Entering the NFT field: You need to understand the impact of digital collectibles on the environment

Over the past year, NFTs have taken pop culture by storm. Nearly every day, new celebrities announce their interest in emerging technologies — often through airdrops of collections of NFT collections. From Quentin Tarantino's "Pulp Fiction" NFT to Snoop Dogg's NFT music NFT, many famous people have begun to realize the creative value of NFT. While celebrity involvement has raised mainstream awareness of NFT use cases and the investment potential of NFTs, it has also drawn the ire of some fans.

Amid the hype surrounding the NFT phenomenon, there are growing concerns about the technology's environmental impact. In one notable example, South Korean boyband BTS suffered a major setback a few months ago with plans to launch their own NFT collection. The encounter with BTS is just one of many similar incidents that have caused some artists to become cautious about exploring the NFT trend on their own.

What many fans don't think about is that we can create NFTs without costing the environment. In fact, many NFT platforms have adopted greener minting methods by integrating energy-efficient blockchains such as Tezos, Flow, Polygon, and Solana. These blockchains use a consensus mechanism called proof-of-stake (PoS) to verify transactions on the blockchain, such as minting NFTs. This type of consensus mechanism requires significantly less energy than Proof-of-Work (PoW), which was previously the main way of validating transactions, as we will explain later.

But given the amount of technical jargon and misinformation surrounding NFTs, the hurdles blocking entry to the NFT space can feel overwhelming when it comes to conducting due diligence. Before any artist enters the NFT space, there are four key factors to consider to maximize eco-friendliness: PoW, PoS, sidechains, and carbon neutrality.

proof of work

Environmental concerns surrounding NFTs stem largely from a consensus mechanism known as proof-of-work (PoW). Essentially, PoW is a security detail for cryptocurrency transactions. To ensure a transaction is safe and legitimate, computers must solve arbitrary mathematical puzzles as verification. The computers involved in this process require a lot of electricity, so some celebrities have faced community backlash after releasing NFTs on PoW chains.

proof of stake

Fortunately, not all blockchains require PoW, and contrary to popular misconceptions, NFTs can be minted in an environmentally friendly manner. That is utilizing Proof of Stake (PoS). Unlike energy-intensive computers that need to solve puzzles to verify transactions, PoS only requires individuals to stake their cryptocurrency to participate in validating transactions to earn rewards.

As mentioned earlier, some popular PoS blockchains include Tezos, Flow, Solana, and Polygon. Tezos in particular has drawn attention for its low energy consumption — for simple comparison, Tezos’ 50 million transactions generate a carbon footprint equal to that of just 17 global citizens.

Additionally, one of the leading blockchains in the NFT ecosystem - Ethereum - will soon be transitioning from PoW to a PoS system. According to the Ethereum Foundation, the Ethereum network is about to switch from PoW to PoS, rumored to be coming this fall, which will increase its energy efficiency by about 2,000 times and reduce total energy consumption by 99.95%.

Sidechains and layer-2 solutions

Another way to circumvent the excessive energy consumption of PoW is sidechains. Sidechains are independent blockchains that run in parallel to a main chain like Ethereum. This independence allows sidechains to formulate their own transaction, security, and governance rules. Since sidechains do not need to rely on a distributed network of computers to verify transactions, their carbon footprint is greatly reduced.

In the NFT space, Polygon is one of the most popular sidechains. It is worth noting that Polygon is also a layer-2 solution, or third-party protocol, which supports the Ethereum main chain by improving transaction speed and gas efficiency. The community curated nature offered by many sidechains is particularly well suited to creators and developers looking to build a mutual economy with their fans, making sidechains a popular choice for those looking to enter the crypto space.

carbon neutral

Regardless of whether a project utilizes PoW, PoS, or sidechains, it is important that they acknowledge and remain accountable for their carbon footprint.

There are many ways that projects can work towards becoming carbon neutral, such as implementing carbon offsets in conjunction with carbon removal projects. For example, earlier this year, Rarible integrated with the popular carbon removal marketplace Nori, allowing anyone to offset the carbon footprint of most Ethereum NFTs listed on Rarible.

With these factors in mind, before entering the NFT space, artists need to conduct due diligence to ensure that the NFT market and project they choose matches their values.

While some see minting NFTs as a “money grab” with no regard for context, this characterization misrepresents the community-focused intent of Web3 futurists and tech innovators. By adopting eco-friendly and practical NFTs, artists can open up a new realm of possibility to connect and share value with their fans.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.