“There has been a rising debate over the environmental impacts of the blockchain technology and the NFTs minted on them. The debate has risen due to the use of energy intensive proof-of-Work mechanisms on which the major blockchain are operating. Though the carbon footprint of NFTs is like a pinch of salt in the Ocean of traditional artwork.”
What are NFTs and how are they Produced?
The NFTs or Non-Fungible Tokens are the digital form of data stored on a digital ledger. The NFTs can be anything including art, picture, ownership certificate of a real asset or anything that can be imagined, but in a digital form. Also each NFT is unique and cannot be interchanged.
There is a very high rise in the demand of the NFTs as the concept of Metaverse is becoming extremely popular. With the rise in demand, a tsunami of NFTs has flooded various blockchain and NFT marketplaces. The NFTs are minted or created on a blockchain such as Ethereum using the underlying consensus mechanism of Ethereum that is Proof-of-Stake (PoS). PoS requires extensive energy sources and mining equipment to work and thus is considered energy extensive and attracts environmentalists.
Environmental Impact of NFTs
Direct or Indirect Impact?
There is no direct impact of NFTs on the environment as their creation does not require energy but the energy is required by the underlying blockchain to create them. Thus, there is no direct relation between the energy consumption and carbon emission.
Magnitude of Impact
The magnitude of impact on the environment is extremely miniscule and is uncalled for debate by the environmentalists. The NFTs at the moment form less than 10% of the use cases of the blockchain technology and the energy required for their minting is extremely low making it unfair to call them as carbon emitters.
Comparison to Traditional Artwork
When comparing NFTs to the traditional physical artwork, the carbon footprint of NFTs will be just like a pinch of salt in the ocean as the carbon emission from the creation of traditional artwork is extremely high. There is a requirement of various chemical processes, chemicals, precious metal mining etc. for creating art and also a huge amount of carbon emission is resulted due to transportation and storage of these artworks. NFTs being digital requires nothing but a minimal amount of electricity.
The Future is even more Carbon efficient
The future of NFTs is even more carbon efficient as the blockchain is moving towards a far more energy efficient consensus mechanism of Proof-of-Stake which will make NFT creation even more energy efficient, thus ending the debate once and for all.
Disclaimer: The article is meant for the educational purpose only and in no way it should be considered as financial advice. Own research on the topic is advisable.
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