NFTs in a Nutshell
What is an NFT and what does it do?
Non-Fungible Tokens (NFTs), which represent a digital version of the artworld's limited editions (i.e. signed and numbered editions of an artist's work) using cryptographic signatures instead, have enabled digital artists, photographers and creators of immaterial art to be able to “sell the original” for the first time ever.
Why the hype?
The nascent NFT market has been growing with rapid pace with NFT sales in August alone surpassing 3 Billion US dollars. Up until recently NFTs were only known within the crypto community. However, Beeple's 69-Million-dollar sale of a single NFT featuring a digital image that was auctioned by Christie’s in March, caught the attention of the artworld and mainstream media.
What do the critics say?
NFTs have been severely criticised for their carbon footprint and their impact on the envinroment. Eco-friendly NFTs already exist and are being traded on energy-efficient blockchains such as Tezos and Polygon, while Ethereum, the blockchain where the vast majority of NFTs are being traded is gradually, ableit slowly, upgrading to the energy-efficient Ethereum 2.0. However, the vast majority of NFTs is still being traded on the energy-consuming Ethereum, which is still considered the golden-standard. Lastly, it is worth noting that if these transactions were fulfilled via the banking system (as they would be otherwise, since artists and institutions continuously explore new ways to raise funds) their impact on the enviroment would be arguably substantial, given the fact that our financial system is investing Trillions in fossil fuels.
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