Based on blockchain technologies, NFTs (for “Non Fungible Tokens”, which refers to unique digital assets) have experienced a recent boom alongside cryptocurrencies. They had a real explosion this summer. On August 1, 2021, 56,045 NFTs were traded. On August 13, this daily figure rose to 442,806. New applications are constantly emerging, but opposition is also vehement: among what they are criticized for, the ecological cost is strongly singled out.
New unseen scenes from Pulp Fiction have just been put on sale by Quentin Tarantino. The American director offers 7 never-before-seen scenes from the film that won him the Palme d’Or at Cannes in 1994. But the particularity comes from the form of this sale: it is NFT. On an impressive upward slope and intimately linked to the blockchain (but different from cryptocurrencies), these tokens are bringing a real transformation to the art market. However, if we are to believe the criticisms addressed to them, they are not exempt from all reproach – particularly with regard to their carbon footprint. Explanations.
NFT, digital ID tokens
“NFT” is the acronym for “ Non Fungible Tokens ”, non-fungible tokens in French. They work on blockchain systems, like cryptocurrencies. But where the value of a cryptocurrency is fixed and equal for each of its units, NFTs are independent of each other and each has its own value. Each NFT is associated with a unique digital object and serves as an authentication certificate. The NFT gives the latter a clean and immutable digital identity. The value of the NFT is linked to that of the object to which it serves as a digital certificate, even more so, it is this object, by virtue of its intrinsic value and its rarity, which determines it.
Thanks to these tokens, it is now possible to distinguish between the original file of a digital object and a simple copy in a guaranteed and secure way. Above all, it is possible to give it a title deed. It was in the art market that the first applications of the technology developed, but other areas could also use it, such as cinema tickets or even other legal documents.
A fresh start for the digital art market
After these clarifications, how can the new technological use that accompanies the rise of NFTs revolutionize the art market? Digital art is inherently free, and viral. Copying is immediate and almost indistinguishable and it is almost impossible to restrict access to a work. Yet the original still has value. This is where NFTs come into play, guaranteeing the authenticity of the object. Whoever owns the token has ownership rights to the original, and therefore the right to sell it.
The absence of a control entity guaranteed by the use of the blockchain allows for greater participation by independent players, and in greater numbers. Memo Akten, an artist and professor at the University of California, San Diego, sees a positive view of the potential behind NFTs. In a column posted on the website of Flash Art magazine, he argues that “for the first time, digital artists can finally support themselves by doing the work they love”.
NFTs allow artists independence and much more control over their works. On the price, on the conditions of sale, all without an intermediary third party entity. All value passes directly from the artist to the buyer. And later, if the object in question increases in value, the latter will pass from the seller to the buyer via decentralized marketplaces without intermediaries. This is not without raising questions as to the fact of “possessing” a digital image which can therefore be easily copied, especially since NFTs are not yet necessarily recognized in the various legal systems and their legal status remains quite blurry. Still, the development of NFTs constitutes a revival for the digital art market.
A widely criticized environmental impact
NFTs also have a dark side. Like any system that relies on blockchain technology, they involve energy consumption and a carbon footprint that is impossible to overlook. Memo Akten tried to calculate the ecological cost of an NFT. In his own words, his calculations lack precision and are based on a few approximations. If the precise figures are to be taken with tweezers, the order of magnitude remains indicative all the same. He thus calculated that the “ Supreme x Federal Reserve 2 ” NFT would have “cost” 421 kWh to produce. That is the equivalent of the consumption of an average European household in a month and a half. The average consumption for the creation of an NFT would be 369 kWh.
This significant energy consumption is then necessarily transformed into a carbon footprint since electricity production remains very carbon-intensive throughout the world. However, this situation is not inevitable for Jack Dorsey, CEO of Twitter: “”We believe that cryptocurrency will eventually be powered entirely by clean energy, eliminating its carbon footprint and driving the adoption of renewable energy on a global scale. “. KPMG’s “Cryptoactives: towards a financial revolution” study highlights these elements: blockchain applications can be a driving force for ecological transition. They cite a Cambridge University studywhich shows that already 39% of the total energy consumption of mining comes from renewable energies. The fact remains that today, the impact of NFTs on the environment remains a black spot which currently limits the support of the general public.