Since 2021, NFTs are everywhere. Impossible to miss these three letters of the hype, which financiers, artists and entrepreneurs enjoy with pleasure. Their success has been such that companies, foundations or associations have started producing and selling NFTs in amounts sometimes exceeding millions. To believe that if you didn’t sell or buy NFT this year, you missed the trend of the century. While some people or structures choose to use it to increase their profits, others decide to embark on the NFT adventure with a nobler purpose: to contribute to a good cause. Solidarity with the Ukrainian people, protection of the environment, support for Unicef… So many humanitarian projects that come up against an area that is nevertheless frowned upon by certain activists. In question ? The impact of NFTs on the environment. Is it healthy to raise money with such energy-intensive technology? Shedding light on a practice where cognitive dissonance may have never been more prominent.
NFTs are “100% based on a highly absurd theory”† When asked about the subject, Bill Gates has a very clear opinion. However, you might think that the founder of Microsoft would be interested in this technology, one of the pillars of Web3. At a media conference TechCrunchthe billionaire has denounced the idea that people can profit from worthless or overvalued assets, as long as there are other people willing to pay a higher price for them, reports now this† He even joked: “expensive digital images of monkeys will vastly improve the world”†
However, this is the strategy used by some companies or associations. Because with the craze around NFTs, some brains have smelled the right vein, both in business and in raising funds for associative projects or charities.
Digital Mona Lisas
But before we go any further, let’s take the time to run through the basics. What is an NFT, a “non-fungible token”? According to the dictionary Roberta fungible “It is said of things that are consumed through use and can be replaced by an analogous thing (commodity, cash).”
“1 kg of flour versus 1 kg of flour, 1 euro versus 1 euro: these are fungible, we can exchange them, they have the same value”explains to The Goodonomist Marie Franville, co-founder and CEO of the Nabiya studio, expert in blockchain, this technology without which NFTs could not exist. “The Mona Lisa on display in the Louvre, on the other hand, is non-functioning. There is only one. It is unique.” NFTs are therefore types of virtual objects (“tokens” or “tokens” in the jargon) fungible, unique.
“NFT technology is based on that of cryptocurrency, mostly Ethereum (but there are others), whose currency is Ether”continues Marie Franville. “This technology makes it possible to authenticate the unique aspect of a digital object thanks to a computer calculation system.” Calculations and results are public, so accessible to everyone. “We can know who owns an NFT, when it was created, who bought it and how much. The person holding the NFT is central to his experience: he can do whatever he wants with this digital object: trade it, sell it, give it away or even destroy it.”
Very popular in the video game world, NFTs were quickly adopted by brands and companies, as well as the contemporary art world. This enthusiasm, according to Marie Franville, stems from the very essence of Web3, which includes cryptocurrencies and NFTs. “Web1 refers to a technology and use of the web where information is read”the expert remembers. “Web2 is collaborative, which resulted in social networking. In Web3, the user becomes master of their experience and monetization”†
With this decentralization of use, brands see importance in developing their customer experience. “They develop a more privileged bond with their community, in a more egalitarian relationship as the community will appropriate the brand and create around it”analyzes the co-founder of Nabiya, whose studio works precisely with brands, especially in luxury and fashion.
For example, NFT artworks have been sold for several million euros. This is, for example, the case of Every day: the first 5,000 daysa work by American digital artist Beeple, sold on March 11, 2021 for $69.34 million. Italian fashion house Dolce & Gabbana sold virtual accessories in NFT intended for digital avatars for the modest $6.65 million, reports media part† In total, the NFT sale in 2021 brought in $25 billion, it says on the Moderator’s blog† By 100 million by 2020.
Faced with this money that seems to flow freely, foundations or companies have started NFTs with the aim of raising funds for humanitarian or environmental projects.
Millions for a good cause
The founder of the platform dedicated to productivity, Visualize valueJack Butcher, for example, launched a campaign to sell NFTs called the “CARE Package for Afghanistan.” The goal: to raise money for Afghan families, through the NGO CARE. Operational report? More than $200,000 was raised for every 1,000 NFTs sold.
At MAC Cosmetics, 5,000 NFTs, selling for $25 each and inspired by the work of artist Keith Haring, were sold to benefit the Keith Haring Foundation to support young people living with HIV.
