Just like the rise of stocks and shares, bitcoin and other global commerce, NFTs have taken up a great deal of public attention in recent history. However, any public social media post regarding NFTs will likely have most of the comments questioning what they are. Maybe that curiosity is why you are here and looking for a quick explanation.
According to Wikipedia, “a non-fungible token (or NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.” There we go, all explained for you.
What’s that? It makes even less sense? Don’t worry, allow us to elaborate on what NFTs are, and what their real impact is on both the economy and the environment.
THE DEFINITION
For those who are still in the dark, a non-fungible token literally means “a receipt of something that cannot otherwise be reproduced”, same as any receipt you receive after buying something to confirm that you are the owner and it was paid for with your own money. This proof of purchase allows you to validate any legal matters if someone else tries to claim ownership. Blockchains are essentially a digital format of the same concept.
In theory a blockchain is very much like a record book, but the issue with only a single record book is that it could be changed, stolen, or faked. This is one of the driving forces behind the creation of the blockchain which shares the record book with everyone on the network, constantly checking to make sure everyone’s records are the same to prevent any external influences. The creation of this shared ledger was to keep records public and safe without the need for trust. Put simply in practice a set of transactions is bundled together into what’s called a block. These blocks consist of: the data which you are sending; a timestamp of when the data was sent; and a link to the previous block. This type of technology can be applied to many different industries, like financial transactions, democratic elections or to represent digital files in the example of NFTs.
However, while this sounds like a typical technological breakthrough, one of the biggest controversies about NFT production is the energy required to generate the aforementioned “blockchain”. Therefore, a blockchain is now nothing more than a glorified buzzword for proof of ownership.
When it came to writing this article, our biggest worries came from intelligent and discerning individuals buying into NFTs without realising the damage they are doing before it is too late. That is why every single point brought up in this article has been fact-checked through research that you can easily do yourself, along with the confidence that people will listen and share the knowledge that they have received.
THE ORIGIN
As a precursor to this most recent discussion on NFTs, the system and ideas have been around since 2012 under the names of “Colour Coins”. Cast your mind back to when the London Olympics were in full swing, the world was supposed to be ending and a new method of representing and managing real world assets on Bitcoin’s blockchain was established. This system creates discrete units of a single item, similar to a cinema ticket. There were also discussions on expanding the usage to areas like property investment or to facilitate the management of shares in a company and deal with the voting percentage.
With the many different applications of these systems of colour coins the community behind it soon started to realise that the Bitcoin blockchain wasn’t the best suited to the needs of those wanting to manage physical assets through the use of blockchain technology. Auctioneering has long been seen as an antiquated activity, something for landlords and elderly art collectors to do on a Thursday afternoon. However, by sprinkling a touch of technological know-how (and a lot of sales tricks), it has been reformed into THE cool new way of spending money that can be targeted towards gullible rich influencers and uninformed artists.
This led to the creation of CounterParty in 2014, which saw the rise of the collection, trading and of virtual collectors cards as a novel idea to the idea of collectables. During this rise we saw the beginning of making and trading memes from this exchange, causing the mainstreaming of the idea of commodification of virtual assets, moving away from the ideals of physical assets ColorCoins was built on.
THE MEMES
With the growth in the new and thriving meme-trading community, coupled with the buzz around the newly created Etherium came together to create PEPERIUM. It calls itself a “Rare Pepe and Meme Trading on the Ethereum blockchain”. What this was in practice was a decentralised, meme focused marketplace and trading card game (TCG). This was marketed as having created Meme’s forever recorded on the back of the Etherium. This growth led the further online community to become aware of this technology and the Meme focus to it bought in a much younger audience.
With this growing interest in using this technology for digital assets an update to the standard Ethereum protocol called “ERC721”, which would allow for the creation of unique tokens on the chain allow them to be Non-Fungible. This was the opening of the floodgates for what we now see with NFT’s.
The only logical avenue for any new use of this budding NFT technology is to make it about cats. In the October of 2017 CryptoKitties was launched, a modern day approach to a Tamagochi style game, with the added ability to buy and sell your cats for money. The team behind this project created it during the ETH Waterloo Hackathon and quickly saw its popularity rise, even being featured on CNN.
THE DAMAGE
This may sound like an attack on NFTs, like we’re trying to needlessly hate on new technology because other people are making money from it. However, this is not true. A balanced writer would find evidence for both sides of the NFT argument and present them evenly, allowing readers to make their own choice. But what does the writer do when they can only find scientific evidence AGAINST NFTs and their technology?
