non-fungible tokens and sustainability
NFT’s are undoubtedly the future for creatives. Their ability to drive growth to the creator economy by enabling artists to not have to rely on large institutions is an important step towards democratizing art. However, this self-sufficiency can come at a price, and there are ongoing discussions as to who is responsible for the energy consumption involved in NFT trading.
An NFT, or Non-Fungible Token, can take many forms, as it technically can be anything digital. A gif, a photo, even racing horses which have been dubbed “breathing NFT’s,” can all be bought and sold on NFT marketplaces via cryptocurrency. Cryptocurrencies are decentralized, meaning they do not rely on any one third party, such as a bank, to oversee transactions. Instead, most cryptocurrencies rely on a ‘proof-of-work’ security system, which has been intentionally designed to be resource exhaustive in order to prevent fraudulent activity. The blockchains are set to a certain level of difficulty to make altering or copying the block during the mining process unfeasible, thus securing it for crypto owners. It is this process of protecting blockchains as they are being extracted that is, to put it lightly, energy inefficient.
As selling and purchasing NFT’s gain popularity, many are looking for alternate solutions to reduce the emissions caused by the increased blockchain mining.
Most NFT’s rely on the Ethereum blockchain, which uses the proof of work model described above. As selling and purchasing NFT’s gain popularity, many are looking for alternate solutions to reduce the emissions caused by the increased blockchain mining. While it is still ultimately the mining of cryptocurrencies that are using the most energy, higher traffic on NFT marketplaces are driving demand for more crypto, resulting in more mining.
The NFTreats marketplace will be run on fully audited L2 solutions. This means that a second layer, or L2, is built on top of the existing blockchain to handle transactions. Once the transaction has been completed, the result of said transaction can be settled back on the original blockchain to be verified through the proof-of-work system. This process saves energy because the transaction happens on a sidechain, only requiring the L1 to authenticate the purchase. This enables crypto holders to use their existing Ethereum coins while reducing the greenhouse gas emissions that are associated with the popular blockchain.
The NFTreats marketplace will be run on fully audited L2 solutions operating with proof-of-work system. This process saves energy because the transaction happens on a sidechain
Sustainable solutions for cryptocurrency and NFT marketplaces are being pushed for by many in the community. As the digital economy grows, greener methods of working will have to be adopted in order for the market to continue to thrive. At NFTreats, our priority is to increase accessibility to these marketplaces for our artists and collectors. Currently, pushing transactions off-chain is the most effort-reducing alternative until more energy efficient methods of mining are built into the original blockchain technology.
As the digital economy grows, greener methods of working will have to be adopted in order for the market to continue to thrive.
Marketplaces, blockchains, and key stakeholders will have to be actively committed to environmentally friendly solutions in order to create a more sustainable, crypto world. Tesla halting vehicle sales purchased with bitcoin, and China’s pledge to be carbon neutral by 2060 will certainly incentivise those invested in the digital economy to work together to develop greener alternatives.
For now it is important for both small and large players to offer accessible and secure work-arounds in order to maintain a profitable and sustainable ecommerce space.
Written by Alexis M. for nftreats.art
