August 9, 2022

In What Ways Are NFTs Harmful to The Environment?

5 min read
In What Ways Are NFTs Harmful to The Environment?

You are not alone if you have recently heard people discussing NFTs or Non-Fungible Tokens but are unsure of what they are referring to. NFTs have been around since 2014, but their popularity did not really take off until this past year.

An NFT Is What?

If you are familiar with and have a basic understanding of cryptocurrencies, understanding what an NFT is should be easy. The same kind of programming used to produce Bitcoin and other types of crypto are also used to construct NFTs, which are also digital assets. The primary distinction between cryptocurrencies and NFTs is that the former are “Non-Fungible,” whereas cryptocurrencies like Bitcoin and others are fungible.

Being fungible means that every unit of one type of cryptocurrency is equivalent to every unit of another. Their equal worth also makes trading for one another simple and smooth. One Bitcoin is worth exactly another and can be exchanged for another one. It is not possible to exchange one NFT for another. They are “Non-Fungible” because they are unique and have different values.

NFTs are also frequently digital collectibles. They are frequently bought using cryptocurrencies. They consist of works of art, music, videos, and other digital content. If they are not made as unique goods, they are made as a very small number of digital items.

Additionally, you are the sole owner of a digital asset when you have the right to an NFT. NFTs differ from other digital works in this way as well. There is practically no end to the amount of other digital works of art or music that are not NFTs. Other forms of digital art do not use the programming that makes an NFT special. Various types of digital art can be produced repeatedly.

In What Ways Are NFTs Harmful to The Environment?

Since November 2017, NFTs have accumulated more than 174 million dollars. Because of their distinctiveness and capacity to hold the asset as the only owner, NFTs have been accorded a high value. Digital artist Mike Winklemann, for instance, is Beeple.

“Everyday: The First 500 Days” is the title of a composition he produced. It is a compilation of daily sketches that he assembled into an NFT and sold for $69,3 million. Jack Dorsey, a co-founder of Twitter, sold his first tweet for more than $2.9 million.

One individual alone is the sole owner of one of the men who founded Twitter because it was sold as an NFT. A one-of-a-kind digital trading card featuring a legendary Lebron James slam dunk sold for $208,000.

It’s Digital. What Harms the Environment Does It Cause?

NFTs may appear to the uninitiated eye as a means for skilled and diligent artists to receive fair compensation for their labor. It is possible because every time an artist’s work is purchased or sold, they receive a percentage of the proceeds. NFTs, however, as well as the energy required to mine and store them, have a negative impact on the environment.

How? NFTs, however, employ Blockchain technology. A lot of power is used by this technology, which is also employed by cryptocurrencies. Power is heavily used when an NFT is produced from a physical work of art or a digital object. And more substantial amounts of power are required to complete the sale each time the NFT is acquired or sold.

Ethereum is usually used to sell NFTs. Because of this system, NFTs are kept so securely. The programming assures that the item cannot be copied or stolen, but it consumes a lot of power in the process.

In What Ways Are NFTs Harmful to The Environment?

Ethereum relies on a “proof of work” system. Although it has been claimed that this “proof of work” consumes as much electricity as the nation of Libya, it guarantees the validity of the sales. The chain is extended in a way that was designed to be energy deficient.

Fewer people would be ready to attempt invalid transactions at a cost of a considerable amount of their power, according to the rationale of intention energy scarcity. They are obligated to pay their electricity bill. It is also the reason why detractors and skeptics are critical of digital assets in general.

It is what makes the acquisition and sale of NFTs and bitcoin so secure. There will be more mining, selling, and buying of NFTs as their value and popularity rise. Consequently, more harmful pollutants will be emitted due to the energy necessary to do so.

Evidence of Stake

Others have suggested other ways to maintain the validity and security of NFT productions and transactions for individuals who support NFTs but are opposed to “Proof of Work” systems and their effects on the environment.

Another approach that has been suggested and which might reduce emissions is “Proof of Stake.” They must demonstrate their “stake” in the transaction rather than showing validity by giving up a considerable amount of their own authority.

In other words, if the transaction turned out to be fraudulent, they would “lock up” a piece of their own bitcoin or other digital tokens. While “Proof of Stake” does not result in a considerable amount of power being used in a single transaction, it has the ability to deter unethical activity, just like “Proof of Work.”

In What Ways Are NFTs Harmful to The Environment?

Ethereum is largely used to program NFTs. Since some years ago, Ethereum has teased that it might eventually transition to a “Proof of Stake” method. The switch’s drawback is that everyone involved in NFTs would have to consent to switch to a different system. If not, the entire system might fall apart.

The value of the amount of power used during the trade has been the foundation of the entire system. The essence of the value and transactions would alter as a result of “Proof of Stake.” Just to be clear, the energy required to run Ethereum and NFTs is equivalent to that required to run a sizable nation.

Given the amount of power needed by “Proof of Work” systems, the entire system might collapse regardless of how many users and systems decide against switching due to the change in value, along with our surroundings.

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