Cryptocurrency, blockchains, NFTs. Unless you stay up to date on the world of fintech (financial technology), odds are you aren’t too familiar with these terms — and you’re not to blame. It’s a whole new approach to capitalism that might feel confusing or even daunting. But as this technology grows in popularity (and in financial value), K-Pop companies have begun integrating it into their offerings. So here’s a quick breakdown of what it all means, and how it concerns K-Pop fans.
What even is cryptocurrency?
We’ll spare you the history lesson and computer science behind it all, but essentially, cryptocurrency decentralizes the exchange of money. In other words, instead of banks being in charge of everyone’s money, the people themselves do the job.
Unlike traditional currency, crypto is entirely digital. You can’t exchange Bitcoin (the world’s first cryptocurrency) at a bank. Instead, you would have to work with a third-party broker who’ll buy it from you — for sky-high prices. Right now, the value of 1 Bitcoin is almost $70,000 USD, a number that will keep climbing as demand for Bitcoin grows.
Since cryptocurrencies do away with traditional banks, they had to find an alternative. Instead of private businesses handling everybody’s money, these digital currency exchanges are recorded on digital ledgers known as blockchains. These public records allow everyone to track the flow of the currency.
Instead of using bank tellers, crypto transactions are monitored by volunteers known as “miners.” They are in charge of making sure people have enough currency to fulfill a transaction, in which case the exchange is verified.
But why would anybody spend hours of their time and thousands of dollars on equipment to do this? Basically, it earns them more currency. With each transaction they complete, new currency is pulled out of thin air and put under their name. Much like traditional mining requires digging through the earth to uncover new materials, cryptocurrency miners dig through numerous transactions to create new currency.
Back to NFTs: the word that K-Pop fans have been seeing a lot of in recent weeks. NFT stands for “non-fungible token.” “Non-fungible” can be adequately replaced with the words “irreplaceable” or “unique.” So essentially, it’s something that’s one-of-a-kind. And to many people, that makes it worth a lot of money.
By purchasing an NFT, you get ownership over that specific item, whether it’s a photograph, artwork, video, anything. The transaction is recorded into a blockchain,the most commonly used one for NFTs being Ethereum. And then it’s yours!
One aspect of NFTs that fuels its popularity is its unique take on art collecting. Collectors can purchase NFTs for artwork they enjoy, thus supporting artists they like. However, this doesn’t mean that the owner receives any physical result of their purchase. The proof of their ownership is simply a record within the blockchain.
Take Twitter founder Jack Dorsey‘s first-ever tweet, for example. The first tweet ever made on the now booming social media platform sold for over $2.9 million dollars as an NFT to a Malaysia-based businessman. Dorsey remains in control of his Twitter account and the tweet remains under his name. But somewhere within Ethereum, it’s written that the tweet is owned by Sina Estavi.
just setting up my twttr
— jack⚡️ (@jack) March 21, 2006
What’s the catch?
Because of how many computers are required to keep track of all this information, NFT transactions take a lot of electricity. Tons of power goes into verifying the transaction, exchanging the currency, and transferring ownership of the NFT. American journalist Johnny Harris explained that as of April 2021, Ethereum was using around 33 terawatt-hours of electricity. A terawatt-hour is one trillion watts per hour — meaning Ethereum was using as much power as the entire country of Serbia.
And this power often comes from power plants running on fossil fuels which emit carbon into the atmosphere, contributing to the global danger of climate change. To many supporters of NFT, the environmental impact is not a pressing concern considering traditional money systems also contribute to climate change. However, critics urge against spending time on a system that is equally as harmful.
Crypto in K-Pop
So what does all of this have to do with K-Pop? Well, just recently, BTS‘s company, HYBE, announced its plans to work with fintech company Dunamu to dive into crypto; and SM Entertainment founder Lee Soo Man revealed the company’s intention of investing in NFTs at a blockchain conference. Fans were concerned upon hearing the announcements, as NFT transactions require massive amounts of energy and negatively impact the environment.
Furthermore, Binance, a cryptocurrency exchange, announced a collaboration with SBSMediaNet and KStarLive for a new NFT marketplace called Featured. “THE SHOW FanBox NFT” includes artists like woo!ah!, Kim Jaehwan, WEi, B.I.G, and Pink Fantasy.
— Featured by Binance (@FeaturedBinance) November 9, 2021
Fans can purchase “photocard-styled official clips” of these artists’ performances on THE SHOW. There are five ranks to the NFTs, ranging from 24 “Legendary” NFTs to almost 20,000 “Common” ones. Owners of the top two ranks, “Legendary” and “Epic” will receive “lifetime access to THE SHOW recording in Seoul, South Korea.”
You might be asking, “What’s the point? I can still screenshot the picture or download the video without buying it.” And you’re absolutely correct. But the purchasers of the NFT would have technical ownership over it (as well as a handful of benefits from Featured).
In the world of K-Pop where fans are familiar with buying, selling, and trading unique and collectable items, perhaps NFTs aren’t the most unfathomable avenue for companies to take. However, the amount of energy necessary to complete these transactions has many fans concerned over the possible negative environmental impact. Read more about HYBE founder Bang Si Hyuk‘s decision to enter the world of crypto — and fans’ subsequent worries — below.