Non-fungible tokens (NFTs) have gained traction in recent weeks as a way to sell artwork using blockchains, the technology that underpins cryptocurrencies such as bitcoin. Two of the developers behind the NFTs that are at the heart of the current digital art boom have now issued a warning that they are harmful to the environment and that a shift in direction is required.
An NFT is a cryptographic claim of ownership that is encoded into a blockchain and cannot be changed, similar to a house deed.
NFTs aren’t inherently bad, according to William Entriken, one of the authors of the NFT protocol for Ethereum, a popular alternative to bitcoin, but rapacious speculation is pushing them and cryptocurrencies down a destructive path as their carbon footprints grow.
To secure their networks, most cryptocurrencies use “proof of work,” which means that computers must perform massive amounts of calculations to “mine” new currency and verify transactions on the blockchain. This consumes a lot of electricity – bitcoin’s annual electricity consumption is comparable to Finland’s.
According to Entriken, investing money in cryptocurrencies – whether through simple speculation or the purchase of expensive artwork – increases demand and thus prices. Mining that cryptocurrency becomes more profitable, but also more difficult, resulting in an increase in carbon emissions.
Carbon offsetting, in which people pay to have carbon emissions removed from the atmosphere, is contrasted by Entriken. “Bitcoin is the polar opposite. “When you buy bitcoin, you’re buying carbon credits,” Entriken explains. “Someone else is directly putting that much carbon into the atmosphere when you buy $50,000 [of bitcoin].” It’s the same with Ethereum.”
POW and POS
He has proposed that Ethereum switch from a proof of work (PoW) to a proof of stake (PoS) approach, which would eliminate the need for intensive calculations by allowing the owners of existing coins, rather than the owners of computing power, to control the network. This is expected to reduce Ethereum’s total energy consumption by 99 percent. “You must change to proof of stake.” Proof of work should be prohibited, according to Entriken.
For a long time, Ethereum developers have been working to make the switch, but because no single person or organisation is in charge of the open source project, progress has been sporadic, according to Entriken. “It’s always been three months away,” says the narrator. These things do not happen overnight.”
Dieter Shirley, who also worked on the Ethereum NFT protocol, says, “The carbon footprint of proof of work blockchains deserves all of the criticism it gets and more.” “However, NFTs aren’t the issue here. Now that electric cars are available, we can say that cars aren’t the issue; gasoline is. Proof of stake is the same way: now that we have PoS blockchains, we can say that NFTs aren’t the issue; PoW chains are.”
The rising awareness of the carbon cost of non-fossil fuels has prompted some artists to look for alternatives. Joanie Lemercier, a French artist, started selling NFT artwork on Ethereum as a way to avoid the emissions associated with shipping physical artwork, but she soon stopped. “I was looking for something better,” he says, “and I thought NFTs would be it.” “However, it’s ten to a hundred times worse, so it’s absurd.”
Websites selling NFTs, he claims, should take the lead and switch to technologies that have already implemented proof of stake. “The platforms should be held accountable and responsible, and they should address the problem because they have the ability to do so,” Lemercier says.
Lemercier has been looking into alternatives and is now selling pieces on the Tezos blockchain network, which is based on proof of stake. “It performs admirably. There’s no compelling reason to stick with Ethereum. “Where the artists are, the big money will come,” he says.