Non-fungible tokens (NFTs) have risen in popularity in recent weeks as a way to sell artwork using blockchains, the technology behind cryptocurrencies like bitcoin. Now, two of the developers behind the NFTs at the root of the current digital art boom have warned that they are is damaging to the environment and that a change in direction is needed.
An NFT is a cryptographic claim of ownership, similar to the deed to a house, that is encoded into a blockchain, meaning that it cannot be altered.
William Entriken, one of the authors of the NFT protocol for Ethereum, a popular alternative to bitcoin, says NFTs aren’t inherently bad, but that rapacious speculation is pushing them and cryptocurrencies down a destructive path as their carbon footprints rise.
Most cryptocurrencies rely on “proof of work” to secure their networks, meaning that computers must perform huge numbers of calculations to “mine” new currency and verify transactions on the blockchain. This uses large amounts of electricity – bitcoin’s annual power consumption is comparable to that of Finland.
Investing money into cryptocurrencies – either through simple speculation or by purchasing expensive artwork – boosts demand and therefore prices, says Entriken. That makes mining that cryptocurrency more profitable, but also more difficult, increasing carbon emissions.
Entriken contrasts cryptocurrencies with carbon offsetting, in which people pay to have carbon emissions removed from the atmosphere. “Bitcoin is the opposite of that. When you purchase bitcoin you’re purchasing carbon creation credits,” says Entriken. “When you purchase the $50,000 [of bitcoin] somebody else is directly putting that much carbon into the atmosphere. Ethereum is the same.”
He has called for Ethereum to switch from a proof of work (PoW) approach to a proof of stake (PoS) approach, which would remove the need for intense calculations by allowing the owners of existing coins to control the network, rather than the owners of the computing power. It is estimated this could cut the total energy demands of Ethereum by 99 per cent. “You have to switch to proof of stake. Proof of work should be illegal,” says Entriken.
Ethereum developers have been working to make the switch for some time, but no single person or organisation is in charge of the open source project, meaning progress has been sporadic, says Entriken. “It’s always been three months away. These things don’t just happen immediately.”
“The carbon footprint of proof of work blockchains deserves all of the criticism it gets and more,” says Dieter Shirley, who also worked on the Ethereum NFT protocol. “But NFTs are not the problem here. Now that we have electric cars, we can say that cars aren’t the problem, gasoline is the problem. Same with proof of stake: now that we have PoS blockchains, we can say that NFTs aren’t the problem, PoW chains are.”
Increasing awareness of the carbon cost of NFTs has inspired some artists to look elsewhere. French artist Joanie Lemercier began selling NFT artwork on Ethereum as an alternative to the emissions involved in shipping physical artwork, but soon stopped. “I was trying to find something better, and I thought NFTs would be it,” he says. “But it’s 10 to a hundred times worse, so it makes no sense.”
He says that websites selling NFTs need to take the initiative and switch to technologies that have already adopted proof of stake. “The platforms should be held accountable and responsible and they should address the issue, because they can,” says Lemercier.
Lemercier has been exploring alternatives and is currently selling pieces via a blockchain network called Tezos, which operates on proof of stake. “It works absolutely great. There’s no reason to remain on Ethereum. The big money is going to come where the artists are,” he says.
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