Tag: Ethereum

The Merge

Earlier this month, a major event happened in the cryptocurrency space called the ‘Merge’. In this event, the ethereum blockchain changed the way it achieves consensus – from using a proof-of-work mechanism to a proof-of-stake mechanism.

A blockchain is a spreadsheet that maintains a record of all the transactions between users using the same blockchain. Every user on a blockchain basically possesses an up-to-date copy of that spreadsheet and helps validate others’ transactions on the blockchain. The rewards that the blockchain produces for desirable user behaviour are called its tokens. For example, tokens on the ethereum blockchain are called ether and those on the bitcoin blockchain are called… well, bitcoins. This is what the users also transact with on the blockchain.

(See here for a more thorough yet accessible intro to blockchains and NFTs.)

As a result of the ‘Merge’, according to the foundation that manages the cryptocurrency, the blockchain’s energy consumption dropped by 99.95%.

The blockchain on which users transact ethereum tokens plus the network is called the ethereum mainnet. During the ‘Merge’, the existing mainnet was replaced with another called the Beacon Chain.

Imagine the blockchain to be a bridge that moves traffic across a river. Ahead of the ‘Merge’, operators erected a parallel bridge and allowed traffic over it as well. Then, on September 15, 2022, they merged traffic from the first bridge with the traffic on the new one. Once all the vehicles were off the old bridge, it was destroyed.

Source: ethereum.org

Each of the vehicles here was an ethereum transaction. During the ‘Merge’, the operators had to ensure that all the vehicles continued to move, none got hijacked and none of them broke down.

(Sharding – which is expected to roll out in 2023 – is the act of splitting the blockchain up into multiple pieces that different parts of the network use. This way, each part will require fewer resources to use the blockchain even as the network as a whole will be using the blockchain as a whole.)

Blockchains like those of bitcoin and ethereum need a ‘proof of x’ because they are decentralised: they have no central authority that decides whether a transaction is legitimate. Instead, the validation mechanisms are baked into the processes by which users mine and exchange the coins. Proof-of-work and proof-of-stake are two flavours of one such mechanism. To understand what it does, let’s consider one of the problems it protects a blockchain against: double-spending.

Say Selvi wants to send 100 rupees to Gokul. Double-spending is the threat of sending the same 100 rupees to Gokul twice, thus converting 100 rupees to 200 rupees. When Selvi uses a bank: she logs into her netbanking account and transfers the funds or she withdraws some cash from the ATM and gives Gokul the notes. Either way, once she’s withdrawn the money from her account, the bank records it and she can’t withdraw the same funds again.

When she takes the cryptocurrency route: Selvi transfers some ethereum tokens to Gokul over the blockchain. Here, the blockchain requires some way to verify and record the transaction so that it doesn’t recur. If it used proof-of-work, it would require users on the network to share their computing power to solve a complex mathematical problem. The operation produces a numeric result that uniquely identifies the transaction as well as appends the transaction’s details to the blockchain. A copy of the updated blockchain is shared with all the users so that they are all on the same page. If Selvi tries to spend the same coins again – to transfer it to someone else, say – she won’t be able to: the blockchain ‘knows’ now that Selvi no longer has the funds in her wallet.

The demand for computing power to acknowledge a transaction and add it to the blockchain constitutes proof-of-work: when you supply that power, which is used to do work, you have provided that proof. In exchange, the blockchain rewards you with a coin. (If many people provided computing power, they split the coins released by the blockchain.)

The reason the Ethereum folks claim their post-Merge blockchain consumes 99.95% less energy is because it doesn’t use proof-of-work to verify transactions. Instead, it uses proof-of-stake: users stake their ethereum tokens for each transaction. Put another way, proof-of-work requires users to prove they have computing power to lose; proof-of-stake requires users to prove they have coins – or wealth – to lose.

Before each transaction, a validator places some coins as collateral in a ‘smart contract’. This is essentially an algorithm that will not return the coins to the validator if they don’t perform their task properly. Right now, aspiring validators need to deposit 32 ethereum tokens to qualify and join a queue. The network limits the rate at which new validators are added to the network.

Once a validator is admitted, they are allotted blocks (transactions to be verified) at regular intervals. If a block checks out, the validator casts a vote in favour of that block that is transmitted across the network. Once every 12 seconds, the network randomly chooses a group of validators whose votes are used to make a final determination on whether a block is valid.

