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Today we tackle some of the more controversial topics in crypto. From energy usage to high fees to NFTs.
ELEPHANT #1 - ENERGY
Politicians are constantly talking about the “energy problem” with Bitcoin. Some sources say 2000 kwh for a single Bitcoin transaction, which is roughly double what Nick uses during the month of July! Can Bitcoin really use that much energy?
Gerbz believes that the argument of breaking Bitcoin’s energy “per transaction” is flawed from the start, because it’s not taking into account that the energy is the security layer for the network (mining, confirmations, etc.) It’s like taking how much energy Nestle corporation uses and dividing it by how many Kit Kats they produced - you can’t just draw a line between separate variables.
Nick adds that energy usage itself isn’t bad, it’s the carbon and waste production that causes the problems. But a clean, renewable energy source would make this problem a non-issue.
Gerbz points out that the high energy usage of Bitcoin also encourages the energy industry to find cleaner and more sustainable ways of powering future technologies. Also, Bitcoin’s energy usage is what “binds” it to our reality - otherwise, it would just be fake internet money.
ELEPHANT #2 - NFTs
Nick thinks that although NFTs are cool, there’s a problem with the craziness of people spending $200,000 on a JPG of an ape.
Gerbz thinks that it is a bit crazy, but it is a cool entry of art into the crypto space.
Nick’s main beef is that art has value for two reasons - because of who painted it (historical, famous, etc) as well as the enjoyment of looking at it (utility). With NFTs and the ability to screenshot them, the viewing experience is the same - so the only thing left to provide value is the first category. Does a random Twitter user’s art garner value on its own? Nick also asks, “What IS art?”
Gerbz like to think of the minting of the artwork on the blockchain “is” the original in an official sense, because natively digital art has a problem establishing a “first production run” like printed pieces. Gerbz also says that NFTs provide ownership rights to artwork, whereas the current system is more archaic (guards with guns in front of the Louvre).
Nick thinks that a good way to sum it up is that something of value that is minted as an NFT is cool, but that NFTs in and of themselves don’t make art valuable. This is essentially Nick’s problem with people saving JPGs or selling a rock for thousands of dollars.
ELEPHANT #3 - ETHEREUM’S CENTRALIZATION
A Redditor posted a thread with concerns about ETH’s centralization. He said ETH’s first hard fork was evidence that ETH was willing to change for the “whales” and not users/miners.
Gerbz thinks a bigger issue is that ETH was premined (essentially the first ICO) - which means many “insiders” had a chance to get in at a base level price before the general public. Gerbz adds that although Satoshi mined the first Bitcoins, he also released the tools to the others - in addition, most of those coins have never moved.
Gerbz points out that, after the DAO hack, a decision in the ETH community was made to roll back the blockchain to a time before people lost their money, but Nick also questions if this goes against the principles of the blockchain (supposedly being uneditable).
Gerbz also points out that ETH is currently a proof-of-work system and that the miners are often the whales, so this hard fork (ETH/ETH Classic) was probably beneficial to most users at the time.
Nick also asks if it’s a problem that someone like Vitalik exists, being “Mr. Eth” - in contrast to Bitcoin, where Satoshi is ghost. Gerbz agrees that it’s definitely a problem, but people should stop trying to make ETH into Bitcoin - it’s its own thing.
ELEPHANT #4 - ILLEGAL ACTIVITIES
Nick brings up that illegal sales, “Silk Road” sites, and other illicit activity are often referred to by politicians as arguments against Bitcoin and cryptocurrency in general. Gerbz also adds that from his perspective, they talk just as much about cryptocurrency’s potential for tax crimes.
Sources tend to indicate that only 0.5% of all crypto activity is used for illegal things, so it’s ridiculous to highlight such a small percentage. Gerbz believes it all comes down to the governments of the world wanting to get their tax dollars, and that it’s not fair to blame a technology itself if some people use it for evil - the other side is that 99.9% of people are getting a better financial system, so we need to weigh the pros and the cons. Terrorists are probably using Whatsapp, but we don’t ban the app - we can’t target technology for what the users do on their own.
Gerbz thinks that a lot of the illegal concerns are because of a lack of understanding - they don’t “get” the tech. Nick adds that this confusion about the technology creates “fear.”
ELEPHANT #5 - STEEP FINANCIAL ENTRY POINT
Nick brings up that people talk about how crypto is for the working public, but then when newcomers complain about fees costing more than transactions, the community tells them to stop complaining.
Gerbz agrees that it’s a huge issue, and that the congestion is absolutely a problem that will get better as the technology becomes more mainstream.
One thing to consider is that time is the most valuable thing in life, and the earliest adopters will be the most successful. Even in early adoption, the networks still get congested - the steep entry point with fees in definitely unfortunate, but it will evolve and improve over time.
ELEPHANT #6 - SHITCOINS
Nick thinks that shitcoins are hurting the space more than they help. People claim that although shitcoins are bad, at least they “bring people into crypto” - but Nick disagrees. These people simply get angry they lost their money and never come back.