Environmental impact of NFTs
NFTs, or non-fungible tokens, have become increasingly popular in recent years. It is mainly used to convey the proprietorship of digital art and collectables. NFTs have, from time to time, risen to the extent of fine art.
But there’s a hidden cost with NFTs — the environmental impact of using the blockchain to transfer assets. Cryptocurrency’s energy consumption and its effect on the environment have lately become a hot topic. The increase in NFTs is only adding fuel to the flames.
How NFTs work
NFT is a non-fungible token that deploys blockchain technology to validate the ownership of an asset. It holds detailed information that makes NFTs stand out differently from cryptocurrencies. Most importantly, the whole idea of NFTs is based on fungibility, so one cannot replace an NFT with an identical NFT because they’re non-fungible. Any Bitcoin can be exchanged with any other bitcoin and is worth the same as any different Bitcoin, but this is not the case with NFTs.
Most of the NFTs use the Ethereum blockchain to convey ownership. When someone purchases an NFTs on the Ethereum blockchain, they send an Ether (a transactional token that expedites operations on the Ethereum network) to the current owner or the marketplace facilitating the separate transaction. In return, they accept the NFT in their wallet. The payment also incorporates the “gas fees” or other service charges linked with the transfer. Those particular fees are handed over to the owners of the network of computers deployed to facilitate the transactions on the blockchain.
If you are the owner of an NFT, then it would be equal to owning the rights associated with a collectable or piece of art. It is almost impossible to stop someone from creating a digital copy of a displayed jpeg or video file present in the public domain. However, owning the rights is equivalent to owning the original painting made by an artist, while similar copies are more like owning a cheap print. The original holds value; the image is nearly worthless.
NFTs effect on the environment
The environmental challenge for NFTs is similar to what the cryptocurrency industry battles with.
As mentioned before, a large chunk of NFTs uses the Ethereum blockchain, which uses a proof-of-work system to authenticate each new block. That means all the computers deployed on the network (i.e., miners) try to solve a complicated problem. The first computer on the web that solves the problem receives the right to validate the particular block and collect the gas fees associated with each transaction in the block, along with a reward.
As the price of Ether increases and gas fees climbs, the value of resolving that problem in the proof-of-work system also notices an increase. As a result, miners are granted numerous incentives to invest in more computer power, which draws an increasing quantity of energy from the power grid. If that energy is coming from that supposedly emit greenhouse gases is proving to be harmful towards the environment, it will negatively affect the environment.
The NFTs represent a small portion of transactions on the Ethereum blockchain. It’s a bit confusing whether they’ve moved the needle in terms of the quantity of computer power miners are including in the network to solve those complex problems.
Environmentally friendly NFTs
There are a few methods to turn NFTs into more environmentally friendly.
Firstly, the crypto space needs to adopt a more efficient way to incorporate renewable sources for facilitating mining. But that solution casts its difficulties of continued pressure on the electric grid, not to forget that renewable energy could likely go toward other, more pressing concerns, such as keeping people’s lights on.
Other options comprise changes within the ongoing technology for NFTs. Using a blockchain technology that depends on the more energy driven proof-of-stake system can reduce consumption and greenhouse gas emissions ascribed to NF tokens.
Several blockchains incorporate the proof-of-stake system and assist NFTs, including Cardano and Solana. Ethereum has also shifted towards working on a proof-of-stake system called Ethereum 2.0.
How are NFTs posing a harmful effect on the environment?
Future of NFTs
Artists and collectors to turn NFTs into more environmentally friendly. Along with that, there’s also pressure on the entire cryptocurrency industry to bring down the environmental impact of crypto assets.
If the people command a more environmentally responsible way to buy, sell, and collect NFT s, the industry will have no option but to give in to those needs. Various tokens marketplaces have already started pushing the environmental friendliness of their services. We may observe many NF tokens drift to those platforms and turn to blockchains that incorporate the proof-of-stake system to validate transactions.