By applying NFTs with a focus on green benefits, artists can open up new avenues for creating connections and exchanging value.
Over the past year, NFTs have taken pop culture by storm. Almost every day a new celebrity expresses their interest in new technology – usually by discarding their NFT collection. From Quentin Tarantino’s Pulp Fiction NFT to Snoop Dogg’s NFT music label, a host of big names are beginning to recognize the creative value that NFTs offer. While celebrity participation has played a key role in raising public awareness of the many uses and investment potential of NFT, it has also drawn the ire of some fans.
Amid the hype surrounding the NFT phenomenon, concerns have grown about the environmental impact of the technology. For example, a few months ago popular South Korean boy band BTS faced significant opposition over their plans to release their own NFT collection. The reaction BTS has seen is one of many similar cases, which is why some artists are wary of exploring the NFT trend for themselves.
What many fans overlook is that NFTs can be created without harming the environment. In fact, many NFT platforms have adopted greener mining practices by integrating energy-efficient blockchains like Tezos, Flow, Polygon, and Solana. These blockchains use a consensus mechanism called Proof-of-Stake (PoS) to validate transactions on the blockchain, such as B. the minting of NFTs. This type of consensus mechanism requires significantly less power than Proof of Work (PoW), the previously dominant method of verifying transactions, as we will explain shortly.
However, given the amount of jargon and misinformation about NFTs, the barrier to entry can seem insurmountable when it comes to conducting due diligence. Before an artist enters the NFT arena, four key factors must be considered to maximize sustainability: PoW, PoS, sidechains and carbon neutrality.
Related: How blockchain technology is changing climate protection
proof of work
The environmental concerns associated with NFTs are primarily related to a consensus mechanism known as Proof of Work. Essentially, PoW acts as a security element for cryptocurrency transactions. To ensure transactions are safe and legal, computers must solve random mathematical puzzles as a test. The computers involved in this process require a lot of power, which is why some celebrities have faced community backlash after launching NFTs on PoW chains.
See also: Green Bitcoin: The Impact and Importance of Energy Consumption for PoW
Proof of use
Fortunately, not all blockchains require PoW, and contrary to popular misconception, NFTs can be minted in an environmentally friendly way. This is where Proof of Stake presents a compelling solution. Unlike power-hungry computers that have to solve puzzles to validate transactions, PoS simply requires people to deposit their cryptocurrency to participate in transaction validation and earn rewards.
As mentioned earlier, several popular PoS blockchains include Tezos, Flow, Solana, and Polygon. Tezos in particular has attracted a lot of attention due to its low energy consumption – for comparison: 50 million transactions on Tezos cause CO2 emissions from only 17 world citizens.
Related: Proof-of-Stake or Proof-of-Work, that is the question here
Additionally, one of the leading blockchains in the NFT ecosystem, Ethereum, is about to transition from a PoW system to a PoS system. According to the Ethereum Foundation, the upcoming transition of the network from PoW to PoS, rumored to take place this fall, will allow it to become about 2,000 times more energy efficient and reduce overall energy consumption by 99.95%.
Sidechains and Layer 2 solutions
Another alternative to circumvent PoW’s excessive power consumption are sidechains, independent blockchains running parallel to mainchains like Ethereum. This independence allows sidechains to set their own rules regarding transactions, security, and governance. Since sidechains do not have to rely on a distributed network of computers to validate transactions, their carbon footprint is greatly reduced.
A great example of a popular sidechain in the NFT space is Polygon. Notably, Polygon is also a third-party Layer 2 solution or protocol that supports the Ethereum backbone by improving transaction speed and gas efficiency. Many of these by d