Category: Cryptocurrency

Are All NFTs Bad for the Environment?

Saying that every NFT is bad for the environment is a big claim. But overall, NFTs aren’t environmentally friendly. Here’s what you need to know about the environmental impact of NFTs, and why a digital asset could be causing physical harm.

NFTs Are a Source of Environmental Worry

An NFT, or non-fungible token, is a way for a creator to sell unique digital assets. NFTs were huge business in late 2021, but since that time the interest in them has declined sharply.

But it’s not the cost of NFTs that’s the concern. It’s the fact that they aren’t easy on the environment. Most of the NFTs today are traded on the Ethereum network. Every transaction requires a mining process to confirm the transaction and the trade.

There is energy used in mining, and that’s a concern for people who feel the trading will add to emissions of carbon. Sometimes clean energy sources are used, but that’s often not the case.

Here’s How the NFT Process Works

The majority of NFTs are on the Ethereum blockchain, and that means they require a confirmation with each new block. Then:

  • A computer network has complex problems they have to solve, for the right to confirm that block.
  • The network uses energy, and vies for the gas fees that come from the block’s confirmation.
  • The system offers incentives for miners who invest in hardware, which takes more grid power.
  • Power sources affect the environment through the emission of greenhouse gases.

When an NFT is resold, it also uses an equal amount of energy in that process. That can quickly create energy usage issues, along with a lot of problems for the environment. A sale that takes only 10 seconds can consume around 8.7 megawatts of energy.

There Are Some Options for Improvement

Fortunately, the fact that NFTs are bad for the environment is something that can change. First, not every NFT uses non-green energy sources. Some of them aren’t actually harmful. Second, there are ways to incentivize the use of NFTs that use green sources of energy.

Ethereum is also working toward a different system, much like those used by Solana and Cardano, that is proof-of-stake. Because this system validates transactions based on a number of coins, the amount of problem-solving is smaller. In turn, that makes it easier to move through transactions with less energy.

Proof-of-stake uses the machines of coin owners to change the way blocks on the chain are verified. Owners offer their coins as collateral, which gives them the opportunity to validate blocks. When the owners have staked coins, they’re listed as “validators.”

Then a validator is randomly selected to validate or “mine” the block. Since the selection is random there’s no competition. When enough validators have “mined” the block, it’s considered validated and the transaction involving it can be finalized.

Batching transactions is another way that NFTs can be easier on the environment. Transactions would be made outside the network and batched at a certain time. Doing that makes it easier to reduce energy usage, and would help protect the environment more easily.

Ethereum Vs Bitcoin: How Different Are The Top Crypto Coins?

Some people describe BTC and ETH as the Coke and Pepsi of the digital currency world. Within the past several years, tens of thousands of cryptocurrencies have entered the market. Even so, Bitcoin and Ethereum stand out as the standard of comparison for other coins and each other. Thus, people who want to learn about digital currency should start by exploring these two market leaders. 

Compare Ethereum Vs. Bitcoin 

Even people who barely know anything about cryptocurrency have probably heard of Bitcoin and Ethereum. That’s because they represent the market’s two most significant digital coins. 

A quick summary of Ethereum vs. Bitcoin should include: 

  • BTC: Bitcoin launched in 2009 and stands out as the first true cryptocurrency. Over a decade later, it still holds the top market capitalization and name recognition rank. Bitcoin also capped the number of coins it can ever produce at 21 million. Today, Bitcoin’s market cap exceeds $400 billion. 
  • ETH: Ethereum launched in 2015 and obtained the second place rank by market cap rather swiftly. Ripple briefly displaced Ethereum at number 2, but Ripple now sits at number seven, and Ethereum took back the spot behind Bitcoin. Ethereum does not cap the total amount of coins produced. Today, Ethereum’s market cap sits just under $150 billion. 

Bitcoin’s founders envisioned an alternative to traditional money, like dollars or euros. This crypto introduced people to blockchain tech, a transparent, distributed ledger. 

Ethereum also relies on this same technology. At the same time, Ethereum’s founders made their product programmable. They provided built-in support for smart contracts and the addition of other digital coins to the chain. Thus, Ethereum offers a more versatile platform than Bitcoin does.

Proof of Work Vs. Proof of Stake 

Miners generate new Bitcoin with proof of work. POW means that miners compete to solve crypto puzzles to create new coins. Ethereum developers also used this model initially. In contrast, the amount of coins a miner locks up impacts their chance of generating new coins with proof of stake. Ethereum plans to replace proof of work with proof of stake when it rolls out Ethereum 2.0. 

Is Ethereum or Bitcoin Better?

Both of these widely-known platforms offer pros and cons. Bitcoin enjoys the broadest name recognition and a higher current market cap. Ethereum can provide a network that supports other digital coins, marketplaces, and decentralized applications. Also, Ethereum’s move to proof of stake should consume less energy, an essential consideration for the future. Still, Bitcoin has not remained static. A new update to Bitcoin called Taproot introduced smart contracts and improved the network’s efficiency and privacy. 

Is Bitcoin or Ethereum a better value? The value of all digital currencies has proven highly volatile in the past few years. Still, people interested in digital currencies might start with these top two coins. As the market leaders, Bitcoin and Etherum attract the most interest and support.