Proof-of-stake is less energy-intensive than proof-of-work but it keeps the ethereum blockchain tethered to the same requirement: the proof of preexisting wealth. In the new paradigm, the blockchain releases new coins as reward when transactions are verified, and those who have staked more stand to gain more – i.e. the rich get richer.

Note that when the blockchain used the proof-of-work consensus mechanism, a big problem was that a very small number of users provided a very large fraction of the computing power (contrary to cryptocurrencies’ promise to decentralise finance). Proof-of-stake is expected to increase this centralisation of validatory power because the blockchain now favours validators who have more to stake, and rewards them more. Over time, as richer validators stake more, the cost of validating a transaction will also go up – and the ‘poorer’ validators will be forced to drop out.

Second, the proof-of-stake system requires problematic transactions to be flagged when the validators have staked their ethereum. Once they have withdrawn their stakes, they can’t be penalised. This in turn revives the risk of the double-spending problem, as set out in some detail here.

The energy consumption of cryptocurrency transactions was and remains a major bit of criticism against this newfangled technological solution to a problem that the world doesn’t have – and that’s the point that sticks with me. The ‘Merge’ was laudable to the extent that it reduced the consumption of energy and mining hardware in a time when the wealthy desperately need to reduce all forms of consumption, but while the ‘cons’ column is one row shorter, the ‘pros’ column remains just as empty.

NFTs aren’t thriving – they’re often in the hospital

This is not a real anniversary but it’s worth commemorating, if only to remember the pseudo-events propping up the NFT business-culture. One month and one year ago, a cryptocurrency user named Metakovan purchased an NFT associated with a piece of art from its creator, a fellow named Beeple, in an auction at Christie’s. (Here’s a beginner’s guide to NFTs.) Even at the time this incident took place, its absurdity was clear: as I wrote at the time, Metakovan’s plan – an ostensible effort to democratise and to fight racism in art ownership – was riddled with problems: it was one big red herring of excuses supplied to mask the Ponzi super-scheme that cryptocurrencies and NFTs need to survive. Since then, as NFTs have ‘matured’, especially by revealing what they truly are to the world, we have become better at understanding what that moment in time has meant for the industry. Today, cryptocurrencies and NFTs are investment options whose prices climb up (and down) purely through speculation, so they must remain constantly in demand, thus the Ponzi. Other than that, they serve no purpose whatsoever. While the $69.3 million that Metakovan paid for Beeple’s NFT bleached our vision, we realise today that it had to; there’s nothing underneath. Similarly, there is today a near-constant drone of faux optimism emanating from cryptocurrency evangelists founded on nothing more than greed and stupidity – one that we must constantly look past to remind ourselves that NFTs are ailing, as they should be. Here are some useful articles I would recommend on the topic.

“It isn’t just charities that are finding cryptocurrencies less popular than the media would have you believe. Game publishers were salivating at the prospect of selling NFTs purporting to represent in-game items. Their customer’s reactions led to headlines such as ‘Roller derby community resoundingly rejects NFT project’, ‘MeUndies cancels its NFT underwear plans and sells its Bored Ape after community backlash’, ‘S.T.A.L.K.E.R. 2 developer quickly cancels NFT plans after fan outcry’, ‘Sega cites fan backlash in surprisingly cautious take on gaming NFTs’, ‘Ubisoft’s first NFT experiment was a dumpster fire’, and so on.”

“For cryptocurrency investors and tech workers, they represent financial opportunities and the ground on which to create an art world all of their own. They are deeply naive about art and often disarmingly sincere in their excitement about it. … Is there any potential in this new art market, which seems poised to edge out the old as it is integrated into art fairs, galleries, and auction houses? Is capital, even in its present decrepit form, more progressive than art theory? … Blockchain may be decentralized, but Sotheby’s and Christie’s, where NFT stars like Beeple have been taking their work direct to market, certainly are not. Art-for-NFT may eschew elite curation from MFAs and PhDs but relies instead on other hierarchies that have more to do with celebrity and straightforward access to money than visual quality, let alone conceptual positioning. It has already proven itself not to be the very thing its digital art proponents hoped it would be: an equitable market (as if such a thing exists) cleared of undesirable barriers. To the contrary, the majority of transactions are concentrated in the top 10% of market actors and the average artist has nearly no shot at making a buck…”

