NFTs, cryptocurrency, blockchain and Web3 are bad for the environment: The new watch trend is hypocritical with self-proclaimed “green” low-carbon claims

Tell me who you’re dealing with and I’ll tell you who you are. -Johann Wolfgang von Goethe

The luxury watch industry depends heavily on credibility. The belief in superior quality is arguably the main reason why people are willing to shell out four, five, or six figures to buy a watch. When the watch-buying public begins to doubt a brand’s quality standards due to a loss of credibility, the future of the brand is seriously called into question.

For these reasons, I have watched with some concern as various watch brands have started to enter the cryptocurrency/blockchain/non-fungible token (NFT) world. This area is highly specialized in skills not normally associated with traditional watchmaking. A lathe isn’t much use if, for example, you’re trying to evaluate a particular public-key cryptographic standard (and vice versa). Because of this, watchmaking’s entry into the crypto space almost always involves a partnership with another person or organization already active in that space.

And this is where the industry is exposed to risks.

Bitcoin Mining Farm Server (Photo courtesy of Marko Ahtisaari/Wikipedia)

trustworthiness of Cryptocurrency and NFT community

There is widespread fraud and intrigue in the cryptocurrency and NFT community. In a recent interview with Bloomberg, a cryptocurrency entrepreneur with an estimated net worth of $24 billion explained an emerging cryptocurrency fad called “yield farming.” The interviewer concluded that this was nothing more than a Ponzi scheme.

We should not equate financial success with value creation. Convicted Ponzi schemer, after all Bernie Madoff at one point had an estimated net worth of $17 billion (he also had quite a decent watch collection sold out by US Marshalls already in 2009).

Software engineer Molly White runs web3isgoinggreat.com, a website that summarizes all the unseemly activities going on in the cryptocurrency world. The site’s motto is “web3 is doing great and is definitely not a huge crime pouring lighter fluid on our already smoldering planet.” To be clear: web3 is a new buzzword for the cryptocurrency space and its related activities.

This is also indicated by White’s motto web3 consumes enormous amounts of energy, a by-product likely to exacerbate climate change. As a side note, any watch brand that touts its environmental initiatives while also entering Web3 territory is arguably hypocritical.

White’s website maintains a running count of reported funds lost through web3 fraudulent activity. To date, it stands at $9.5 billion. That’s a lot of Grim. In May 2021, the U.S. Federal Trade Commission reported a 10-fold increase in cryptocurrency investment fraud losses. The list goes on.

The risk for a watch brand is that it messes with a “cryptocurrency expert”, a fraud scandal ensues, the brand’s reputation is irrevocably damaged, collectors question the brand’s claims about the quality of the product, and it will also be the end for this brand. While that might seem a distant possibility, there’s already an episode that illustrates a good chunk of this awaiting catastrophe.

Jacob & Co. SF24 Tourbillon NFT

About a year ago, Jacob & Co. announced it would sell the world’s first NFT luxury watch: the SF24 Tourbillon “Unique piece.” The plan was to continue auctioning off the NFT watch ArtGrails, a self-proclaimed “standalone blue-chip NFT platform”. After the auction was supposedly closed, the The reported result was that the NFT sold for $100,000.

The problem is that the SF24 Tourbillon digital asset was never minted on the blockchain, or at least I can’t find it. Back in November 2021, Twitter user @tea profit described ArtGrails’ many bugs, noting: “@Jacobandco X @argrails [sic] Drop they couldn’t sell anyone but themselves lol, wasn’t even minted, no proof on the blockchain.” I posted these irregularities on my Instagram stories asking if anyone could find the SF24 tourbillon on the blockchain and give me theirs address via DM.

I was greeted with silence. I invite readers to read 676 items by ArtGrails actually minted on the blockchain to see if they can find the SF24 Tourbillon.

It’s one thing to debate whether digital assets are actually worth money. However, if the digital asset itself doesn’t even exist on the blockchain, there’s absolutely no reasonable basis to argue that it’s worth anything, let alone $100,000.

When ArtGrails founder Avery Andon was asked about these events, he replied on Twitter, “These were made in the early days and never promised any use outside of art.” While the definition of an NFT is somewhat shrouded in mystery, the general understanding is that it typically involves the minting of a token on a blockchain . Unless the seller doesn’t seem to promise any benefit, whatever that means.

At the end of the day, watch brands need to ask themselves if the risk that comes with the Web3 space, along with environmental damage, is worth any potential reward. Watch collectors should also ask themselves whether a watch brand’s decision to participate in web3 signals a level of risk-taking they can live with.

As complicated manufacture movements gain wider acceptance, buying a watch means a collector is relying on a manufacturer’s long-term viability. When a risk-taking manufacturer disappears, servicing a particular watch can be prohibitively expensive or perhaps impossible. For now, it might be reasonable to conclude that the best brand is the one that decides NFT stands for “not for that” manufacturer.

Brendan M. Cunningham, PhD, is an economics professor at Eastern Connecticut State University and founder of www.horolonomics.com. He has a forthcoming book on Rolex history; You can learn more by visiting www.sellingthecrown.com and signing up for email updates about the project.

You can also enjoy:

Real or illusory? A watch collector’s foray into the world of digital collectibles and NFTs

What happens after a watch is stolen? Art Recovery’s Chris Marinello can help

View Mutual Funds: Show Me the Money!

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers