Jawad Ashraf, CTO and Co-Founder of Terra Virtua, looks at the sustainability of NFTs.
As we head towards the end of the year, a period dominated by the pandemic will be briefly overshadowed by a topic that could arguably have even greater consequences, climate change. In November, the UK will host COP26, the global environment conference that is seen as vital in stemming the world’s march towards climate catastrophe. While that will focus on the steps governments can take to turn the tide, there is increasing pressure on businesses and industries to do their part too, including the digital collectibles industry through NFTs.
As the popularity of non-fungible tokens (NFTs) has grown, inevitable questions start being asked about how sustainable and environmentally friendly NFTs really are. Technology in general is under the microscope when it comes to its environmental impact, particularly due to the recent news around the energy use needed to mine Bitcoin. Research by Cambridge University found Bitcoin uses more electricity annually than Argentina and the United Arab Emirates. While differing things, both Bitcoin and NFTs do rely on blockchain platforms.
So, with a keen focus on industries’ impact on the environment, what can the digital collectible sector do to show it’s taking the issue seriously?
A greener blockchain
The first thing the industry can do is to understand the impact NFTs can have on the environment. Recent research had found the impact of one NFT is equivalent to an EU resident’s electricity consumption for 77 years, using a laptop for two and a half thousand years or driving a petrol car 838,000 kilometres.
This is down to the platforms that are being used. NFT platform providers, much like ourselves, need to assess the platform they’re using and figure out if there should be a more environmentally friendly one out there. Polygon, for example, has helped Terra Virtua reduce the energy we use to create a single NFT by 99.9%. This ensures NFTs can use as little energy as it takes to send two emails, down from the equivalent of creating and publishing 83 paperback books.
Transitioning to a new platform may sound simple, but the reality can often be the exact opposite. If done wrong it can be both costly, time consuming and ultimately may see the provider give up on the whole process. Rather than trying to transition straight away, providers should instead look to conduct testing in the background, with the aim of making the change once the new platform is up and running and, importantly, stable.
Alongside testing and launching a new platform, in order for NFTs to truly be accepted in this sustainably conscious world, the industry needs to convince both consumers and brands that it’s taking the appropriate steps. Without consumers on board there simply isn’t a demand for the market to supply to.
Education is needed to convince consumers what they’re purchasing isn’t substantially contributing to an issue that is growing on their consciousness each day. From a brand perspective, NFTs represent a great opportunity to generate increased revenue by interacting with customers on a whole new platform, deepening relationships with them. However, as consumers grow more aware, the pressure builds on brands to show their credentials, with customers changing their shopping habits and being prepared to pay more to companies that are sustainably and environmentally conscious.
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A sustainable future
As COP 26 approaches then, the NFT industry faces a race against time to show it’s working to be on the right side of history in the fight against climate change. The industry already has a lot going for it, compared to its physical sibling in the collectibles sector. Being just online, NFTs remove the need for people to travel miles to see collections, but with its reputation as it is, it needs to do more to reduce its impact. Whether it be those that are providing the marketplaces or brands looking to ride the wave of consumer enthusiasm, sustainability needs to be placed at the heart of all the industry moving forward. Switching to a sustainable technology like polygon, and educating businesses and consumers are vital steps to ensuring NFTs can sustain its future in the first place.