“Kelani Nichole, who first priced and sold artworks in bitcoin in 2013 as the owner of the new-media-centric Transfer Gallery, … reached an unequivocal conclusion about Christie’s proclamation that it had made NFT history. … First, multiple users [of cryptocurrencies expressed] confusion over why, as one member put it, they saw “none of the usual stuff you’d expect to see” for an NFT sale through Etherscan, an established portal for viewing verified data on the Ethereum blockchain. … the second point of disagreement is even more existential. On one hand, Christie’s role in facilitating the sale of Beeple’s work was seen as a powerful validation of NFTs by (very) late adopters in the traditional art world. On the other hand, true believers in blockchain’s revolutionary potential aim to eliminate gatekeepers of all types. They saw Christie’s very presence in the sale as a betrayal of crypto’s core values…”

“Forms of self-dealing among an elite are also baked into the market and the history of how it got so big in the first place. Take Vignesh Sundaresan, a collector known as “MetaKovan” who purchased the $69 million Beeple NFT that touched off one of the earliest hype cycles around the digital assets. MetaKovan is the financier of Metapurse, a Singapore-based investment firm that earlier this year listed its mission as to “democratize access and ownership to artwork.” Metapurse has bought 20 Beeple NFTs, four virtual museums, a soundtrack, and consolidated it all into an “NFT bundle” that offers fractionalized ownership through 10 million B20 tokens. Beeple, as it turns out, happens to be a business partner of MetaKovan and owns 2 percent of all B20 tokens, while MetaKovan owns another 59 percent.”

“… Lemercier’s sale of six crypto artworks of Platonic solids late last year consumed more electricity within ten seconds than the entirety of his studio in the last two years. Worse still, with every resale, their footprint will grow: one estimate indicates the mere act of selling an edition of one hundred NFTs consumes more energy than an individual living in the European Union for a year—and there are already more than six hundred thousand NFTs in existence. Though the hype of NFTs will likely burn off, the noxious fumes produced by these ostensibly ethereal works will linger in the atmosphere for decades, if not centuries, to come.”

“Time’s cover story by Andrew R. Chow, The Man Behind Ethereum Is Worried About Crypto’s Future, is supplemented by his I Spent 80 Minutes Inside Vitalik Buterin’s Brain. Here’s What I Learned. What I learned from these two pieces of hagiography was that Buterin is having a lot of difficulty dealing with the failure of Ethereum to live up to the goals he had for it. … The entire story is shot through with the normal cryptocurrency gaslighting, claiming that the benefits Ethereum will bring to the world are because it is decentralized, even though it isn’t. At the fundamental level it isn’t — last November two mining pools controlled the majority of Ethereum mining. At the API level it isn’t, as Moxie Marlinspike describes in ‘My first impressions of web3’. But the detachment from reality goes much further. … The quote “Crypto itself has a lot of dystopian potential if implemented wrong” reveals two of Buterin’s delusions. First, the idea that the dystopian effects of cryptocurrencies are a future potential, not a current reality. And second, that the dystopian effects are merely a symptom of improper implementation, rather than fundamental attributes. Chow reports Buterin’s ideas for cryptocurrencies implemented right: … These utopian dreams fuel the gaslighting that covers up the real-life casino and “wretched hive of scum and villany” that cryptocurrencies have become. The idea that, at some time in the future, the Ethereum ecosystem is “at risk of being overtaken by greed” is laughable to everyone outside the cult.”

Crypto: Climate change means new tech has less time today to prove itself

I spent this weekend reading about permissioned and permissionless blockchain systems. If you want to get in on it, I can’t recommend this post by David Rosenthal enough. Much of the complexity of executing transactions of the major extant cryptocurrencies, including bitcoin and ether, arises from the need for these systems to ensure they are permissionless from start to finish, i.e. to maintain their integrity and reliability without deferring to a centralised authority entity.

This simple fact is more important than it seems at first because it challenges in a significant way the reality that most bitcoin and ether mining pools are highly concentrated in the hands of a very small number of people. Put another way, everything from the verbal sophistry to the speculative fundraising to the enormous power consumption that sustain the major cryptocurrencies have failed to do the one thing that cryptocurrencies were invented to do: decentralise.

