This was published 1 year ago
Hotels shouldn't be bragging about embracing cryptocurrency or NFTs
By Lee Tulloch
Most leading blockchains use a mindboggling amount of energy, most of it from fossil fuels. Credit: Getty Images
Imagine, if instead of booking a room in a hotel the usual way, the hotel issues you with a digital token that you can sell or trade if you no longer need it, or if its value rises enough to make it an investment.
That is already happening through emerging blockchain technology, as the hospitality industry looks at new ways to engage guests.
Essentially, a blockchain is a kind of database. Unlike traditional databases, blockchains store data in a decentralised way, through a network of multiple computers. They organise data in blocks, with each block linked to the one before it. This forms the chain.
I'm skipping a lot of technical detail here, but each block knows the value of the preceding block, ensuring that the data content cannot be changed. As a result, the data in blockchains is safe from manipulation, which is not the case with ordinary databases.
Blockchain technology has enabled cryptocurrencies such as Bitcoin, Dogecoin and Tether. Bitcoins are "mined", a process that involves no digging, but millions of powerful computers racing each other to generate tokens.
While currency traders and investors have experienced boom and bust with Bitcoin, artists have built a new art market based on the inherent decentralisation of blockchain, disrupting a traditional art market they say is stacked against them.
NFTs (non-fungible or unique tokens) allow digital ownership of works, anything from an image of a Jeff Koons puppy to a capture of Jack Dorsey's first tweet.
Creating works as NFTs allows artists to cut out the middleman (galleries) and sell their work directly to customers – for insane prices in some instances. The most expensive piece of crypto art so far, Pak's The Merge, sold for $US91.8 million ($136 million).
Musicians can use smart contract technology to commit the copyrights of their work to NFTs, which means they will be compensated any time their music is used.
Quickly jumping on the bandwagon have been luxury goods companies such as Gucci and Tiffany and spirits brands like Patron and Hennessey, which have all launched NFT collections and "exclusive" experiences unlocked by buying a token.
Some hotel groups have also been early adopters. Using blockchain, hotels can offer guests access to exclusive or discounted rooms or room packages with add-ons that aren't offered via traditional booking channels. Purchasing a RNT (room night token) this way gives guests the flexibility to sell or trade the token, which may also have a commemorative aspect or be uploaded with personal highlights of the stay.
In 2021 Marriott International unveiled a collection of art NFTs awarded to individuals who could redeem them for travel experiences. Wyndham Hotels partnered with a crypto start-up to create a Bitcoin rewards program for their guests which allows them to claim Bitcoin for cash or loyalty perks.
Dream Hotel in Hollywood created an NFT membership program called Social Club, which members gain access to through purchasable NFTs, unlocking events, access to pools, and VIP concierge services.
That, they say, is just the start.
But so far, it's a bit underwhelming. I'm not that excited about tokens or even exclusive events through clubs, which already exist. And there is one significant problem, which has me sighing every time a hotel sends me a press release boasting about some NFT they've bought or that they're now offering cryptocurrencies as methods of payment.
Most leading blockchains, such as Ethereum, use a mindboggling amount of energy, most of it from fossil fuels. The Bitcoin Network is one of the biggest greenhouse gas emitters (aside from agriculture and industries) in the world. A single Bitcoin transaction uses as much energy as a typical American household over 26 days, or the carbon footprint of watching YouTube for 73,000 hours.
With NFTs, a sale of a single NFT produces about 211 kilograms of CO2 over its lifetime, whereas a point and click sale might produce only 2 kilograms including shipping. The "'Space Cat" NFT, which features a cat in a rocket on his way to the moon, has a carbon footprint that is equivalent to an EU resident's electricity consumption over eight weeks.
Many artists have expressed misgivings and no longer produce NFTs or have transferred to emerging, greener blockchains such as Algorand, which uses carbon offsets. NFTs are new and shiny for now, but they're in danger of becoming naff. Besides, is it conscionable to hog all that precious energy on an NFT of a room reservation when a few clicks of the keyboard might do as well?
Instagram: Instagram.com/bymrsamos
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