“NFTs are pushing the relationship between art and philanthropy into a whole new paradigm. Digital art can create and support movement in ways that physical art cannot”says entrepreneur Jack Butcher in comments reported by android gadget†
But don’t think that this trend is exclusive to the United States. NFTs are also popular in France. For example, last April the #EnsembleUkraine collective organized a charity sale of 5,000 NFTs for the benefit of the victims of war, we can read on Healthcare news† Among the artists who participated in the operation, we find the photographer Yann Arthus-Bertrand or the French artists Grégoire “Greg” Guillemin, Ito Dubois and Maguitte. The institution that is UNICEF for its part offered 1,000 NFTs in December 2021 to fund its actions and those of the International Telecommunications Union.
“If we want to reach more children and build a better world, we need to use all the resources at our disposal – and that means new ways of fundraising and funding, among other things. UNICEF’s launch of its first collection of data-driven digital tokens will directly support our global action to bridge the digital divide and make it easier for all young people to access the internet. †
Henrietta Fore, UNICEF Director General, in a press release
But despite these good intentions, NFTs have a bad reputation among environmentalists.
Energy-intensive technologies, ready to evolve?
In question ? The system that makes technology work. It is called “proof of work”. For example, every NFT exchange (or cryptocurrency exchange) is verified by other users. This verification is called “mining” and takes a lot of energy. In other words, if NFTs are virtual, their existence requires very real resources and leads to significant carbon emissions. The data is inaccurate, but according to the University of Cambridge, creating and spending bitcoins (a cryptocurrency, like Ether) consumes more electricity than Finland in a year, we can read at Release† For the New York Timesthe production of an NFT would represent more than 200 kg of carbon dioxide, or a journey of about 800 kilometers in a petrol car, reports the Internet news†
Raising money to support a humanitarian or environmental project, even though the technologies used are major CO2 consumers, is that consistent? The Goodonomist discussed it with Tristan Le Lous, owner of the Château Cantenac Brown wine estate, located in Cantenac in the Gironde.
Tristan Le Lous has invited American country artist David Popa to his country. His mission? Create a fresco in the heart of the Château’s vineyards using sustainable materials from the area such as chalk for the white color, lees for the purple color. Because the work was ephemeral, it was immortalized in a promotional video and in NFT. The sale of this digital object will be organized in September for the benefit of the Observatory of the Coast of New Aquitaine, which is engaged in the conservation of the coast.
“I really like this approach to a testimony of a work that has not survived. I’m not afraid of NFTs because we really want photos and prints. But it is true that when we see the servers to mine, it is dramatic from an ecological point of view and contradicts the approach”recognizes the owner of Château Cantenac Brown before adding that cryptocurrencies represent to him rather “a gimmick” which almost happened. The aim remains to contribute to the preservation of the coastline, in particular that of the island of Patiras, in the Gironde estuary, where the director of the estate, José Sanfins, comes from. “This action is very important to him”underlines Tristan Le Lous, who also emphasizes the emotions and the experience itself, designed to create a link between the winegrowers and the staff of the Observatory:
“The vintners teamed up with David Popa to cover the vines or watch the aisles at night – it was a collective experience. When we showed them the rendering of the video, they were moved. It is the fact of experiencing moments like this that drives me. As for the auction, we brought in people from the Observatory. The goal is to involve them in the project, just like our customers who have seen the work. It is no longer a matter of signing a check or making a transfer, we belong to a common project and we have created a common emotion.”
Tristan Le Lous
Marie Franville, for her part, dismisses the criticism. “Bitcoin and Ethereum are old technologies”which she believes will evolve. “We are going from ‘proof of work’ or ‘proof of commitment’ (“proof of commitment” or “or proof of participation”, editor’s note), less greedy in energy, a new model will be introduced”assures those for whom the criticism of the environmental impact of cryptocurrencies also applies to very popular platforms such as Facebook and YouTube.
With this more eco-responsible shift, industry players will have to get to work, but when? Solutions exist, but are still marginal, as the story goes France Info in this article. In anticipation of greener solutions, shouldn’t we better follow the example of the K-pop groups BTS and ACE? Driven by highly devoted fans, the two groups preferred to shelve their plan to sell NFT. Or should we insist in spite of the environmental consequences? “NFTs have had a huge impact on the charitable sector. We are seeing a noticeable increase in NFT-related donations”Alex Wilson, co-founder of Giving Block, told the specialist media being crypto† Something to reach a new audience in these times when solidarity is needed more than ever…
You decide.