When we first caught wind of Bike Club NFT, claiming to be 'the world’s first blockchain-based cycling club', we also noticed that the idea was met with a pretty scathing reaction from some corners of the cycling community. After the second wave of backlash we got a message from Bike Club, and thought it was time to put some questions to two of the founders: Tyler Benedict, also the founder of Bike Rumour, and Richard Mitchelson, the popular cycling artist also known as Rich Mitch.
*Press play to listen to the interview, keep scrolling for bonus musings
A decentralised cycling club with members from all over the world, happily chatting away online about their shared love of all things bike… sounds great, right? Almost a little bit like the original concept of road.cc when we started out way back in 2008. It’s also what the founders of Bike Club NFT say they have started; however, it turns out if you add in the word ‘NFT’ and require members to buy in using the controversial cryptocurrency called Ether, you risk making at least half of cycling Twitter pretty mad.
Environmentally damaging, 'Ponzi scheme', 'scam' were some of the terms and accusations being thrown around, and it was all turned up a notch when the former pro-turned presenter and commentator Matt Stephens announced his involvement earlier this month.
Stephens is a highly respected and much-loved personality in cycling, so it was perhaps unexpected to see such fury directed his way, even if what he'd got himself involved in was controversial. Rich admitted to us that he expected some backlash, but was taken aback by the ferocity. To understand why for those who don't know anything about NFTs, it's important to clarify what they are first...
What are NFTs?
NFTs (non-fungible tokens) are unique pieces of data stored on a digital 'ledger'. They often take the form of images, but even Tweets can be stored as NFTs. The blockchain it is stored on contains proof that the owner bought it. That means it's a digital asset, like a physical one, and owners can claim the asset holds value, because the file contains a digital certificate of sorts that proves they own the original. In the case of Jack Dorsey's first tweet sold for $2.9 million, the buyer received signed confirmation of the sale from Dorsey and meta data accompanying the tweet, arguably meaning that it holds much greater value than finding the tweet and simply saving a screenshot.
In the case of Bike Club, the NFTs are 10,000 unique cycling-themed avatars created by Rich Mitch, that will then be sold for the equivalent of around $200 each using the Ethereum blockchain to make transactions. They are set to be 'minted' (put up for sale) this spring.
Why the backlash?
The first big sticking point – that might be particularly pertinent for many cyclists who believe their choice to get around by bike is better for the planet – is the environmental concerns. This isn't so much about the NFTs themselves, rather the cryptocurrency that is used to buy and sell them. Bike Club's NFTs are set to be sold using Ether, the currency native to the open-source Ethereum blockchain.
Ethereum is currently built on the 'proof of work' mechanism, which means that in order to maintain the network and prove transactions are genuine, Ethereum 'miners' solve complex puzzles to add blocks to the chain. Miners are rewarded with Ether for doing the work, so are incentivised to do so. In order to severely compromise the chain you'd have to use enough computing power to take out more than half of it, which would be so expensive it would outweigh the gains you would make. It's been claimed that all the computing power needed to mine Ethereum creates a huge amount of greenhouse gas emissions, as much as the entire country of Libya.
There has been talk of Ethereum moving to the much more environmentally-friendly 'proof of stake' mechanism this year, whereby cryptocurrency owners would instead have to put down virtual currency as a deposit against messing up the chain. If they do mess it up, by making a bogus transaction for example, they would lose those coins.
The other main criticism is financial. One artist who has been outspoken about her distrust of the NFT market is Eriana Ura-Smith, who told The Business of Business last year: "The biggest negative of NFTs is clear: The market as it currently exists is a classic Ponzi scheme.
"Users invest in something more-or-less intangible, a digital receipt of ownership of an infinitely replicable image or other online object. The general consensus is that they will, in turn, be able to sell this intangible thing for absurd returns.
"Early investors are paid out from the money coming in from new investors, seeing the success of the early ones. Wash trading inflates the value of NFTs, and original owners slowly cash out by selling off the NFTs they've minted for extraordinary prices."
The Financial Conduct Authority also warns: “Cryptoassets are unregulated and high-risk. We have repeatedly warned people should be prepared to lose their money.”
