The irreplaceable (or NFT) tokens are the newest players in the cryptocurrency market and environmental The impact may surprise you.
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What is NFT?
Let me start by saying, I don’t have to technology Writer. I’m a sustainability writer. So I’ll explain what’s best I can with the knowledge and tools I have.
At this point, you may have heard about blockchain and electronic money like Bitcoin. Ethereum is another cryptocurrency and NFT is part of its blockchain. Contrary to the way Bitcoin, for example, can be traded like regular money, the NFT is assigned a single ‘token’ to verify a particular owner. It’s a bit like the title of a car showing its owner and its VIN. NFTs are irreplaceable, which means they cannot be easily exchanged for a similar good in the same way bitcoin can be traded for another bitcoin. In this sense, it is like tangible art. If you own an original Rembrandt, you have sole ownership of a unique work of art.
If you’ve seen headlines lately, digital artwork is the hot NFT we’re talking about here. For example, according to Christie’s auction houseBeeple’s “EVERY DAY: FIRST 5000 DAYS” is the first pure digital artwork to be offered by a major auction house. It sold for $ 69.3 million. There are a few other top selling examples art in the digital realm. The bustling industry has opened doors for emerging and established artists as another way of promoting their work, especially in the face of the challenges of the pandemic.
So where does the consumed energy go?
To understand NFTs’ energy consumptionYou will have to understand the process of how they are bought and sold. Here’s the simplified version of how it all works.
Let’s say you create a digital image of Snoopy dancing in the rain with an umbrella. To find your audience, you need to bring your work to an online marketplace like OpenSea. Most of these sites use Ethereum to verify transactions through ‘mining’. When an NFT is purchased, miners have to compete to solve a block that results in your Snoopy artwork being the uniquely identifiable NFT that the buyer wants. Miners have an incentive to compete because whoever solves the first block gets a commission for their work. All the others participating in the match were unlucky, even though they spent a lot of energy on their efforts.
How much energy?
So, how much energy does this take? According to current estimates, an Ethereum transaction consumes 48.14 kWh. For comparison, that was just over a day and a half energy consumption in standard US households. Now multiply that number by thousands of daily transactions and you can see the energy consumption of the NFTs.
There are a few things to keep in mind here. During production and sales, a single Ethereum transaction to buy NFT consumes less energy than execution. T-shirt. Also, NFT isn’t the only commodity bought with Ethereum, so even if the art has appeared elsewhere, there will still be energy-intensive transactions.
What might be more important to focus on is the impact of cryptocurrencies in general. Some statistics on Brightly.eco help make this matter central to explain, “Bitcoin” mining generated 38 million tons. CO2 per year, the more of carbon’s emissions Slovakia. In other words, Bitcoin’s daily carbon footprint is equivalent to watching 57,000 hours of video on YouTube. And, its daily electricity use is equivalent to the amount of electricity that the average American household uses over the course of 25 days.
Shidan Gouran, co-founder of Gulf Pearl, a commercial bank in the blockchain sector, said a cryptocurrency transaction uses as much energy as more than 700,000 Visa transactions. To further illustrate his point, Gouran said, “Even if you eliminate carbon emissions, if we move Visa to the same system as Bitcoin, you will still planet heating increased by more than one and a half degrees. Only the heat generated by the system will not be sustainable ”.
Changes may happen in the short term
Now, here is an important piece that I missed earlier. The reason all miners are competing for each transaction has to do with how the system is set up. Currently, the ETH blockchain uses a competition-based “Proof of Work (PoW)” system, as explained above. However, there is buzz about switching to another system called “Proof of Stake (PoS)”. This system will randomly select a person to solve the block, eliminating competition and ample energy consumed in the process. The result will be one 99% discount in energy consumed. Some say that this new system could be deployed later this year or in 2022. There is also the option to use a chain other than Ethereum, then pick it up again when it is transferred to the system PoS. Furthermore, as more sources report this energy consumption issue, some stores are starting to supply carbon offsetting with each purchase or sale.
Image via Adobe Stock and Wikimedia Commons