NFT: a new revolution in the digital world
Have you ever created a meme? Maybe you haven’t heard of it yet, but your meme might be worth a lot of money. On April 28, that photo of a little girl smiling sadistically in front of a burning building, shared thousands of times on social networks, sold for US$473,000 (R$2.5 million) when it was turned into NFT. for Non-Fungible Token, a terminology that seems straight out of science fiction.
In the technology area, token is like a token, a contract that represents an asset (real or digital); “non-fungible” means it is unique and cannot be replaced by anything else. A 100 reais banknote is a “fungible” object as it can be exchanged for two 50 reais banknotes without loss of value. On the other hand, a work of art or goods produced in a limited series are not “fungible”: they are unique, personalized. The good news is this. Finally, a mechanism that guarantees ownership of digital assets was created.
This made it easier to sell them, as NFT facilitates purchase and sale transactions. If Picasso produced digital works of art, the NFT could be a kind of signature or attestation of authenticity, which links his art to himself. Now imagine that Picasso has sold this work and its current owner has placed it in a museum for public appreciation. That’s more or less what NFT does. It allows others to enjoy the property without harming the value of the work to its owner or investor.
This opens up a huge unexplored field for entrepreneurs. Artists, musicians, influencers and many other virtual world producers can monetize goods that were once free or easy to copy. According to a report by NonFungible.com, an NFT market analysis firm, with support from L’Atelier BNP Paribas, the non-fungible token (NFT) market reached US$250 million in 2020, 299% higher than in 2019. The study says that NFT will be an emerging asset class for the economy in the coming years and a major driver of economic activity in virtual worlds. After all, the trend is for people to spend more and more time and money online.
The bad news is that the environmental impact of this fledgling industry is astronomical. When creating, selling or buying an NFT, millions of tons of greenhouse gases are released into the atmosphere. This is because NFT is encoded using blockchain, the same technology behind cryptocurrencies as bitcoin, which is particularly harmful to the environment. Each block of data that represents a purchase of bitcoins or an NFT transfer is added to a stream, in a process known as mining, done by computers that consume staggering amounts of energy for processing. We must remember that, in 2016, energy generation from fossil fuels still represented 67.3% of global production.
A Cambridge University study revealed that bitcoin mining now consumes more energy than Argentina. There are also those who say that, annually, bitcoin’s carbon emissions are equivalent to those of the city of London. Or a trip from San Francisco to New York taken 15,000 times. To neutralize its carbon emissions, a hypothetical forest the size of Portugal would be needed. And others claim that bitcoin alone can increase the Earth’s temperature by two degrees. In other words, a not negligible impact.
With all these implications for the environment, there are those who question whether by-products of blockchain technology, such as cryptocurrencies and NFT, would be ethical in a world that is moving, at great cost, to zero carbon emissions. Elon Musk, founder of Tesla, which has given up on accepting bitcoins for vehicle purchases, said recently that cryptocurrencies are a good idea but cannot harm the environment. With that, the next logical step would be to find ways to make this technology “green” so that it reaches its full potential for the benefit of society. The Ethereum network, which creates and stores NFTs, is already moving in this direction by moving to a model that uses a much smaller amount of data processing. If successful, the NFT, in addition to revolutionizing the digital world, it could also be a clean technology. As a result, we can expect huge growth in the use and value of NTFs in the near future, which makes this revolutionary investment very interesting.
