite these impacts, I believe the situation will only escalate until a solution is found to turn Crypto green. Yet that seems to be a long running joke. Late to this party on many fronts am I!
So what is middle America to do? Squeezed from every side at nearly every turn, how can you get ahead. Even upper middle America isn't immune. You're in the top 10% if you have household income over $118,000 per year. Yet it's doubtful that means you feel wealthy after paying for housing, transportation and college where even a state school is $25k per year. Only 5% of households had single earners over $100k.
"Bitcoin is the democratization and fragmentation of everything." - Tim Denning
Tim Denning has an interesting perspective on bitcoin as a new way of thinking about currency. That it will change society as no one controls it. Not a single government.
In Tim’s words, if you ignore Bitcoin you only have:
Stocks — record highs with a strong chance of a correction.
Gold — a heavy, expensive, under-performing fax machine.
Real estate — a good option if you can stomach the enormous upfront cost and the global property bubble.
Bonds — paying to own debt that pays you next to nothing in interest.
Derivatives — bet on the price of an asset without owning it. Welcome to the global casino that can keep going when sport stops due to a pandemic.
Savings account — throw your money on the sidewalk and step on it two hundred times. It pays more in entertainment value than an old bank.
Essentially you have limited places to store money.
Given the bitcoin train has left the terminal AND it's really bad for the environment, what's the answer? I'm not sure. Other than it's important to go back to what YOU can do to create that portfolio of work. To ensure you have options for generating revenue. Easier said than done.
So what am I doing?
Still creating images and offering them online. While 99% of people experience images as disposable, I'm in awe of seeing them printed. And thus hope to appeal to the subset of the 1% of those who also value images as a physical object.
I'm also exploring different ways and looks for creating images from going back to a little film to looking at how different camera sensors and lenses can produce more character. In this quest, just stumbled on a 100 year + printing method in France that Sheila Metzner uses for her imagery. So secret it's been in the same family for more than 100 years and I can't wait to try it.
I am also grateful to be consulting and working in marketing for the AV industry.
Writing here fuels my thinking and helps me explore what's possible just as I hope it sparks your thinking.
I do focus much on photography as it's such a part of how I see the world and the world of business. It's one of the most commoditized, insecure businesses around should you try it full time (I did some 20 years ago). Frank Ockenfels 3 is an imminently successful celebrity and advertising photographer with more than 30 years in the business.
Even he doesn't take success for granted. And told his kids that if he stops working the money stops coming. As a result he's made sure he's lived what some call a bohemian life. So he doesn't have to worry so much. Check out his work. And he has a very creative book out now about his journals.
Examine the ugly and uncomfortable
While this edition may have been a bit of a downer, I also believe it's important to examine what's ugly and uncomfortable. The climate isn't something we can stick our heads in the sand hoping it magically goes away. Or that it's someone else's problem. I still believe that there's opportunity for the many that work to solve it. And there's opportunity in helping the middle create stronger financial foundations.
While it's up to each of us to use our curiosity and create our own happiness and success, a society that rally's together in support of each other goes a long way to lifting us up. We're not on a solo journey even though it may feel that way. Even the most successful have had help along the way. I don't believe anyone is truly self made. It's that unique blend of work, thinking, timing, and a dash of luck after doing the work.