Most other cryptocurrencies likely operate with the same problems; I say ‘major’ only to limit myself to what I’m familiar with. Second, don’t underestimate the value of simple facts in an ecosystem in which jargon and verbiage are core components of defending against criticism. One such bit of verbiage is the oft-repeated claim that “it’s still the early days” – in the face of questions about how much more time cryptocurrencies will need to become stable and, importantly, socially useful. Software engineer Molly White has written about how this is simply not true:

… a lot has changed in the technology world in the past six to twelve years. One only needs to look at Moore’s law to see how this is pretty much built in to the technology world, as once-impossible ideas are rapidly made possible by exponentially more processing power. And yet, we are to believe that as technology soared forward over the past decade, blockchain technologies spent that time tripping over their own feet?

Something I see missing from this already expansive discussion (i.e. I might have missed it) is how climate change alters the picture.

The biggest criticism facing bitcoin and ether is that their power consumption, based on the method they use to protect against fraud in a decentralised way – called ‘proof of work’ – is colossal. Rosenthal defers to the Cambridge Bitcoin Energy Consumption Index, according to which the annualised bitcoin network power consumption (at 6:47 pm on February 13, 2022) was 125.13 TWh – roughly equal to that of the Netherlands.

Others, like Molly White, have written about the fact that 13-14 years after the advent of the web, there was much more adoption and innovation than there has been in the 13-14 years since the birth of the idea of using permissionless blockchains to execute financial transactions. This can be interpreted to imply that the proponents of cryptocurrencies have been expending energy – both literal and otherwise – fighting against the system’s indefatigable tendency to centralise. And by failing, they have kept this energy out of reach of its “more socially valuable uses,” to use Rosenthal’s words.

I think both these arguments – the straightforward carbon footprint and the social disempowerment – are significant and legitimate but often lead people to ignore a third implication specific to technology: the time a technology has available to prove that its adoption is desirable is falling rapidly, perhaps as fast as the atmospheric concentration of carbon dioxide (CO2) is increasing.

The creation and implementation of the web – technically, web1 from the early 1990s and web2 from the mid-2000s – happened at a time when the atmospheric CO2 concentration was 354.45 ppm (1990) and then 379.98 ppm (2005). In 2021, the concentration was 416.45 ppm.

Tech folks may find this arbitrary, but for an observer at infinity (which I consider myself and anyone outside of the cryptocurrency as well as IT/software spaces and located in an economically developing or ‘under-developed’ country to be), it seems eminently reasonable. Climate change has broken the symmetry between our past and our future vis-à-vis our ability to tolerate energy-intensive technologies, and constantly breaks it.

Roughly 16 years lapsed between the advent of web1 and the birth of Twitter, but in the era of manifest climate change, the fuller statement has to be: “Roughly 16 years lapsed between the advent of web1 and the birth of Twitter, as the atmospheric CO2 concetration increased by 27.64 ppm.” Obviously there may be no generally accepted way to compare levels or even types of innovation, so saying “innovating something in the cryptocurrency space comparable to Twitter” doesn’t make sense. Let’s flip it to a marginally more meaningful statement, one that I hope will also illustrate my point better: how much innovation did technologists achieve in the cryptocurrency-space in the time in which atmospheric CO2 concentrations increased by 27.64 ppm?

Note here that web3 – a web based on storing, transporting and validating information using blockchains – seeks to depart from the incumbent web2 by decentralising, and liberating, user experience from the silos of ‘Big Tech’, a group of companies that includes Twitter. So there may be a way to compare the carbon emissions vis-à-vis efforts to achieve web3 versus efforts to achieve web2. Proponents of cryptocurrencies and NFTs may contend in turn that the social consequences of web2 and web3 would be apples and oranges, but I think I’m comfortable ‘cancelling’ that difference with the opportunities for social welfare squandered by wasteful energy consumption.

Second note: the concentration of atmospheric CO2 is distributed like this. But in our calculations, we need to adopt the global average for reasons both obvious (it’s climate change, not weather change) and subtle. Some entities have created (permissionless) “carbon-negative” blockchains; the negativity is attained through carbon offsets, which is a stupid idea. To quote from a previous post:

Trees planted today to offset carbon emitted today will only sequester that carbon at optimum efficiencies many years later – when carbon emissions from the same project, if not the rest of the world, are likely to be higher. Second, organisations promising to offset carbon often do so in a part of the world significantly removed from where the carbon was originally released. Arguments against the ‘Miyawaki method’ suggest that you can only plant plants up to a certain density in a given ecosystem, and that planting them even closer together won’t have better or even a stagnating level of effects – but will in fact denigrate the local ecology. Scaled up to the level of countries, this means … emitting many tonnes of carbon dioxide over North America and Europe and attempting to have all of that sequestered in the rainforests of South America, Central Africa and Southeast Asia won’t work, at least not without imposing limitations on the latter countries’ room to emit carbon for their own growth as well as on how these newly created ‘green areas’ should be used.

