Paris Hilton has declared that these are her new obsession, exclaiming they have “taken over my entire mind and soul.” The CEO of Twitter just sold his first tweet as one for 2.9 million dollars. Yes, you read that right a TWEET sold for 2.9 million dollars. How is this possible? Through the use of NFTs, also known as non-fungible tokens. You have probably heard this term popping up around social media or on the news with little explanation of what they are. To put it simply, NFTs are original data assets, such as tweets, music, art, and video clips stored on blockchains. Blockchains act as digital ledgers certifying the authenticity of the data and tracking who owns the data. Non-fungible refers to the fact that the assets have unique codes that differentiates them from other datasets. A way to look at this is through the concept of physical paintings and prints. You can buy prints and essentially the painting, but there is only one original painting in existence. The NFT represents the original painting. We can see the Twitter CEO’s tweet and take a screenshot of it, but we do not own the original data blueprint of the tweet.
Proponents of NFTs argue that they provide a direct line between the artist and the customer, allowing more profit to go directly to the artist. Digital art is now purchasable at prices that rival physical art, promoting growth for the digital art medium. Artists like Jazmine Boykins, who used to post their art for free, now use NFTs to profit off their work. On the opposite side, critics argue that NFTs are unethical due to their socio-ecological impact. Blockchain mining works on a Proof of Work model that uses a large amount of energy per transaction, resulting in CO2 emissions. I recommend reading this article that further delves into the process of blockchain mining and why it has such high energy usage. According to the Digiconomist, a single Ethereum (an open-source blockchain) transaction consumes 75.84 kWh of electrical energy and has a carbon footprint of 36.02 kgCO2. The transaction’s energy usage is equivalent to 2.56 days of power consumption in a single household. That’s a lot of energy! Especially when you consider that the number of Ethereum transactions per day is around 1.5 million.
These numbers aren’t due solely to NFT transactions since NFTs encompass a relatively small portion of Ethereum transactions. According to Joseph Pallant, the Founder of Blockchain for Climate Foundation, figuring out how NFT transactions contribute to these emissions is similar to determining your emission level from flying on an airplane. One can argue that someone is partly responsible for the emissions of their flight. However, even if you don’t buy a ticket, the plane will still take off and produce those emissions. Whether someone creating, buying, or selling an NFT is responsible or not for the blockchain emissions is still up for debate.
NFTs are controversial, with critics arguing they produce substantial emissions and proponents arguing that they have done positive things for digital artists and the medium itself. The emission levels of NFTs still need to be studied. What is known is that blockchain mining itself does consume large amounts of energy. In good news, some researchers and scientists have dedicated their time to studying blockchain mining and methods to make the process more energy-efficient. Ethereum 2.0 has arrived this year and utilizes Proof of Stake, which creators Sunny King and Scott Nadal believe is more efficient than Proof of Work. Hopefully, we will see more sustainable practices in the world of digital ledger technology soon.