Written by Sidney Lampayan Illustration by Zia Palomar
Since 2021, NFTs have been a popular term used on digital spaces and social media. They’ve exploded onto the mainstream, and have been used to signify artwork, NBA basketball clips, and even tweets. But there’s still a general confusion around what NFTs actually are — and the impact they have on the world around us.
NFT stands for “non-fungible token”. Non-fungible means that something is unique and cannot be exchanged for something else. A commonly used example for this is the Mona Lisa. It’s a unique painting that does not have an identical copy — it’s the only one of its kind. The token aspect refers to the NFT being an asset, one that is in a digital space.
They are stored as data on a blockchain, which, according to Wikipedia, is a public digital ledger that keeps record of every purchase of an NFT. But that begs the question — how does one go about buying NFTs?
When you buy an NFT, the transaction is recorded publicly on the blockchain. This means anyone can see that you have bought the NFT. The NFT will have a unique fingerprint, a token name, and a token symbol. The blockchain ensures that the information of the purchase can’t be tampered with. It also lets you track who owns the token, and who used to own, and how much it has been sold for before.
But the thing is, when you buy an NFT, you aren’t buying the token itself. For instance, if you buy an NFT of the artwork, you’re not buying the art. You are buying the right to claim that you own this art. However, the creator of the art still owns copyright and the ability to reproduce their work.
For this reason, people often say that buying an NFT is just like buying “digital bragging rights”. Everyone can actually view the artwork for free, but due to the public records of the blockchain, if one buys the NFT, they can say they own it and bought it for this amount of money.
Some say that NFTs are the future for the digital market and artists. However, NFTs have a large and negative impact on the environment. In order to run blockchains, the technology used comprises computers running day and night, every day. Blockchains use a lot of power and terawatt hours (TWh) of electricity just to record these purchases.
As an example, Ethereum is one of the well-known blockchains used by NFTs. As of January 2022, it uses an estimated 103.42 TWh a year. Electricity is often produced from power-plants that burn fossil fuels, which are a problem for the environment. Burning fossil fuels releases the greenhouse gas carbon dioxide into the air. Greenhouse gases trap heat in the atmosphere, which causes the earth to heat up. This is what’s known as global warming, and more burning fossil fuels only accelerates that process.
“It’s all digital, but it has real world effects,” says YouTuber Johnny Harris in his video NFTs Explained, which is the most viewed video about NFTs on the platform.
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