NFTs are a thing of beauty (sometimes), and sometimes they are just downright weird. But they are collectible, and they are definitely having more than a moment. NFTs have grabbed the headlines with celebrities releasing their collections, from “The Mohammed Ali Collection”, to Tony Hawk and then prominent artists like Banksy and Beeple whose work was auctioned off in Christie’s for an astonishing $69 million bid. Anything can be sold as an NFT as long as it is first digitized; from gifs to songs from the likes of Snoop and Grimes, to tweets – remember Jack Dorsey’s first-ever Twitter Tweet with the memorable words “just setting up my twttr ”? He wrote that on March 21, 2006, and it was later auctioned off by the CEO of Twitter and Square, Dorsey for an eye-watering $2.9 million to a Malaysian businessman. And especially art, including trading cards and unique pieces of artwork.
The Weird and Wonderful Tale of NFTs
The advantage of NFTs over physical artwork is that rather than keeping it on your wall or in your home, where a limited number of people can view and enjoy it, digital art opens it up to be viewed in digital galleries for everyone to enjoy.
However, NFTs come with a hefty price tag. And i don’t mean how much you would purchase them for on an NFT marketplace. I’m talking about the cost to the planet. Most NFTs are bought, sold or minted on the Ethereum blockchain. As many crypto aficionados know, Ethereum gas prices are out of this world, as the miners there have to use an incredible amount of energy for each ETH they mine. Not only is this impractical on the wallet, where transactions on the Ethereum network can cost anywhere up to $1000 per transaction, but the cost on the planet is even heavier.
Ethereum is based on a system that uses what is called “Proof of Work”. This is the security system that ensures all transactions or riddles are being accurately authenticated and verified and then stored on the blockchain. The puzzles that miners are forced to solve are extremely complex and require huge amounts of energy. For each puzzle they solve, they receive rewards by way of Ethereum. The energy guzzled in this way makes the act of tampering with the ledger unrealistic, and is a form of security.
However, it is also unviable, slow for transactions and particularly impractical for minting NFTs. For that reason the future of minting will be conducted with a system called “Proof of Stake”, rather than the current method “Proof of Work”. This works in a different way. Rather than miners having to use extraordinary amounts of energy to keep them on the straight and narrow, they need to have cryptocurrency holdings locked in, which gives them a stake and a reason to behave.
From Work to Stake
Ethereum has been working on a way to move their hefty system to “Proof of Stake” for some years, however, it is no mean feat, with updates taking them years. In the meantime, there are private networks like Tezos, which already use “Proof of Stake”. Tezos is an active system hosting many NFT marketplaces. One example is Hic Et Nunc, meaning Here and Now, which is a much less controversial choice as it consumes over two million times less energy than a network like Ethereum. It is extremely popular and recently overtook OpenSea as the largest NFT marketplace in terms of users. In fact, Tezos impressed OpenSea so much that they have now formed a collaboration with Tezos so users of the Tezos NFT community can view and trade Tezos-based FA2 NFTs on OpenSea.
Here’s what they said: “At OpenSea, we’re excited to support a growing, cross-chain ecosystem of user-owned digital assets. We’ve been very impressed with the work that the Tezos ecosystem has done to further NFT standards, and we are proud to announce our collaboration with the Tezos ecosystem”
So NFT demand might be dropping, but only on carbon-emitting, energy-guzzling networks. Is Proof of Stake the future of NFTs?