You may have heard of the digital artwork “Everydays: The First 5,000 Days” by Beeple that sold for a staggering US$69 million, or Damien Hirst’s “The Currency” – a collection of 10,000 virtual art pieces. If you haven’t, then welcome to the world of NFTs.
This is the new frontier of art and collectibles, with famed artists, fashion brands and other commercial enterprises (e.g. think NBA basketball cards or digital mementos) getting in on the action.
But while NFTs may be the future of art curation, they may not be as sustainable as they seem – despite their digital nature.
To understand it better, you need to know what exactly is a non-fungible token or NFT. Simply put, it’s any data on the Blockchain just like cryptocurrencies (e.g. BitCoin, Dogecoin or Ethereum). The difference is that while cryptocurrencies are “fungible,” meaning their values are the same for a similar cryptocurrency, an NFT is “non-fungible,” meaning each token is unique.
To put it in plainer terms, cryptocurrencies are like physical money where your HK$100 bill has the same value as your friend’s HK$100 bill. On the other hand, an NFT could be something unique like your Hong Kong ID – no two are the same.
It is this ability for an artist to digitise any form of art whilst maintaining provenance that makes NFTs so appealing. And, buyers are responding. Hirst’s collection, which allows the owner to decide whether to go digital or opt for a physical version, averages for about US$19,600 per piece. According to market tracker NonFungible.com, overall sales of NFTs (including artwork, collectibles, etc) in November topped US$11.9 billion – 128 times from just a year ago!
Apart from its capability to certify something as unquestionably authentic, NFTs are also seen as a more eco-friendly art form. Given its digital nature, nothing is wasted…or is it?
The dirty secret of NFTs:
While NFTs are hot, they are also literally hot. Since NFTs are minted on Ethereum, they also use the same amount of energy needed to mine the cryptocurrency. Experts estimate that each time an NFT is created and sold, it generates a carbon footprint of 48kg of carbon dioxide – about 14 times the amount needed to mail an art print.
So should we just then write off NFTs are another unsustainable fad and remain with more traditional and eco-friendly art forms? Definitely not. Steps are being taken to reduce the carbon footprint of this platform.
One way is to utilise renewable energy sources for their mining operations. A more direct way though would be using alternative blockchains such as Tezos or Polygon. The latter claims that the annual energy consumption of their system is just 0.00006TWh versus the 33.57TWh consumed by Ethereum.
Without a doubt, digital art will further grow in prominence in the future and using NFT to secure its authenticity is the way to go. Ultimately, it will be up to the artist to migrate to a less-polluting and more sustainable platform, and for buyers to support them.
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