The Impact of NFTs on the Environment, Here's the Explanation!

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Bittime - In recent years, awareness of global ecological damage and climate change caused by technological advances has prompted industry experts and artists to question the environmental impact of nonfungible tokens or NFTs.

Although this type of digital asset has seen tremendous gains in the past year, it is too early to obtain valid data to assess the environmental risk of NFTs. Although some figures emerge, none of these data have been reviewed by outside experts and are reliable.

What Are NFTs?

Nonfungible tokens (NFTs) are blockchain-based technologies that make digital assets unique and one-of-a-kind. Photos, videos, and pieces of music can be digitally copied infinitely, but blockchain smart contracts ensure that a single artwork or video, for example, is the only existing representation of the item. This technology allows users to make transactions in a trustless environment, so there is no need for a third party to verify their legitimacy.

Are NFTs harming the environment?

Digital artist Beeple, who sold his work "Everydays: The First 5000 Days" with a $69 million bid at Christie's, believes in a more sustainable future for NFTs and promises that his work will be carbon neutral. He thinks he can offset emissions from his NFTs by allocating a portion of the funds he receives to renewable energy, conservation projects, and the development of technologies that reduce CO2 emissions.

What is the Carbon Footprint of an NFT?

While it is somewhat impossible to establish the ecological cost of crypto art exactly, different estimates can give an idea of the carbon footprint of an NFT. For example, the weight of a single edition artwork on Ethereum is 220 pours (100 kg) of CO2, equivalent to a 1-hour flight. In addition, digital artist Memo Akten analyzed around 18,000 NFTs and found that the average carbon footprint of an NFT is equivalent to more than one month of electricity use for the average person living in the European Union.

How Do NFTs Impact the Environment?

The use of energy in blockchain technology, especially in cryptocurrency mining, has been a major concern in discussions about the environmental impact of NFTs. Mining cryptocurrencies like Ethereum, which is used to store and trade NFTs, has been a source of concern because it uses a lot of energy, especially in the form of fossil-based electricity.

Numerous studies have shown that cryptocurrency mining, especially on blockchains that use proof-of-work (PoW) consensus algorithms, results in significant carbon emissions. Ethereum, one of the most popular blockchains for NFTs, operates using PoW and has a significant carbon footprint.

Cryptocurrency mining, which is essential for transacting and storing NFTs, requires a large use of energy. Ethereum, one of the most popular blockchains for NFTs, operates using proof-of-work (PoW), which requires a lot of energy. As a result, the use of Ethereum for NFTs has been the subject of controversy in discussions about the environmental impact of NFTs.

One of the proposed solutions to reduce the environmental impact of NFTs is to switch to more environmentally friendly blockchains, such as those using the proof-of-stake (PoS) consensus algorithm. So, what are PoS and PoW? Here's a brief explanation!

Proof-of-Work and Proof-of-Stake?

Proof-of-work (PoW) and proof-of-stake (PoS) are two consensus algorithms used by blockchains to reach an agreement on the state of data stored within them. A consensus algorithm is a mechanism used by blockchain networks to ensure that all nodes or participants have the same and valid copy of data.

Proof-of-work (PoW) is the consensus algorithm used by Bitcoin, Ethereum, and some other blockchains. In PoW, miners use computational power to solve complex mathematical puzzles and build new blocks containing transactions. The first block built with a valid proof of work will be added to the blockchain and recognized by the network. The miner who successfully builds that block receives a reward in the form of coins or tokens.

Proof-of-stake (PoS) is the consensus algorithm used by Cardano, Polkadot, and some other blockchains. In PoS, mining is replaced with staking. Staking is the process of actively participating in transaction validation by locking a certain amount of coins or tokens as collateral. Validators who stake their coins or tokens are randomly selected or chosen based on the proportion of their stake to create and verify blocks. Validators who successfully create or verify a block receive a reward in the form of interest on their stake.

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Also Read:

Get to Know the Types of NFTs and How to Get Them

What Are NFT Royalties?

NFT Marketplace: NFT Buying and Selling Gateway

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