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.