How to Sell NFTs Without Destroying the Environment
Sell plenty of NFTs or reduce carbon footprint? Why not both? Join the Discord discussion and discover how you can be an environmentally responsible artist.
$69 million. $7.6 million. $6.66 million.
Big numbers, right?
These are just some of the prices of Non-Fungible Tokens (NFTs) or Crypto art sold online.
Mind-boggling, I know. But it doesn’t end there.
Traditionally, an artist sells their work for a couple of thousand dollars that can be resold for millions of dollars in a few decades. The original artist does not benefit from that price increase. NFTs, however, are different. Crypto art galleries offer royalties to the original artist for secondary sales. When their work gets resold, they get a commission or a certain percentage of that revenue.
What a time to be an artist. No middlemen. Just the artist rightfully taking the profits they deserve.
Undeniably, the crypto space has provided a platform that cares about the artist and allows them to participate in their own success. However, this innovation is still in its early stages. This advancement comes with its disadvantages—one that is ecologically destructive.
French artist and climate activist Joanie Lemercier experienced firsthand the large energy consumption of crypto art. In a Wired article, Lemercier was said to have vowed to reduce his energy use by 10 percent each year. The artist has successfully met his goals, that was, until his first blockchain “drop.” His works, which were auctioned online, sold out in 10 seconds and consumed 8.7 megawatt-hours of energy—equivalent to two years of energy use in his studio. Lemercier’s years of progress in reducing his energy consumption were erased in just a few minutes.
As ridiculous as it sounds, this energy consumption problem has been happening for years in the crypto space because of a system called Proof of Work (PoW).
Why NFTs Use So Much Energy
Different blockchains have different ways of minting tokens. Ethereum (ETH), the blockchain wherein most NFTs are created, uses the Proof of Work (PoW) algorithm to validate transactions and mint new tokens. PoW ensures that cryptocurrency transactions can be processed peer-to-peer in a secure manner without a third party. While PoW deters malicious uses of computing power, it requires an immense amount of electricity which increases as more miners join the network.
PoW requires members of the network called "miners" to use powerful computers that need lots of electricity to validate blockchain transactions.
In his research of the ecological cost of crypto art, writer Memo Akten stated that a single Ethereum transaction is estimated to have an average footprint of 35 kWh. That is roughly the equivalent of an EU resident’s electric power consumption for four days. On the other hand, the footprint of a single NFT-related transaction on SuperRare is more than double of an average ETH transaction.
Due to its compute-intensive design, other developers have found more efficient alternatives to PoW. However, PoW, specifically Ethereum, is still currently the most widely used blockchain for minting NFTs.
On the upside, Ethereum is well-established and is trusted by people who need assurance that their NFTs will still be available for sale a few years from now, mainly due to the decentralization of Ethereum (the amount of nodes running on their network). Ethereum has a massive global community and a vibrant ecosystem of decentralized applications collaborating amongst one another, allowing those who own an NFT on Ethereum the biggest canvas of possibilities for what an NFT can do, and what creatives can create. This creates culture and resiliency against other blockchains offering the same functionality. Their community is their secret sauce.
While Ethereum is more secure, it still does not solve the ecological problems of minting NFTs.
This is where Proof of Stake (PoS) and Proof of Authority (PoA) come in.
A Cleaner Alternative to PoW
A cleaner alternative to Proof of Work is the Proof of Stake (PoS) and Proof of Authority (PoA) algorithm.
In the PoS concept, a person validates block transactions based on how many coins he/she holds. The person then “stakes” or hands over their coins which serve as collateral to become eligible validators. In a nutshell, the PoS algorithm is similar to winning the lottery. The more coins someone “stakes,” the higher the chances of them earning more coins.
In PoS, the validator is randomly chosen based on how much stake they commit to a network.
Some of the known PoS blockchains include Polkadot, EOS, and Cardano. As of writing, Ethereum is transitioning from a PoW to a PoS system called Ethereum 2.0. This upgrade is aimed to increase the network’s efficiency and scalability.
Another energy-saving alternative to PoW is Proof of Authority (PoA), which Real Items uses for its system. This algorithm is a modified form of PoS built so that blocks and transactions are verified by pre-approved participants who act as moderators of the system. These moderators have to meet a certain standard (a publicly-traded company) and must be ready to invest their personal funds.
In PoA, only approved parties selected based on reputation can become validators. Check out why Real Items moved from a PoW to PoA consensus algorithm here.
Although PoA is more centralized, it is more energy-efficient compared to blockchains that use the PoW algorithm. PoA does not need powerful computers that use up an absurd amount of energy to run. Real Items uses PoA and has a store that sells NFTs and phygitals.
Real Items believes that artists should be able to express their creativity and receive the profits they rightfully deserve. This process, however, does not have to come at the cost of destroying our planet. That is why we have opened our platform to artists and Shopify store owners that want to sell original products and artworks.