To conclude: Global warming is accelerating, so I’m comfortable comparing two events – such as two bits of innovation – only if they occurred in a period of the same atmospheric CO2 concentration (give or take 10%). Perhaps more fundamentally, clock-time is a less useful way today to measure the passage of time than the value of this number, including vis-à-vis the tolerability of innovation.

On crypto-art, racism and outcome fantasies

If you want to find mistakes with something, you’ll be able to find them if you tried long enough. That doesn’t inherently make the thing worthless. The only exception I’ve encountered to this truism is the prevailing world-system – which is both fault-ridden and, by virtue of its great size and entrenchment, almost certainly unsalvageable.

I was bewitched by cryptocurrencies when I first discovered them, in 2008. I wrote an op-ed in The Hindu in 2014 advocating for the greater use of blockchain technology. But between then and 2016 or so, I drifted away as I found how the technology was also drifting away from what I thought it was to what it was becoming, and as I learnt more about politics, social systems and the peopled world, as it were — particularly through the BJP’s rise to power in 2014 and subsequent events that illustrated how the proper deployment of an idea is more important than the idea itself.

I still have a soft spot for cryptocurrencies and related tokens, although it’s been edging into pity. I used to understand how they could be a clever way for artists to ensure they get paid every time someone, somewhere downloads one of their creations. I liked that tokens could fractionate ownership of all kinds of things – even objects in the real world. I was open to being persuaded that fighting racism in the crypto-art space could have a top-down reformatory effect. But at the same time, I was – and remain – keenly aware that fantasies of outcomes are cheap. Today, I believe cryptocurrencies need to go; their underlying blockchains may have more redeeming value but they need to go, too, because more than being a match for real-world cynicism, they often enable it.

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Non-fungible tokens (NFTs) are units of data that exist on the blockchain. According to Harvard Business Review:

The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.

NFTs have been in the news because the auction house Christie’s recently sold a (literal) work of art secured as an NFT for a stunning $69.3 million (Rs 501.37 crore). The NFT here is a certificate of sorts attesting to the painting’s provenance, ownership and other attributes; it exists as a token that can be bought or sold in transactions performed over the blockchain – just like bitcoins can be, with the difference that while there are millions of bitcoins, each NFT is permanently associated with the artwork and is necessarily one of its kind. In this post, I’m going to address an NFT and its associated piece of art as a single, inseparable entity. If you read about NFTs in other contexts, they’re probably just referring to units of data.

The reason a combined view of the two is fruitful here is that AFP has called crypto user Metakovan’s winning bid “a shot fired for racial equality”, presumably in the crypto and/or crypto-art spaces. (Disclaimer: I went to college with Metakovan but we haven’t been in touch for many years. If I know something, it’s by Googling.) He and his collaborator also wrote on Substack:

Imagine an investor, a financier, a patron of the arts. Ten times out of nine, your palette is monochrome. By winning the Christie’s auction of Beeple’s Everydays: The First 5000 Days, we added a dash of mahogany to that color scheme. … The point was to show Indians and people of color that they too could be patrons, that crypto was an equalizing power between the West and the Rest, and that the global south was rising.

This is a curious proposition that’s also tied to the NFT as an idea. The ‘non-fungible’ of an NFT means the token cannot be replaced by another of its kind; it’s absolutely unique and can only be duplicated by forging it – which is very difficult. So the supply of NFTs is by definition limited and can be priced through speculation in the millions, if need be. NFTs are thus “ownership certificates for digital art that imbue” their owners “with demonstrable scarcity,” as one writer put it. This is also where the picture gets confusing.

First, the Christie’s auction was really one wealth-accumulator purchasing a cultural product created by consuming X watts of power, paid for using a new form of money that the buyer is promoting, and whose value the buyer is stewarding, in a quantity determined by the social priorities of other wealth-accumulators, to an artist who admits he’s cashing in on a bubble, plus allegations of some other shady stuff – although legal experts have also said that there appear to be no “apparent” signs of wrongdoing. What is really going on here?

