While most of the world is still trying to understand the concept of an NFT, many digital artists worldwide have adopted this emerging technology. It’s now a means to revolutionize digital art sales and distribution. As an industry, NFTs surged from near-obscurity to a $10 billion market practically overnight.
NFTs have their share of critics, like all new and emerging technologies. However, instead of showing a lack of belief in the technology’s potential, the most vocal opponents to NFTs include artists and technologists concerned about their impact on climate and the environment.
NFTs are gaining popularity based on what they do for digital artists. Learn how the discussion shifted from potential technological revolution to environmental sustainability and what solutions exist.
NFTs Explained
A Non-Fungible Token (NFTs) is a concept and a technology rooted in the blockchain, like cryptocurrency. An NFT is effectively a unit of data stored in a tamper-proof digital ledger (the blockchain). It’s typically associated with an asset, most often a digital file such as images, videos, audio, or text.
Although that asset can be copied and distributed like any other file, the NFT acts as a certificate of authenticity. Buying an NFT certifies you as an owner of the digital material.
Why Digital Artists Adopted NFTs
No matter what type of art they create, publishing anything in digital format exposes artists to the risks associated with virtual files. Their creations are data that anyone can copy, share, and distribute infinitely. Unlike physical media, digital art is like any other data in that it’s nearly impossible to regulate its reproduction.
Before NFTs became popular, digital artists had only three viable options to receive payment for their work:
- Create physical versions of digital art such as prints or CDs and sell those, which requires a significant upfront investment.
- Publish it on a large, centralized social platform like Youtube or Facebook and earn money based on engagement and ad revenue, forcing artists to rely on these platforms’ algorithms.
- Use the commission system and ask customers to pay upfront in exchange for a piece of art produced to their specifications.
NFTs solve these problems by creating digital artwork that is unique and cannot be replicated freely. NFTs and crypto-art use the blockchain transaction ledger to guarantee legitimacy and security from piracy. They have the potential to give artists total control over their art’s creative and financial processes. NFT art can even be exposed in virtual reality and geotagged to a specific real-world location, enhancing prestige and exclusivity.
While anyone can still copy and share the file associated with an NFT, only a select number of people will buy the NFT and become official owners. This is similar to owning an authentic Rembrandt and a reproduction.
The Environmental Impact of NFTs
Despite the promises they bring to artists, many prominent members of the digital art world today have ceased using the technology, citing concerns over the environmental impact.
French artist Joanie Lemercier has seen his efforts undone after a single $16,000 sale comprising 53 NFT pieces. He is famously known for having vowed to decrease his carbon footprint by 10% every year.
After reaching out to technologists such as Memo Akten and Offsetra, he determined that each NFT in the set emitted approximately 80 kilograms of CO₂, totaling 4.24 tons. This quantity of CO₂ is approximately 7% higher than the average U.S. household’s yearly emissions. The cause of these high emissions is due to the NFTs’ reliance on the Ethereum network. It employs one of the most power-hungry transaction resolution systems: Proof-of-work.
Blockchain technologies require transactions to provide cryptographic proof for validation. Under the proof-of-work system, the proof consists of spending a quantity of processing power (and therefore, energy) on arbitrary mathematical puzzles. As of 2021, the most prominent cryptocurrencies employ proof-of-work, consuming multiple hundreds of terawatt-hours (TWh) of energy every year.
The Potential Solutions
The significant amount of energy required to verify an NFT or crypto transaction is currently unavoidable because of the proof-of-work system’s dependence on the blockchain. Fortunately, crypto specialists have proposed potential alternatives with a much lower carbon footprint. The most promising of these solutions is proof-of-stake.
Under the proof-of-stake method, transaction validations depend on buyers staking a specific number of coins. Proof-of-stake is similar in principle to locking an asset into a security bond. The more coins a buyer stakes, the more trustworthy they are and the more likely a transaction will be considered valid. Any suspicious or malicious activity results in the loss of the staked coins.
The proof-of-stake method is more energy-efficient because it doesn’t require extra processing power to prove a transaction. Cryptocurrency expert and Ethereum researcher Danny Ryan estimates that the energy consumption of the proof-of-stake method is 99.99% lower than proof-of-work.
Ethereum pledged to switch from proof-of-work to proof-of-stake in 2022. Under their proposed system, a buyer would need to stake a minimum of 32 ETH to be considered valid.
Why NFTs Are Here to Stay
Although NFTs and crypto-art currently rely on verification methods severely impacting the environment, change is coming. New cryptos are being designed from the group up to use energy-efficient technologies, and existing cryptos are switching to more efficient verification methods.
