How to reduce the environmental impact of NFTs? – Cryptocurrencies – Estadão E-Investidor – Main financial market news

  • NFT is a digital certificate that authenticates a virtual product, including an illustration, a picture, a video, a song, and more. Uses are as diverse as possible, and processing is done through blockchain operations
  • What makes Blockchain secure is a large network of computers that work together using encrypted algorithms. But this has a high environmental cost, especially when it is fueled by more polluting energy.

proposal non-fungal token (NFT) It’s simple: if everything works in the cloud, why can’t art be produced and traded in this way?? Even if, it is concerned about the environmental impact they createThe. So how do you balance the pros and cons?

Understand and see more about the topic How to deal with NFT technology without creating any real problems for the environment.

Understand what NFT is and why its environmental impact is worrisome

Behind an artistic revolution, there are thousands of computers that consume energy and are concerned about environmentalists. (Source: Shutterstock / Reproduction)

NFT is a digital certificate that authenticates a virtual product, an illustration, a picture, a video, a song, and more. The uses are as diverse as possible, and the processing is done through blockchain operations.

is the idea similar to what happens in the analog world: Mona Lisa it’s one of the most played works in the world, but it’s the only real one. Thus, NFT opens up a number of possibilities for regulating assets in the digital environment.

According to lawyer Elaine Keller, an expert in Digital Law, the use of this technology is still in its infancy, close to its potential in the world of fashion, sports, music, games and more. It uses the security of blockchain technology, which already works in online financial transactions, for example. it is considered safe.

The main problem is not reliability environmental impact. Keller explains that the blockchain relies on mathematical calculations to create encryption algorithms, which requires thousands of high-performance computers on the network at once.

“These mining consumes a lot energy. China is the leader in this market, but it is estimated that half of that work is done with it coal energythe most damaging to the environment is the high carbon emissions from the atmosphere, ”says the lawyer.

Therefore, although NFT has a lower energy cost, compared to other products that use blockchain, such as cryptocurrencies, it should be considered to expand this model. environmental planning and care.

Thiago Valadares, managing partner of NFMarket Agency, an agency specializing in NFT project management and development, agrees with this assessment.

For him every impact created by web3 needs to be closely monitoredsince the computational chain depends on the energy to operate, it does not always come from clean sources.

“When there is an environmental imbalance caused by digital technology, everyone pays the bill,” said Valadares.

Learn how to reduce the environmental impact of NFT

China is a leader in blockchain technology, but it uses coal burning in the middle of operations. (Source: Shutterstock / Reproduction)

Valadares says that blockchain-derived technologies are not without problems, but also they are not the “bills” of the story.. For him, web3 decentralizes power and information, giving the community more autonomy, being a transparent blockchain, and allowing small actors to get involved.

As in the analog world, there are several production chains concerned with the impact of their practices, which also happens in the virtual realm. “Large companies have been polluting the world for many years without creating corrective measures, and this is the potential for this new phase. the ability to create new solutionsValadares argued. But in practical terms, how to correct the impact of an NFT?

1. Changes in the operation of technology

Elaine Keller points out that ways to combine technology development with environmental protection are possible improve blockchain performanceImproving the energy performance of NFT and other projects.

“He has been discussing mining protocols known as community proof of work and proof of bet. This replaces standard mining with a draw mode, which allows you to reduce energy consumption. Ethereum cryptocurrency, which is widely used in NFT operations, is gaining traction, ”he said.

2. Blockchain governance

For the lawyer, NFT still has a very small share compared to the entire set of blockchain operations. However, some measures in the sector already indicate improvements a set of services that use encryption.

He cites an example of an interesting initiative in 2021: the Crypto Climate Accord. It is a private sector-led movement aimed at decarbonising the cryptocurrency sector based on the guidelines of the Paris Agreement.

This shows the use governance strategies in blockchain technology-based projects. After all, if the ESG agenda fits into analog companies, why not introduce the digital sector?

3. Increase the market for carbon neutralization

Valadares believes that the web3 sector is more sustainable than expected the community is closely linked to environmental values. “Pablo Spyer of XP Investimentos will launch his NFTs and has already hired us to neutralize credit. And the Reserva brand recently launched its NFTs and also naturalized this campaign,” he said.

Therefore, for the director, NFTs and other virtual products based on blockchain technologies may be more sustainable than ordinary economic sectorslittle open to thinking about the impact of their activities.

Keller recalls that it is now possible to secure carbon credits on digital platforms and to trade in markets such as Bitcoin, Binance and Gemini.

4. Digitization of analog processes

Finally, the lawyer comments on the need to think about the solutions that NFT creates to replace physical processes. In the case of a work of art, for example, it is possible to negotiate a without having to travel anywhere in the world. The only cost is digital storage in targeted markets.

The same goes for everyday demands. To sell the property “in the real world”, the owner needs intermediaries and authentication of documents until a sale is made at a notary. If the owner makes the sale online, securing the transfer of the property via blockchain, himself it eliminates this whole process of mediation that is responsible for carbon emissions.

“What will consume the most carbon? Is it the traditional and bureaucratic process of issuing many brokers, notaries and documents, or is it a straightforward process over the Internet? Studies are still needed to better quantify these issues, however Other technologies based on NFT and blockchain may be able to protect the environment“says Keller.

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