Minting an NFT is an energy-intensive process. For example, you can acquire bitcoin, which is an example of a fungible token, by submitting verifiable proof of work to a network of users transacting via a blockchain. This work is in the form of solving a complex mathematical problem. Every time you solve a problem to unlock some bitcoins, the next problem automatically becomes harder. So in time, acquiring new bitcoins becomes progressively more difficult, and requires progressively more computing power. Once some proof of work is verified, the blockchain – being the distributed ledger – logs the token’s existence and the facts of its current ownership.

‘NFTs are anti-climatic’ is a simple point, but this argument becomes stronger with some numbers. According to one estimate, the carbon footprint of one ether transaction (ether is another fungible token, transacted via the Ethereum blockchain) is 29.5 kg CO2; that of bitcoin is 359.04 kg CO2. The annual power consumption of the international bitcoin mining and trading enterprise is comparable to that of small countries. Consider what Memo Atken said here, connecting NFTs, fungible tokens and the “crypto-art” in between: “Artists should be able to release hundreds of digital artworks” – but “there is absolutely no reason that releasing hundreds of digital artworks should have footprints of hundreds of MWh.”

Of course, it’s important to properly contextualise the energy argument due to nuances in how and why bitcoin is traded. In February this year, Coindesk, a news outlet focusing on cryptocurrencies, rebutted an article in Bloomberg that claimed bitcoin was a “dirty business”, alluding to its energy consumption. Coindesk claimed instead that bitcoins and the blockchain do more than just what dollars stand for, so saying bitcoin is “dirty” based on Visa’s lower energy consumption is less useful than comparing it to the energy, social and financial costs of mining, processing, transporting and securing gold. (Visa secures credit and debit card transactions just like, but not in the same way, the blockchain secures transactions using consensus algorithms.)

However, the point about energy consumption still stands because comparing bitcoins and the blockchain to the Fedwire RTGS system plus banks, which together do a lot more than what Visa does and could be a fairer counterpart in the realm of bona fide money, really shows up bitcoin’s disproportionate demands. Fintech analyst Tim Swanson has a deep dive on this topic, please read it; for those who’d rather not, let me quote two points. First:

“The participating computing infrastructure for Fedwire involves between ten and twenty thousand computers, none of which need to generate [power-guzzling cryptographic safeguards]. Its participants securely transfer trillions of dollars in real value each day. And most importantly: Fedwire does not take the energy footprint of Egypt or the Netherlands to do so. … the more than 2 million machines used in bitcoin mining alone consume as much energy as Egypt or the Netherlands consumes each year. And they do so while simultaneously only securing a relatively small amount of payments, less than $4 billion last year.”

The energy consumption, and the second point, shows up when users need to protect against a vulnerability of consensus-based transactions, called the Sybil attack (a.k.a. pseudospoofing). Consider the following reductively simple consensus-generating scenario. If there is a group of 10 members and most of them agree that K is true, then K is said to be true. But one day, another member joins the group and also signs on 14 of his friends. When the group meets again, the 15 new people say K is false while the original 10 say K is true, so finally K is said to be false. The first 10 members later find out that the 15 who joined were all in cahoots, and by manufacturing a majority opinion despite not being independent actors, they compromised the group’s function. This is the Sybil attack.

Because the blockchain secures transactions by recursively applying a similar but more complicated logic, it’s susceptible to being ‘hacked’ by people who can deceptively conjure evidence of new but actually non-existent transactions and walk away with millions. To avoid this loophole without losing the blockchain’s decentralised nature, its inventor(s) forced all participants in the network to show proof of work – which is the mathematical problem they need to solve and the computing power and related costs they need to incur.

Proof of work here is fundamentally an insurance against scammers and spammers, achieved by demanding the ability to convert electrical energy into verifiable digital information – and this issue is in turn closer to the real world than the abstracted concepts of NFTs and blockchain. The problem in the real world is that access to crypto assets is highly unequal, being limited by access to energy, digital literacy, infrastructure and capital.* The flow of all of these resources is to this day controlled by trading powers that have profited from racism in the past and still perpetuate the resulting inequality by enforcing patents, trade agreements, import/export restrictions – broadly, through protectionism.

