The term NFT, which stands for Non-Fungible Token, has intrigued many investors, gamers, and artists worldwide. Over the past decade, many games have surfaced. These games, some with support for NFT, have made a huge impact on the entertainment industry and influenced the gaming community. On top of such game titles, the popularity of platforms like Ethereum is on the rise. Ethereum allows individuals to create decentralized applications using fungible and non-fungible tokens. These applications run on blockchain technology and allow users access via their computers and smartphones. Now let’s dig into the environmental impact of NFT.
What are Non-fungible Tokens?
Non-fungible tokens are a type of cryptocurrency that is unique. This means that each token is different from any other token that exists. The tokens are similar to collectible items like stamps, coins, or paintings. For example, you can buy a coffee mug with an image of Mies van der Rohe on it. This means that the two mugs are different and that only one coffee mug exists. Although intellectual property rights still protect these items, the protection doesn’t usually include ownership.
A non-fungible token is an asset that uses blockchain technology to certify ownership. NFTs are unique and specific, making them different from other cryptocurrencies. They cannot be replaced with similar NFTs because they are Non-Fungible. Owning any Bitcoin is the same as owning any other Bitcoin, but this is not the case with NFTs.
Many NFTs use the Ethereum blockchain to transfer ownership. When someone buys an NFT on the Ethereum platform, they send Ether to the current owner or the marketplace supporting the transaction. In return, they receive the NFT in their Ethereum Wallet. Part of the payment includes the “gas fees” or service charges associated with the transfer. The collected expenses go to the owners of the network of computers used to confirm transactions on the blockchain, who use their resources to keep it running smoothly.
An NFT is like owning an artist’s original painting, while copies are more like owning a cheap poster or reprint. The original is valuable, while the copied version is of lesser value.
How Non-Fungible Tokens Work
Non-fungible tokens are not interchangeable like most other cryptocurrencies, and each one has its distinct value. These tokens are often described as “Collectible” or “Intangible”. They are also known as tokens without names, as they have no titles associated. They are usually purchased, traded, and sold on a blockchain.
The first Non-Fungible Token was made in 2014 by Kevin McCoy and founded his project Monegraph. The platform aims to connect event professionals through the use of blockchain technology.
What’s the Environmental Impact of NFT?
Non-fungible tokens can harm the environment by creating more waste. Because each token is unique, it’s impossible to recycle them like traditional plastic or paper tokens. The value of the non-fungible tokens also raises questions about their sustainability. After all, it’s hard to say what someone might have valued a token if they have never used it.
When someone creates, buys, or sells an NFT through Ethereum, it leads to carbon emissions generated by the mining process. But it’s still debatable whether NFTs are significantly increasing emissions from Ethereum. It’s unknown if they’re just taking the blame for emissions that would have been generated by miners.
Some experts say Ethereum mining is causing an unnecessary spike in global emissions, while others say it’s adding to a problem we should be aware of and trying to solve. According to Digital Mist’s Bitcoin Energy Consumption analysis, as of 2018, NFT mining generates 38 million tons of CO2 per year, which is considerably higher than produced by Slovakia. Another study by Nature.com revealed Bitcoin emissions could raise the Earth’s temperature by 2 degrees.
Sustainability and Future of NFTs
The future of NFT looks bright, despite its environmental impact. These tokens are unique and have specific characteristics that make them different from one another. This makes them perfect for various applications, such as digital collectibles, identity verification, and more.
In the next few years, the success of non-fungible tokens can be measured by the projects that focus on the tokenization of everyday goods. The most important non-fungible token projects are those that focus on everyday goods. These include a wide array of digital goods, such as real-world items, loyalty points, JPEGs, art, or even data.
NFTs can be made more sustainable by reducing the number of transactions they need on each Blockchain. This solution can be introduced in the short term. However, most energy production is still obtained from fossil fuels. Experts say cryptocurrencies and NFTs will significantly add to global warming without a substantial change. If that doesn’t occur, the raised temperature of 2 degrees can surge further in the coming years.