Here are the impacts of NFTs on the environment
NFTs generate a considerable environmental impact but at the same time could contribute to reduce it or to raise awareness among people on the most important issues of today, including the effects of climate change.
Non-Fungible Tokens (NFTs) are a type of token that are used as a unique digital asset as they replace a verified title deed. NFTs rely on bolockchain technology just like cryptocurrencies and are often hosted on the Ethereum network .
There are many categories of NFTs that spun a $41 billion market last year, which makes this world quite complex and difficult to analyse in terms of the environmental impact it generates.
At the same time, the developers are trying to make not only NFTs more sustainable but also models for the fight against climate change as well as educational video games to generate more awareness towards environmental issues.
In fact, considering that
NFTs are tokens, have an economic value and are exchangeable, the ecological footprint should not stray too far from that produced by cryptocurrencies. Blockchain technology also presents the same challenges for NFTs: how are transactions certified?
And how is property protection ensured?
According to Samuele Marro and Luca Donno, with the current commission mechanism, spending a dollar on transaction fees corresponds to emitting at least the equivalent of 1,151 kilograms of CO2!
The world of NFTs and sustainability in 2022
According to Forbes an NFT:
"It is a digital asset that represents real-world objects such as art, music, game items and video. They are bought and sold online, often with cryptocurrency, and are generally encoded with the same underlying software as many cryptocurrencies."
Although they have been around since 2014, NFTs are only becoming very popular in recent times especially in the buying and selling of digital artwork.The digital art market last year alone was worth the figure of 41 billion dollars, a sum that is close to the total value of the entire global fine arts market.
The technology used by NFTs is very similar to that of cryptocurrencies but conceptually there is a fundamental difference: digital currencies are fungible while NFTs are not, this determines their scarcity and their uniqueness.
The technology we are talking about is the blockchain, a virtual ledger where important data is collected to establish the value of the good or service, its uniqueness and ownership. This is the same technology that developers use to both create cryptocurrencies and make them work.
NFT and sustainability: blockchain technology
According to Forbes, the definition of blockchain is as follows:
"A distributed digital ledger that stores data of any kind. A blockchain can record information about cryptocurrency transactions, NFT ownership, or DeFi smart contracts."
Any conventional database can store this type of information but the unique feature of blockchain technology is its decentralization.
This means that instead of being kept in one location and managed by a centralized administrator, many identical copies of a blockchain database are kept on multiple computers spread across a network.
NFTs allow you to purchase ownership certificates on digital or real works and more. This is possible thanks to the blockchain technology that specifically regulates the exchange.
As anticipated, NFTs work according to a mechanism very similar to virtual currencies but the exchange is different.
NFT and sustainability: cryptoart
The most popular NFT category is undoubtedly the artistic one, also called cryptoart, and guarantees artists to be able to certify the ownership of digital works, to sell or exchange them.
The buyers in turn will become the new owners 100%, or partial if they only buy a part.
Among the most expensive digital artwork of the last year is The Merge, Pak sold for nearly $92 million to 28,984 people who bought 266,445 units of this piece, an example of partial ownership of an NFT.
Lately cryptoart has plunged especially into pop culture, so much so that more and more celebrities announce their interest in this emerging technology usually by buying an NFT collection.
Although celebrity involvement has played a key role in raising mainstream awareness of the range of NFT use cases and investment potential it has also provoked a lot of criticism among fans.
NFT and sustainability: the impact of cryptoart
The impact of cryptoart is not far from that of cryptocurrencies, in fact even in this case the basic problem is the validation of transactions, which is essential to avoid double spending of the same good or service. Many developers use consensus mechanisms that certify each trade.
Since more and more people are trying to make conscious and sustainable investments, the world of NFTs must also propose alternative solutions to reduce energy consumption given above all by mining and the Proof of Work consensus mechanism.
One of these is the Proof of Stake consensus mechanism which is actually a more respectful process regarding the environmental aspect but generates new criticisms from a social and economic point of view since fairness would no longer be guaranteed.
Defining NFT green as well as gree cryptocurrencies is not so simple because there is no official and complete method to exactly calculate their impact.
NFT and sustainability: video games
The term sustainability is complex and implies that three fundamental pillars are respected: the environment, society and the economy.
NFTs such as cryptocurrencies to define themselves as "friends of the environment" will therefore have to respect these three aspects also in the category of video games.
The implementation of NFTs in the world of video games implies that their blockchain systems, which track and enable trade, consume a lot of energy and generate greenhouse gas emissions that are harmful to the environment.
So even if their development is very flourishing, it is necessary to analyse what impact they would generate.
The community of developers most sensitive to environmental issues has begun to move and has joined an anti-NFT commitment for the impact on the environment they generate.
This proposal was launched by Climate Replay, a team of developers that seeks to mobilize the community of gamers in the fight against the climate crisis in fun, educational and inclusive ways by aiming for sustainable technological growth.
NFT and sustainability: the impact of video games
The Climate Replay team recognises the concerns of players, assists those who work in the video game industry especially in the risks associated with the integration of NFTs in games; it also offers advice on sustainable design for anyone working in the world of video games from developers to artists, producers, managers and executives.
What involves the commitment made by the various developers who have joined the Climate Replay is to consider the implementation of NFT only if it is necessary for the player and involves the use of a technology that does not cause significant environmental damage.
Additionally under the commitment , the implementation of digital proprietary technology should NOT:
relying on cryptocurrencies that are not regulated,
disproportionately benefit early adopters or wealthier players ,
encourage informal jobs (working in a game solely for personal gain),
be implemented without full transparency.
NFT and sustainability: the luxury industry
After cryptoart and video games, the luxury industry also benefits has begun to exploit this technology with a view to the "physical-digital", that is, a middle ground between the digital and the real.
Through NFT technology, major brands can provide the consumer with a token that certifies the authenticity and ownership of the asset.
In particular, a sort of "digital twin" that can be exchanged in a second-hand marketplace or used in virtual gaming arenas.
NFT technology is therefore contributing to evolve the concept of digital ownership, a phenomenon destined to grow and increasingly linked to conscious consumption.
Even the luxury industry should pay attention to the impacts that would be generated by the implementation of NFTs and opt for conscious and sustainable growth since opening this door would leave room for new investors who are not fully aware of their choices.
NFT proposals closest to sustainability
NFTs generate an impact but at the same time could help reduce it or raise awareness of the most important issues of today, including the effects of climate change. Askanews reports an example of these NFTs, Plastics :
"A marketplace where those who deal with waste can create NFT on their business and link them to works of art uploaded by artists", explained Andre Vanyi-Robin CEO of Plastics.
"Buyers - he says - buy the works and in the same moment they make sure that the amount of plastic associated with them will not be dispersed in the environment, but recycled and reused. "
Another example is Axiom Space , a commercial space station that joined organisations a month ago that coined NFTs from space.
The company seems to have an eye for sustainability as it aims to minimize its ecological footprint.
However, the fact that instead of finding solutions for sustainable growth on our planet one option is to move into space should not cheer us up.
This is because once again the human being is looking for short-term solutions without being really responsible for their actions.
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