* Ethereum’s plan to transition from a proof-of-work to a proof-of-stake system could lower energy consumption, but this is an outcome fantasy and also still leaves the other considerations.

So even when Black people talk about cryptocurrencies’ liberating potential for their community, I look at my wider South and Southeast Asian neighbourhood and feel like I’m in a whole other world. Here, replacing banks’ or credit-card companies’ centralised transaction verification services with a blockchain on every person’s computer is more of the same because most people left out by existing financial systems will also be left behind by blockchain technology.

Metakovan’s move was ostensibly about getting the world’s attention and making it think about racism in, for some reason, art patronage. And it seems opportunistic more than anything else, a “shot fired” to be able to improve one’s own opportunities for profit in the crypto space instead of undermining the structural racism and bigotry embedded in the whole enterprise. This is a system which owes part of its current success to the existence of social and economic inequalities, which has laboured over the last few decades to exploit cheap labour and poor governance in other, historically beleaguered parts of the world to entrench technocracy and scientism over democracy and public accountability.

I’m talking about Silicon Valley and Big Tech whereas Metakovan labours in the cryptocurrency space, but they are not separate. Even if cryptocurrencies are relatively younger compared to the decades of policy that shaped Silicon Valley’s ascendancy, it has benefited immensely from the tech space’s involvement and money: $20 billion in “initial coin offerings” since 2017 plus a “wave of financial speculation”, for starters. In addition, cryptocurrencies have also helped hate groups raise money – although I’m also inclined to blame subpar regulation for such a thing being possible.

I’ll get on board a good cryptocurrency value proposition – but one is yet to show itself. The particular case of ‘Everydays’ and the racism angle is what rankles most. “Depending on your point of view, crypto art could be the ultimate manifestation of conceptual art’s separation of the work of art from any physical object,” computer scientist Aaron Hertzmann wrote. “On the other hand, crypto art could be seen as reducing art to the purest form of buying and selling for conspicuous consumption.” Metakovan’s “shot” is the latter – a gesture closer to a dog-whistle about making art-trading an equal-opportunity affair in which anyone, including Metakovan himself, can participate and profit from.

If you really don’t want racism, the last thing you should do is participate in an opaque and unregulated enterprise using obfuscated financial instruments. Or at least be prepared to pursue a more radical course of action than to buy digital tosh and call it “the most valuable piece of art for this generation”.

This brings me to the second issue: what can the energy cost of culture be? For example, Tamil-Brahmin weddings in Chennai, my home-city, are a gala affair – each one an elaborate wealth-signalling exercise that consumes thousands of fresh-cut banana leaves, a few quintals of wood, hundreds of units of power for air-conditioning and lots of new wedding clothes that are often worn only once or a few times – among many other things. Is such an exercise really necessary? My folks would say ‘yes’ in a heartbeat because they believe it’s what we need to do, that we can’t forego any of these rituals because they’re part of our culture, or at least how we’ve come to perform it.

To me, this is excessive – but then I have a dilemma. As I wrote about a similar issue last year, vis-à-vis Netflix:

Binge-watching is bad – in terms of consuming enough energy to “power 40,000 average US homes for a year” and in other ways – but book-keepers seem content to insulate the act of watching itself from what is being watched, perhaps in an effort to determine the worst case scenario or because it is very hard to understand, leave alone discern or even predict, the causal relationships between how we feel, how we think and how we act. However, this is also what we need: to accommodate, but at the same time without being compelled to quantify, the potential energy that arises from being entertained.

At this juncture, consider: at what point does art itself become untenable because it paid an energy cost deemed too high? And was the thing that Metakovan purchased from Beeple, ‘Everydays’, really worth it? While I don’t see that it could be easy to answer the first question, the second one makes it easy for us: ‘Everydays’ doesn’t appear to deserve the context it’s currently luxuriating in.

Aside from its creator Beeple’s admission of its mediocrity, writer Andrew Paul took a closer look at its dense collage for Input Magazine and found “juvenile, trollish bigoted artwork including racist Asian caricatures, homophobic language, and Hillary Clinton wearing a grill”. (Metakovan said in one interview that he felt a “soul connection” with Beeple’s work.) ‘Everydays’, Paul continues, “appears to say more about the worst aspects of the art world and capitalism than any one … of Beeple’s doodles: gatekeeping, exploitative, bigoted, and very, very tiresome.”