Why does Bike Club say it is different?
To those not involved in the buying or selling of NFTs, one of the most bewildering things is understanding why you'd want one and why it's worth anything. What is the point of paying eight grand to 'own' a digital image of a Colnago when a half-decent graphic designer could knock you something up for a fraction of that price? Or, you could just buy a real one...
This is where Bike Club says it differs, with Tyler reeling off the many benefits he says the club will offer besides the digital asset: free access to the Bike Club community forum on Discord, discounts and offers from Bike Club's surprisingly large list of brand partners, 10% of Bike Club proceeds going to cycling-related charities, and the prospect of using your unique avatar in virtual games after the mint phase.
There's also the decentralisation aspect:
"Bike Club stands on its own without the NFT," says Tyler.
"The decentralisation is really the whole premise of Web 3.0, which encompasses NFTs, cryptocurrency and the whole concept of taking the control and the information and everything back down to user level.
"We're never going to force you to reveal your true identity, we're never going to force you to pay anything, and we're not going to capture your data to sell against advertising."
On the environmental concerns, Tyler admits that Ethereum and Bitcoin is very energy-intensive, but claims that proof of work isn't always dirty:
"A lot of the energy usage for these things, Bitcoin mining in particular, comes from places where there is an abundance of energy.
"The truth is... there are areas where there is an abundance of wind-generated energy, and the infrastructure has been built to hold that energy right there, but the infrastructure has not been built to move this energy out to the bigger cities and places where it's needed.
"So to justify that build-out expanse, somebody needs to use that power. And so what Bitcoin miners will do is go to these areas and actually consume that power.
"People who were mining in China... it was all coal-fired so it was extremely dirty. Now we've moved all that to other places where there is greener energy.
"These sensational headlines do not tell the story."
On the financial side of things, Tyler and Rich appear to be as scathing as anyone else about heavily 'hyped' projects, where a very anonymous creator might drive up the price of whatever it is they are selling with clever marketing, then disappear when they've bagged a huge amount of cryptocurrency.
Rich and Tyler argue that the first reason this won't happen with Bike Club is that they - alongside the other two creators, the founder of DeFeet and a former member of the Equipe Z pro cycling team respectively - have reputations to maintain.
They also claim that because the value of the NFT is tied to club membership, and the community exists on its own without the NFTs, it's unlikely that members of the club will simply cash out if/when their NFT skyrockets in value.
"With a lot of the NFTs you see people cashing out for tons, those tend to be the art and the hype projects," says Tyler.
"Some people maybe get lucky and make a whole bunch more crypto coins, who knows.
"We're going to offer a lot of utility and benefits just for being part of the community, without you ever having to buy an NFT."
NFT, or NFI?
So, have I changed my mind about NFTs – and specifically online cycling clubs that involve NFTs – after speaking to Tyler and Rich? I’m still not completely sure. I think Tyler’s prediction that NFTs and cryptocurrency will explode so much this year that they will be unavoidable is pretty far-fetched, and I still don’t fully understand why crypto needs to be involved at all if Bike Club's intentions to start a worldwide cycling club are as honourable as it is claiming.
I now understand that what Bike Club members will be buying is perfectly tangible, so feel like the accusations about it being a 'scam' or pyramid scheme were largely addressed; but I don't think our questions about environmental concerns were answered fully. Although we learned that, according to Tyler, not all energy being used to mine Ethereum is dirty, and the promise of moving to proof of stake is encouraging, I think Bike Club will struggle to convince the wider cycling community that this venture won't be at all environmentally damaging, especially while Ethereum is still built around the proof of work system.
As mentioned towards the start of the pod episode, maybe I’m the dinosaur US senator and Tyler is Mark Zuckerberg trying to explain a concept I don’t fully understand yet. Even so, Ryan and I came away thinking that Rich and Tyler seem like they genuinely have good intentions (even if we did decline the offer of joining the Bike Club NFT Discord), and we’re pretty fascinated to see how this all plays out.
Images courtesy of Bike Club NFT
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