By Elise Lingeridis
Now that we have hit the two-year mark since the NFT boom began, there are also a lot of concerns to there around the validity and future of NFTs. These issues are usually related to security and valuation.
So, this blog post asks, do NFTs have a future? And, if so, how bright does it look?
Blockchains and the environment
One of the biggest concerns around blockchains at the moment is related to their sustainability.
According to Memo Akten’s research, in Dec 2020 1 in 5 NFTs has a footprint greater than 10 tonnes of CO2. To put that into perspective, that is equivalent to 12 transatlantic flights.
Unfortunately, there is also a chicken and egg problem to this: Ethereum-based platforms have a much larger volume compared to their counterparts — and, therefore, larger environmental costs. But, because it’s one of the biggest blockchains out there, artists keep joining Ethereum…
But not to worry. Solutions to the NFT climate problem are in the works! Artists are pushing marketplaces for change.
The new Ethereum merge, for example, should slash its energy consumption by an impressive 99.95%.
Here is a comprehensive guide to eco-friendly art, if you are interested in knowing the tools that can support the push towards a more climate-friendly NFTs world.
If you’re interested in finding out even more about the topic, you can:
- Join the Clean NFTs Discord channel
- Read the Unreasonable Ecological Cost of #CryptoArt
Are we anywhere near to financialization of NFTs?
Naturally, the end goal of NFTs is understanding how these can be financialized. Trichilo and Gabler have been the first to give a definition of NFT Finance:
We define NFT Finance as the Web3 vertical comprising the infrastructure and set of markets for NFT-based financial products and services.
And the more mainstream NFT adoption becomes, the more all those involved in this world will bring the outside world in. You can then make more use of all economic verticals, like real estate, IP rights, and supply chain management.
To add some context, we know that art and collectibles are non-fungible (semi-fungible at best) and markets for these assets are traditionally illiquid. So, while it’s not possible to push a button and suddenly make these markets “liquid”, there are certainly companies out there that are making the effort to release liquidity.
(Just so you know, liquidity defines how easily a company can convert its assets into cash. And you can read more about that here.)
Currently, since there are only a handful of companies working on the subject, it’s worth giving them a mention:
- Fractional, where you can buy, sell and mint NFTs.
- Charged Particles, a protocol that lets you put digital assets inside your NFTs. Now, ordinary NFTs (think neutral molecules) can contain a digital “charge” inside — ERC20, ERC721, or ERC1155 — giving you the power to create nested NFTs. If you can digitize it, you can deposit it into your NFTs.
- Unic.ly, the protocol to combine, fractionalize, and trade NFTs.
- NFT20, a protocol where you can trade, sell and swap NFTs.
- NFTX, A community-owned protocol for NFT index funds on Ethereum, that allows you to unlock liquidity in many popular NFTs.
Also, Taetaehoho launched the podcast above, solely focused on NFT finance. The podcast puts out weekly episodes, so it’s worth listening to if you want further developments around the space.
So, NFT 2030… yay or nay?
The big question is: will NFTs be in it for the long term? Will they still be around in 2030?
No one can predict the future. So, instead of trying, let’s weigh up some more of their main challenges with the positive developments in the NFT space, that might signal its longer-term success.
Despite skepticism from mostly old-school institutions, there are plenty that believe big time in NFT’s future success:
- The shift to proof-of-stake after Ethereum’s merge will benefit NFTs in the long term. People are excited since, especially since someone paid just 36 ETH in fees to mint an NFT ever after the Merge. Plus, as mentioned, this merge represents a ground-breaking change in energy consumption for the industry.
- Massive players such as Starbucks are continuing to invest in the space, with the so-called new “Starbucks Odyssey” experience, which sees coffee lovers earning and buying digital collectible stamps to unlock access to new experiences.
- Grammy award-winning producers are now helping to create music for a Bored Apes NFT band. These creators previously collaborated with the likes of Justin Timberlake and Beyonce.
- The application of NFTs is expanding even further, this time in performing arts. With the hope of capitalizing and exploring alternative revenue streams, the Washington-based Spare Parts Puppet Theatre is collaborating with NFT communities, in order to launch their very own Doge puppet NFTs.
- Investment in NFT projects is very much ongoing: On Tuesday, non-fungible tokens collection Doodles wrote that they had raised $54 million at a $704 million valuation in a funding round led by Seven Seven Six. Also on board were 10T Holdings, Acrew Capital, and FTX Ventures.
What you should now be asking yourself
- What is your biggest concern about the carbon emission caused by blockchains, and what do you think should be done to address it?
- In an ideal world, how do you “get rich” out of NFTs? Do you think governments will be open to adopting new policies and regulations in which NFTs can be accepted as a widespread asset to buy and sell?
- What do you see as some future use cases of NFTs that have not been discussed?
Other good reads
How To Understand Liquidity When It Comes to NFTs
A Guide To Ecofriendly Cryptoart
Top 13 Blockchains for NFT Minting
Video: Line Goes Up — The Problem With NFTs
Flow: Distributed Roadmap and Mainstream Adoption
WWF Tried Raising Money With Digital Art But Backtracked
The Unreasonable Cost of Cryptoart
Towards A New Ecology of Crypto Art
NFTs and German Law: Rights and Duties of NFT Holders
A guide to ecofriendly Cryptoart
The Financialisation of NFTs (1kx)
The Financialisation of NFTs (Quantstamp)
Samsung to drop NFTs on Theta Network
What to look for in an NFT Lawyer Put NFTs to Work