NFT scams, toxic “mining” and lost life savings: Cryptocurrency dream is fading fast | David A Banks
cCoins are supposed, according to their most ardent proponents, to replace the currencies of existing nations and end central banks’ control of the money supply. Instead, individuals will be able to trade with each other in a decentralized digital financial system. This is a good thing, they promise, because unlike states and their central banks, technology is incorruptible. Code missionaries imagine technology as an alternative to social and political institutions.
But technology does not replace social and political behaviour. It only changes the rules and norms that we follow. To actually see this, one need only look at the declining value of Terra Luna, a digital currency that crashed 98% in one day, causing some investors to lose their life savings; depreciation of bitcoin and ethereum; Or victims of the countless scams that have stolen non-fungible tokens (NFTs). NFTs use the same blockchain technology as cryptocurrencies, such as Bitcoin, to trade algorithm-generated illustrations that engage a topic. Shown by the cartoons are Bored Apes, Lazy Lions, and “CryptoDickButts”. Although NFTs are aesthetically uninspiring, they can sell just as much Like $91.8 million – As their value increased, so did the scams involving the theft of NFTs. Just last month, Bored Ape Yacht Club’s Instagram account was hacked, and the perpetrators stole $3 million worth of NFT by directing followers to a fraudulent site.
When a scammer steals CryptoDickButt, it all gets high Data on the decentralized power of the blockchain disappears, as fraud victims beg for a handful of cryptocurrencies Exchanges to prevent the sale of stolen NFT. The underlying technology and its tokens may be decentralized (and even that claim is questionable, given that the cryptocurrency markets are largely concentrated in the hands of a few hundred people), but where you can actually buy, use and sell these things is still limited to a few services and exchanges. This forces cryptocurrency enthusiasts to recognize the hard truth: currencies and contracts are as valuable or doable as the people and institutions that acknowledge their legitimacy. Blockchain technology does not change this fact at all.
In turn, countries and institutions have begun to treat cryptocurrencies as a potentially destabilizing geopolitical force, as they put a limit and tax the huge amounts of energy consuming cryptocurrency miners. The crypto-mining industry already consumes 0.55% of global energy production – About as much as a small country. Some have gone so far as to put the kibosh on blockchain technology entirely. China effectively banned mining and use of cryptocurrency in late 2021; Prior to that, the country was the largest bitcoin miner by volume, accounting for up to 75% of the global volume in September 2019. The reasons for banning cryptocurrencies are likely a combination of reducing energy consumption in cryptocurrency mines, and protecting citizens from Fraud and control of the flow of funds within the country and with China’s trading partners. So far, China is the only government that has taken an aggressive step toward extricating itself from this technology, but other countries face similar problems.
Russia has learned this lesson in the past few months, starting in January when crypto miners set up shop in nearby Kazakhstan after being expelled from China. Their mining servers have taken a heavy toll on the power grid of the Central Asian country, using up to 8% of its total power generation capacity, as it is quickly becoming the second largest producer of cryptocurrency after the United States. Despite efforts to control the industry through energy taxes, citizens of Kazakhstan rioted over rising fuel prices and unreliable electricity. Russian forces and neighboring countries were called in to quell the violence in January, even with most of their attention focused on Ukraine.
The war in Ukraine proved to be a different but equally crucial moment for the geopolitics of cryptocurrencies. Ukraine’s Deputy Prime Minister, Mikhailo Fedorov, announced on March 3 that his government would issue an NFT to raise funds for the war effort. So far, the Ukrainian government has amassed $50 million worth of cryptocurrency since the war began, although there are very few of them Report who exactly is collecting money for the purchase of weapons in Ukraine in this way. “Most of the donations come from people,” said Alex Bornyakov, Ukraine’s Deputy Minister for Digital Transformation, while others come from companies.
Russia itself is a huge crypto player, providing 11% of the world’s bitcoin mining capacity. The country’s influencers should be grateful, given that trade between the Russian ruble and crypto assets has doubled since the start of the attack on Ukraine. It seems that getting around the sanctions by converting rubles into crypto assets is working at the moment, but this may end soon. Just as scam victims are rushing to ask NFT trading sites to blacklist a stolen monkey, cryptocurrency exchanges are under pressure to stop Russians from using their platforms. There has been a strong debate in the industry as to whether this goes against the whole idea of the technology, but the main point is that cryptocurrency has not brought about a financial revolution, it has given states and scam artists a new piece to play on the grand chessboard.
This is only the beginning. Producing mysterious financial assets using coal-fired electric grids is contributing to a rapidly warming planet already suffering from the worst droughts seen in over 1,000 years in California and severe monsoon seasons in India. All the ethereal images associated with cryptocurrencies are obscured by the fact that they consist of millions of tons of coal, copper, rare earth metals, and plastics. The servers that mine cryptocurrency on planet Earth are located in real countries with laws, wars and lack of resources – governed by politicians with real obligations and interests. With the Russian invasion of Ukraine, we are beginning to see the emerging geopolitics of cryptocurrencies that closely resemble the old world of banking and finance.