At the time of writing this article the yearly carbon footprint of the entire ETH blockchain sits at 20.15 megatons of CO2 produced per year, and is still rising. To put this in easier to visualise figures, this is nearly equal to the entire carbon footprint produced from Bolivia per year. With the throwing around of large numbers without any sense of scale, it can lead to wide misunderstandings. Hopefully this helps make it easier to visualize. It’s sometimes helpful to not only look at these issues on a large scale but also on a smaller scale to truly understand these figures. Looking now at a single transaction along this blockchain; again as of the point of writing, the carbon footprint from a single transaction is 37.29kg of CO2, closely equal to the same carbon effect as watching over 6000 videos on YouTube. It clearly doesn’t make sense to equate general internet usage to NFT production; they’re in vastly different power brackets let alone their functions.
For further comparison, the average UK household in a 3-4 bedroom house uses 2900 kilowatt-hours (kWh) annually [1], and the electricity consumption in the United States totalled 3,802 terawatt hours in 2020 [2]. Putting these outputs into perspective, given that 1 terawatt hour equals 1,000,000,000 kWh (1 billion kilowatt-hours), you would need to run your house on full power for over 344,000 years. To put that in perspective, that would be during the end of the Pleistocene era, just after early man discovered fire. Now, if you’re thinking it’d be stupid to blame the first humans for NFT carbon production then you’re right.
Such a vast and stupendous amount of energy and power is being generated because of NFT sales, and with great power comes great carbon outputs. Formal measures of the environmental impact are being frequently withheld by cryptocurrency and NFT distributors, with Ethereum and Nifty Gateway being the biggest offenders. This is concerning not just from a fiscal standpoint, but also from an awareness standpoint. Plenty of young and upcoming artists may be tempted to finance their work through NFTs, not realising the damaging and unsafe effects it can have.
THE REALITY
A prominent example of this was brought up by Artnews.com, who made mention of a French artist named Joanie Lemercier, a frontrunner for climate activism and awareness. Despite his best intentions, he succumbed to the alluring NFT sales pitch that artwork could be sold online without him having to frequently fly out to auctions. However, he was crushed after Offsetra (a company dedicated to equating carbon output with businesses) revealed just one of his NFTs produced 80 kilos of CO2, the equivalent of an hour’s plane journey.
Plenty of crypto companies are making promises that they are looking into more renewable and eco-friendly measures of promoting e-commerce, but there is a problem with this behaviour. Even if there was a 100% carbon-efficient system in place for generating blockchains, it is still being used to generate fictional currencies and receipts for digital goods.
Just take a moment to consider how much more beneficial this energy output would be for the planet; 140 tWh of energy being spread over the world to lower electricity tariffs, reduce the energy system’s dependency on fossil fuels, and all of it without generating waste or non-sustainable carbon offsets. Your energy bills every month would be going down, and there would be more incentive to switch to more environmentally friendly tariffs on a global scale. But instead, this effort is being used so that the rich can get richer at the expense of the planet once again.
Additionally, whether you care about the carbon footprint of NFTs or not, you still aren’t as safe as you think when it comes to legality. Already in 2021 there are cases of people selling pictures, graphics and videos that do not belong to them, resulting in digital art theft that other people are profiting from. You could wake up tomorrow to see an anonymous user has left a blockchain comment beneath your artwork posted on social media, meaning that someone has bought and sold your art illegally, without you getting any of the profits and leading to yet more carbon production. This could be enough to deter lots of budding artists from publishing their work online in public or in private, if not convincing them to quit altogether.
THE FUTURE
Yes, we all live in the digital age whether we like it or not. Yes, a lot of what we do in modern daily life generates pollution. However, we can all take steps to reduce the effect our carbon footprint generates, and many people do indeed make changes every day. One of the biggest ways would be to stop NFTs being generated, because no-one wants to have all of their hard work undone by one clumsy online purchase. Doesn’t it feel unfair to hear about the careless damage people are doing to the planet when you are turning off your lights at home, recycling as much as you can, reducing food waste, walking instead of driving, and so forth?
If you were unaware about the nature of NFTs before reading this article, it is likely you feel angry or adverse now after hearing what goes on behind the scenes. Don’t worry, this is just a sign that you are still human. Change can be done, and it will be done if enough people can raise awareness to speak out about the facts. If you’re still in doubt, do more research and come to your own conclusion as we have.
Incidentally, you can buy this GIF as an NFT from our website. Just send us 1,993 ETH and you can own the receipt to use this clip that we neither own nor have the legal rights to sell.
Ruby is an independent content creator, editor and writer who loves sharing insight into video games and discovering new things.
Nathaniel is a Web Design Executive who also writes content on technology and loves spending his days researching and building new projects, and generally complaining about new trends.
