Environmental Impact of NFT’s

We should all know what NFT’s are at this point. It is a hot topic right now, as is the metaverse. But what most people haven’t been made aware of is,  their impact on the environment. These blockchains run-on high-energy consumption to be created and checked through what is called the “proof of work” system, through cryptocurrency companies such as Ethereum. The way this works to oversee transactions is that the system forces “miners” to compete by solving complex puzzles to basically land the job of verifying transactions to a blockchain. These miners will then receive a reward once the job is completed. The process is incredibly inefficient on purpose, according to The Verge. This encourages someone to be less likely to screw up the ledger because of how much energy it takes. A.K.A. how much money it costs to do. Let’s look at some figures that were put together in an article written by VICE. “Based on data from the Energy Information Administration, there are 0.85lbs. of CO2 released into the air per kWh of energy used. If you multiply this by the amount of energy spent on each transaction on Ethereum, this equals 120.7lbs of CO2 for every NFT created. This is 6.16 times the CO2 of burning one gallon of gasoline…. Ethereum uses as much electricity as the country of Lybia.” Those numbers are absolutely staggering! Is there a solution? As it turns out there may actually be one option. To rid the system of this energy consuming proof-of-work system, some have proposed what is called a proof-of-stake mechanism instead. This system uses validators and chooses them based on the number of tokens they have instead of having them compete with complex puzzles to see who will validate the block chain. This requires much less energy because “the time it takes for the proof-of-stake algorithm to choose a validator is significantly quicker” (Blockworks). Does this seem like a good solution? We don’t really know, but it seems like it may be a step in the right direction. Since this space is so new at this point, there is still much to learn. However, it seems that the metaverse may create a whole lot of negative impacts on the environment from where we stand now.

NFT’s…What’s the Big Deal?!

Non-fungible tokens. What are they? Why are they important? Everyone everywhere seems to be slightly confused on what these are exactly. We recently wrote a blog on the metaverse and what it is so now we want to dive into this topic of NFT’s a little deeper. Upon our searching, we found one of the best descriptions of what an NFT is exactly. Think of them as trading cards. Each one is different from the other and there is only one original that can be bought. Each NFT is created of a specific blockchain unique to itself. Though this original can be reproduced and sold, there will still only be one true original, such as piece of art in a museum. Think about it, you can go to the gift shop after your visit and buy postcards with the painting you just looked at on them but the only true original will be the one hanging on the wall. So, what’s the big deal? Why would someone want to buy one of these things? Well, it seems that it is geared toward creatives and collectors. Anything digital can be sold as an NFT. Art, digital design, articles, music, virtual trading cards and even gaming supplies such as helmets, armor, guns, etc. Gaming was actually one of the first places that you could buy an NFT. An NFT’s value is expected to increase over time just like that of a trading card. Also, the owner will make percentages off of copies made and sold just as in the real world. Artists can make money off of their digital NFT art and buyers can purchase one of kind art in hopes that the value will increase over time just like in the real world of buying and trading art. “Some think this is the future of art but some just treat it like trading Pokémon’ cards” (The Verge). Either way, it could be another stream of revenue for artists and creatives alike. I guess we will just have to see where this goes. 

What is the Metaverse?!?

 This term metaverse has been popping up everywhere as of late and if you’re like us, you’re still a little confused as to what this actually means and how it will affect businesses. It seems that people are being urged to grab their spot in this virtual world. But why? And to what benefit would one gain from this? We decided to do a little research of our own to better understand what this new virtual world really means. According to an article written by VICE magazine, “the metaverse is an all-encompassing digital world that exists parallel to the real world.” The term was actually coined from a sci-fi novel, Snow Crash written by Neal Stephenson in 1992, which is very interesting. This is 3D world of the internet. My thoughts first go to Simms World but most say it’s much like games, such as Fortnite. In the metaverse, users will be able to create, sell and buy goods. Some argue that creating this digital economy will boost our economy IRL. However, the question on our minds and I’m sure you’re thinking the same thing, “why would I want to buy a house, clothes and the like for an avatar in a world that is technically not “real?” Don’t we all have enough to worry about financially in reality? Well, ROI or return on investments. This is the largest driving factor in the argument for purchasing digital properties. These properties aren’t limited to real estate. It can also include things like art, music, graphic designs, etc. Purchases must be made using NFT currency in the metaverse. NFT’s have a specific unique blockchain for each one created. They give the investor ownership of the virtualized asset. This was spawn from cryptocurrency that is created in a similar fashion. “Cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers. This decentralized structure allows them to exist outside the control of governments.” (Investopedia) This is another blog all in itself but I need to touch base a bit in order to fully understand NFT’s. it has been described as like purchasing a domain name. The purchasers of the NFT’s in the early stages of the meta are seeing the costs of the same properties increasing in value substantially. To be specific roughly 500% since Facebook transitioned to meta (CNBC). The potential financial gain also lies in the fact that these virtual worlds can be rented out. Say Nike wants to rent a space in your virtual mall for their metaverse line. Yes, this does exist already. They have monopoly on the shoe commerce as of now in cyberspace. Basically, the metaverse still has a long way to go in terms of development. Some speculate about 10 years before it’s fully developed. Business owners are seeing potential profits in the future for their properties in the metaverse and thus, the reason for businesses to break into this space now. It is up to each business to decide if the metaverse is right for them. It depends on a lot of factors. What type of business it is, does it financially make sense, and does the company believe that the metaverse will be the future. Some are still skeptical. Bottom line, it’s important for businesses to do research into this new world and decide if being part of it is right for them. One size does not fit all.