*Artist: Youssef Berkane @cevenova
The First Break-Out Series of NFTs:
One of the most well-known and perhaps first major NFT (non-fungible token) project is the CryptoPunks, created by Larva Labs on June 22, 2017. There were 10,000 CryptoPunk NFTs issued for free by the creators, Matt Hall and John Watkinson. People could claim a CryptoPunk for free, the only payment was the “gas” fee, meaning the cost for the transaction. Each character was an original, all 10,000 were a one of a kind. I bring this up, as the CryptoPunk series was the first to really become popular and expose digital creations as something that has value. CryptoPunks became so popular that in March of 2021 a couple of them fetched over $7.5M and on May 13th, Christie’s will be offering a single-lot of 9 CryptoPunks for $7M.
As NFTs have become more popular, the concern arising over the environmental impacts of creating NFTs has become a hot topic.
Ethereum Blockchain: Proof of Work (PoW)
Simply put, cryptoart is collected on the Ethereum blockchain. In this way, collectors know they are getting an original work with a certificate of authenticity-the NFT or non-fungible token. This process consumes a staggering amount of electricity. It is estimated that a single Ethereum transaction uses the same amount of energy a typical US household uses in an entire day. With over 1 million transactions happening per day, that amounts to a whole lot!
Currently the Ethereum blockchain uses a system known as Proof of Work (PoW). What this means is that miners compete to solve problems and verify transactions; once completed another block is added to the chain and that miner is rewarded with 2 ETH. “This provides an incentive for miners to mine on the Ethereum network resulting in many machines fighting to solve a new block. The problem is that although potentially millions of miners may compete to solve a block, there is only one winner. The computation and energy consumption used by the rest of the miners who did not solve the block is essentially wasted.” The glaring problem here is not the creation of NFTs, but rather the PoW algorithm used by the Ethereum blockchain.
Ethereum 2.0: Proof of Stake (PoS)
Many believe the answer is coming with Ethereum 2.0 which has been in the works for years. It is estimated that it will be adopted by late 2021 to early 2022. Ethereum 2.0 will be a much more efficient process, in fact 99% more efficient. Instead of performing 30 transactions per second, it will be able to handle 100,000. The PoS model streamlines the process so that instead of millions of processors scrambling to secure the next block on the chain, PoS will randomly pick one to do the job. The participants will no longer be called miners but instead they will be validators. To keep them honest, each validator will need to put up a stake or at least 32 ETH collateral to get the job. Those that put up more Ethereum as collateral have higher chances of getting the job, but this will also prevent them from cheating as they will lose their collateral and their accounts can be destroyed if they break the rules. With this new system, less money will be required to attract validators lowering the “gas” fees to creators and reducing the energy consumption exponentially.
Viral Outrage and Next Steps
If you are on Twitter, Discord, or Clubhouse and are tracking the cryptoart market, you can attest to the inundation of discourse around the environmental damages of NFTs. What is also evident, this art community is very much in tune with this issue and creators and collectors alike are working on ways to solve the problem. Alternatives to energy-efficient ways to “mint” an NFT have surfaced with sidechains that already use the PoS system; artists have been making donations that offset kWh and plant trees; and some purchase carbon credits to offset their carbon footprint. Once the Ethereum 2.0 upgrade is implemented, it will improve speed, efficiency, security, scalability, and neutralize the environmental issue.
This is not a time to point fingers at artists or gatekeepers; this is a time to continue inventing and building new systems to address the problems to move forward. The art community is all about-support, kindness, encouragement, creativity, and autonomy.
Stay Curious!
~NFT Art Source
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