Entering NFTs: Understanding the environmental impact of digital collectibles

Over the past year, NFTs have been a major part of pop culture. Nearly every day, celebrities announce their interest in this emerging technology by dropping NFT collections. A wide variety of celebrities are starting to see the creative potential offered by NFTs, from Quentin Tarantino’s Pulp Fiction NFTs to Snoop Dogg’s NFT music labels. Celebrities have played an important role in increasing awareness of the many NFT investment opportunities and the various use cases, but it has also attracted the ire some fans.

There has been a lot of talk about NFT’s potential environmental impacts. One notable example is the backlash that South Korean boy band BTS received a few months ago due to their plans to launch their own NFT collection. BTS’s backlash is just one example of the many such instances that have led to some artists being wary about exploring the NFT trend.

Many NFT enthusiasts forget that you can create NFTs that are not harmful to the environment. Many NFT platforms use more eco-friendly methods of minting NFTs. They incorporate energy-efficient blockchains like Tezos and Flow, Polygon, Polygon, and Solana. These blockchains use a consensus mechanism called Proof-of-Stake (PoS), to validate transactions on the blockchain. For example, minting an NFT. As we’ll see, this type of consensus mechanism uses significantly less energy than the proof-of-work system (PoW), which was once the dominant method to validate transactions.

The technical jargon and misinformation surrounding NFTs can make it difficult to do your research. To maximize eco-friendliness, artists must consider four factors before entering the NFT space: sidechains, carbon neutrality, PoW, and PoS.

Related: How blockchain technology transforms climate action

Proof-of-work

NFTs are primarily concerned about environmental concerns due to a consensus mechanism called Proof-of-work. PoW acts as a security feature for cryptocurrency transactions. Computers must solve mathematical puzzles to verify transactions. This is done in order to ensure they are legitimate and secure. This process requires a lot of electricity. That is why celebrities have been subject to backlash after they launch NFTs on PoW chain PoW.

Related: Green Bitcoin: The importance and impact of energy use in PoW

Proof-of-stake

Not all blockchains require PoW. NFTs, contrary to popular belief, can be created in an environmentally-conscious manner. Proof-of-stake is a promising solution. Instead of requiring energy-guzzling machines to solve puzzles in order to verify transactions, PoS requires that individuals stake their crypto to be eligible to receive rewards for validating transactions.

Tezos and Flow are some of the most popular PoS Blockchains. Tezos has received a lot of attention because of its low energy consumption — just look at how many transactions Tezos generates for 17 global citizens.

Related: Proof of stake or proof-of work, that is the question

Additionally, Ethereum, the most prominent blockchain in the NFT ecosystem will soon move from a PoW system to a PoS system. According to the Ethereum Foundation’s latest switch from PoW-to-PoS system, it will become approximately 2000 times more efficient and reduce its total energy consumption by 99.95%.

Sidechains and layer-2 Solutions

Sidechains are a way to avoid the high energy consumption of PoW. They are independent blockchains that run parallel to mainchains such as Ethereum. Sidechains can set their own rules for transactions, security, and governance. Sidechains are able to verify transactions independently of a distributed network. This reduces their carbon footprint.

Polygon is a great example of a sidechain that is very popular in the NFT space. Polygon, a layer-2 protocol or third-party protocol that supports Ethereum’s mainchain, improves transaction speed and efficiency, is a great example of a popular sidechain in the NFT space. Many of these sidechains are community-governed and align with developers and creators who want to build mutually beneficial economic relationships with their followers. This makes sidechains appealing for anyone looking to enter the crypto space.

Carbon neutrality

It doesn’t matter if a project uses PoW, PoS, or sidechains; it is vital that they acknowledge their carbon footprint and keep accountable.

Projects can take a focused effort to achieve carbon neutrality in many ways, including implementing carbon offsets by integrating with carbon removal projects. Rarible’s integration earlier this year with Nori, a popular carbon removal platform, allows anyone to offset their carbon footprints for any Ethereum NFTs on Rarible.

Artists should ensure they do their research to ensure that they only mint with NFT markets and projects that are in line with their values.

Related: Green finance requires voluntary carbon markets that work

NFTs have been portrayed by some as a quick cash grab without consideration for the environment. However, this misrepresents the community-oriented intentions of the Web3 futurists. By adopting environmentally-friendly, utility-driven NFTs, artists can unlock a new realm of possibilities for building connections and sharing value with their fans.

This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Alex Salnikov, the co-founder of Rarible and chief strategy officer is a community-centric NFT market. Alex Salnikov is a blockchain pioneer and an active developer in crypto space. He was previously the chief technology officer at CoinOffering which was the first company to offer shares in the form blockchain assets. A B.A. A B.A. in computer science and an M.A. Alex is a data scientist with a wide range of specialties, including market analysis, tokenomics, decentralized finance and NFTs.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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