NFTs: The Environmental Effects and Why It Concerns You!

Author: Omar Nasution, 11 August 2021

Cryptocurrencies are hot topics these days. With Bitcoin, Ethereum and many other cryptocurrencies all over the news, we've seen an enormous rise in the number of people who want to invest in these digital tokens. While there have been some success stories with these digital currencies, there have also been a good deal of failures concerning them. So before you start investing your hard-earned money into these digital currencies that the media seems to portray as too good to be true especially for the field of digital art, you might want to learn more about their potentially heavy environmental impact. Here's what you need to know about non fungible tokens (“NFTs”), its impact on the digital art world and its accompanying high environmental costs.

Before we begin discussing the concept of NFTs , we must ascertain the concept behind blockchain itself. Blockchain is the application running at the helm of all cryptocurrencies like Ripple, and the aforementioned Bitcoin and Ethereum. It has been a groundbreaking technology that has grabbed the interests and imaginations of both civilians and big corporations alike. Due to its unique nature, where it automatically checks within itself in a regular time period,, the blockchain technology creates a digital form of self-auditing ecosystem, with each group of data transactions being referred to as a “block”. This is where the technology gets its name as blockchain. One might ask, what makes this blockchain technology different from any form of server technology? Well, the key lies in the fact that, due to the very nature of blockchain being self-updating within itself and with each block running independently and in a decentralised fashion, the blockchain is essentially indestructible without the destruction of the entire chain.

Now when digital art is inserted into the equation with NFTs, a large amount of opportunities are opened up for the digital art industry by the utilisation of NFTs and its blockchain technology. Due to the nature of blockchain itself, when an item is given possession to someone on the blockchain, then the record of ownership is entrenched within the blockchain itself, meaning that ownership cannot be transferred without the approval of the original user. Furthermore, due to the active nature of blockchain technology, the digital art can be active and linked within the blockchain technology itself . One good example would be CryptoKitties, a form of online game that allows for a breeding ground of virtual cats, each with their own unique traits generated by the software, which can be freely traded and given value on the blockchain. As you can see from this example, the art is not just a visible piece of digital media, but a piece of living information and form of artistic expression.

However, NFTs and blockchain technology are not without their own flaws, amongst which the biggest one, being the potential environmental damage that can be caused by the said technology. There is a clear cause for concern due to the use of energy-intensive hardware that is required for NFTs to compute and propel the transactions and movements of the blockchain. The gravity of this issue becomes more apparent, when considering the fact that the sheer amount of power that is being consumed for this purpose is on track to that of the City of London. This is an extremely large amount of energy use that is difficult to justify considering that currently the transactions made on the blockchain aren’t as numerous when compared to that of legal tender. However, efforts are being made to help regulate and provide some form of accountability for where the energy used in these NFTs and blockchain transactions is coming from; alongside news that some of the money made through this technology has been directed towards renewable energy research.

As a conclusion, there is no denying that this technology is definitely going to be a part of our lives in the near future, pros and cons included, we will definitely be following this technology and how it affects the art world with a great interest! What do you think about NFTs? Is there anything about NFTs that catches your eye? Are there any reasons that you’re avoiding them? Let us know in the comments!

Bibliography

Radocchia, S. (2018, July 5). How non-fungible tokens from physical collectibles are strengthening asset-backed securities. Forbes. https://www.forbes.com/sites/samantharadocchia/2018/07/05/how-non-fungible-tokens-from-physical-collectibles-are-strengthening-asset-backed-securities/?sh=596845231b2e.

Serada, A., Sihvonen, T., & Harviainen, J. T. (2021). CryptoKitties and the new ludic economy: how blockchain introduces value, ownership, and scarcity in digital gaming. Games and Culture, 16(4), 457-480.

Li, T. C., & Columnist, (2021, March 16). Bitcoin, NFTS and other CRYPTO fads are destroying our planet. MSNBC. https://www.msnbc.com/opinion/bitcoin-nfts-other-crypto-fads-are-destroying-our-planet-n1261139.

Celine Herweijer, (2018, September 18). 8 ways blockchain can be an environmental game-changer. World Economic Forum. https://www.weforum.org/agenda/2018/09/8-ways-blockchain-can-be-an-environmental-game-changer/.