New research published online in the December issue of the Journal of Responsible Technology examines Non Fungible Tokens, or NFTs, and blockchain technology through an ethical framework. It found that there are no ethical use cases for NFTs that justify their use and sale.
NFTs have been a significant topic of conversation since the previous year. NFTs are unique identifiers recorded in a blockchain that cannot be copied or subdivided. They work as certifications of authority and ownership. In the current usage of the word, it represents “a sub-culture in cryptocurrency that allows someone to claim ownership of digital artwork.” Although the concept of NFTs has been around since 2014, intrigue around them peaked in 2021 with digital artists, celebrities, and tech billionaires all jumping on the bandwagon to create and sell their own NFTs. As The Swaddle, noted earlier, “NFTs allow digital ownership of anything deemed artistic — people have purchased a publicly available 10-second video clip for $6.6 million, one of a LeBron James slam dunk for $200,000, Jack Dorsey’s first tweet, Rick & Morty images for $2.3 million. The Nyan Cat gif, which has been in public circulation for decades now, ended up selling for $600,000.”
The usage of the term “NFT” on the internet surged by 11000% last year. As far as their uses cases are concerned, they became status symbols that denote authenticity and ownership. Elsewhere, people skeptical of the Blockchain and NFTs have cautioned about the environmental and ethical concerns of using cryptocurrency and blockchain.
The current study reinforces these ethical concerns by examining NFTs and their use cases through an established Code of Ethics standard set by the New York-based Association for Computing Machinery (ACM). Catherine Flick, who authored the study, wrote “questions have been raised around the sustainability, environmental impact, and exploitative practices within this space – and whether there are, in fact, any possible socially responsible use cases for NFTs.” Using the ACM’s code’s framework, they aim to “fill a gap in the literature surrounding NFTs, primarily through a thorough ethical analysis of the technology and its implementation, deployment, and sustainability.”
Last updated in July 2018, the ACM’s code “is designed to inspire and guide the ethical conduct of all computing professionals, including current and aspiring practitioners, instructors, students, influencers, and anyone who uses computing technology in an impactful way.” It sets out 25 ethical rules that computing professionals should follow, including, among others, respecting people’s privacy, avoiding harm, designing secure computing systems, and being honest and trustworthy.
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In their analysis of NFTs and blockchain through every principle of the code, Flick observed that NFTs fail to live up to almost any of the principles. For instance, the study states how NFTs have failed in living up to the first and foremost principle of the Code: to contribute to society and to human well-being, acknowledging that all people are stakeholders in computing. In other words, any new computing technology should ensure to serve human good and progress. The present study highlighted that in the case of NFTs, “there appears to be little to be gained in terms of human well-being other than through gains in capital, and that is generally at someone else’s loss.”
Considering the other principles of the code, they also note that the volatile market of cryptocurrency trading may affect the mental health of those enthusiastic about cryptocurrencies. Moreover, they write, the tactics employed by current cryptocurrency influencers to lure others into getting into NFTs and the crypto market are often reminiscent of ponzi schemes. They further note that a large part of cryptocurrency and blockchain technology is shrouded in secrecy, so much so that people have often been scammed of their money with fake NFTs. They also note how theft in NFTs is common. All of this highlights the security risks of NFTs and blockchain technology — and how there are few, if any, cases in which their use has been toward a greater good.
“The biggest draw of blockchain technology, like crypto and NFT, is the promise of more wealth and more ownership rights… with crypto and NFT, the meaning of value is abstracted to a degree that makes it hard to grasp and even harder to access. This abstraction works to obfuscate the fact that these storehouses of value are leading us into catastrophic ecological decline and devaluation of women’s bodies and labor,” The Swaddle observed last year. Studies estimating the ecological damage of cryptocurrencies have determined that Bitcoin is responsible for as much environmental destruction as the beef industry, highlighting the disproportionate impact this exclusionary technological innovation has on the planet.
Instead of aiming toward more collectivity, moreover, NFT and blockchain technology remain accessible only to those who understand them — and is thus a technology that is heavily mediated by gatekeeping.
Commenting on the failure of NFTs and blockchain technology to live up to the principles set by the AMC, the study suggests that “unless there is absolutely no other way to solve a problem other than using NFTs, then they should not be implemented.” This points to how much of the cryptocurrency and blockchain ecosystem is based almost entirely on a hype economy. The key, perhaps, is not in inventing new ways to own art and information but in finding methods to share them.
Note: a previous version of this article incorrectly attributed the study to multiple researchers.