What Are NFTs? ~ Their Sustainable Impact, and More
Unless you have not been to social media in the last 3 months, you probably have heard of this new phenomenon called Non-fungible Token, or more commonly knowns as NFT. The first question that popped in my head when I heard the term was well, “what is it?” Today Lee London brings to you a quick guide on what is NFT and how they are impacting our world!
Simply stated, an NFT is a cryptographic asset created on blockchain that is unique in its individuality. Often it’s a digital audio, image, or video file created simply as another asset to enjoy, or collect. Rather than in the tangible world, NFT’s are just digital forms of these collectables. In layman’s terms, a singular NFT cannot be replaced with another NFT due to its unique identification marker and metadata behind them that makes them distinguished. So, similar to experts knowing what Van Gogh is a fraud, simple copy, or the real piece, NFTs have these digital markers so one is ensured it’s the original. Still, people trade NFTs as a digital currency.
How does it make it different from any other cryptocurrency? A quick comparison with bitcoin will clear that right up. Bitcoins are able to be traded in for another bitcoin and you will have the exact same kind of bitcoin. However, one NFT cannot be traded in for another due to its unique encoding.
Now let’s talk about the various industries or rather people who have benefited from this NFT boom. Remember the disaster girl, success kid, or bad luck brian memes? These all sold as NFTs and brought these people each around $500,000 in various cryptocurrencies. And it’s not only memes, the music/entertainment industry is also one of the few taking full advantage of the NFT boom. When Grimes sold around $6 million worth of digital artwork as NFTs people went ballistics trying to understand the implications. Following the explosion, even the ever prestigious Grammy’s have announced earlier this month that the 2022 Grammy’s will be commemorated NFTs. This all sounds fun and dandy, but what are the real implications of NFTs?
As with most crazy innovations the impact of mining an NFT is on our mother earth. According to estimated research, creating one NFT can power an EU resident’s household for 77 years. Essentially if someone chooses to create an impact that is not only going to be millions richer, they will leave behind a carbon footprint of 200 Kilograms. Obviously with the glaring impact of NFTs people who create NFTs are trying to find alternative solutions to create their artwork in this form. Currently, most NFTs are being created utilizing a technology referred to as Ethereum and like most blockchains, they utilize something called “Proof of work” that ultimately causes a huge carbon imprint.
Currently, many artists and NFT creators are trying to find solutions to curb carbon emission in order to make the mining of NFTs sustainable. One of the ways, according to artist Mike Winkelmann is by investing the money earned from NFTs into renewable energy sources, or technology that allows sucking the CO2 from the atmosphere. Another way artists are hoping to combat the issue is by paying a carbon offset fee that will fund projects created to fight the environmental impacts of high CO2 emissions. Lastly, people are also looking into using blockchains that do not rely on such heavy energy consumption and thus utilize far less electricity.
With most new innovations, it is hard to tell where they are going and what can we expect from them without giving them the benefit of the doubt. However with NFTs, aside from the environmental impact, one also should consider looking into the financial implications of trading NFTs and also if this is just another money grab to make the rich richer or do they really care about the art they are purchasing.