WWF debacle makes it clear that ‘eco-friendly’ NFTs don’t really exist
NFTs are a bad idea for environmental charities' fundraising efforts
‘Eco-friendly’ NFTs?
According to one estimate, NFTs generate morecarbon emissions than Singaporeas a result of their energy consumption.
Most NFT creators use a technology called Ethereum, which is a blockchain system similar to Bitcoin that involves anenergy-intensivecomputer function called mining. Specialist mining computers take turns validating transactions while guessing the combination of a long string of automatically generated digits. The computer that correctly guesses the combination first wins a reward paid in acryptocurrencycalled ether.
Unlike regular NFTs though, WWF claimed that its NFAs were “eco-friendly”. In its sustainability statement, the charity suggested the sale of all 8,000 or so NFAs would have asimilar carbon footprintto a pint of milk, or a half-dozen eggs. The reason for this negligible impact they claimed was a clever blockchain application called Polygon, which would have allowed WWF’s project fewer direct interactions with the Ethereum blockchain. WWF wouldn’t then need to take as much responsibility for its share of Ethereum’smonstrous carbon footprint.
So why the Twitter tantrums?
WWF’s assumption was a tricky one. That’s because Polygon depends on Ethereum contracts tocarry out essential services, such as moving assets between Ethereum and Polygon and creating checkpoints between the two. According to Alex de Vries of the cryptocurrency monitoring website, Digiconomist, the footprint of WWF’s project was actually around2,100 times more(12,600 eggs) than the estimate provided by the charity.
There are also second-order effects to consider. Ethereum’s carbon emissions are not related directly to the number of transactions occurring on the network. PoW mining is what gives Ethereumits dirty reputation. By pumping up the hype around NFT markets, the collection coulddrive up the priceof Ethereum. This would encourage more PoW mining, increasing the network’s overall carbon footprint.
Initial buyers of NFAs would purchase them from WWF’sdedicated website. But buyers canrelisttheir artwork on the popular NFT marketplace, OpenSea. OpenSea is currently thenumber one gas guzzleron the Ethereum network, responsible for nearly 20% of actions on the blockchain.
Blockchain backlash
WWF is not the first charity to reevaluate its position on crypto-giving. In 2021, Greenpeacestopped accepting bitcoin donationsafter seven years.Friends of the Earthsoon followed. The WWF furore forced the wildlife charity,International Animal Rescueto park its NFT fundraising plans indefinitely. Internet nonprofitsMozilla and Wikipediahave also reconsidered their crypto-giving strategies on climate change grounds.
There are multipleNFT-friendly blockchainsthat don’t cause carbon headaches. Even so,research showsit’s difficult for charities to fundraise using NFTs without getting their hands dirty.
Charities should be mindful ofgrowing public disapprovalof blockchain projects.Some arguethat the technology is driven by predatory marketing tactics. Others claim blockchain is aplatform for Ponzi schemes, grift, and multi-level marketing arrangements.According to OpenSea, 80% of the NFTs minted through its site are spam, scams, or otherwise fraudulent.
Research also showscryptocurrencies can restrict the work of conservation charities. In 2018, WWF partnered with blockchain developers,AidChain. To improve transparency in the donor tracking process, AidChain encouraged WWF to pay their service providers in a cryptocurrency called AidCoin. Using an Ethereum smart contract, donors could then track and manage how funds were spent.
Platforms like thiscan allow non-expert crypto donors to encode concrete conditions to their donations. Break the conditions – lose the funds. Great for the donor. Lousy for the charity’s conservation experts.
Before reacting to crypto-giving hype, conservation charities such as WWF need to do their homework. Animal jpegs and cryptocurrencies may seem a harmless way to fundraise. But mindlessly jumping on the blockchain bandwagon could tie their hands while longstanding donors take their support elsewhere.
This article byPeter Howson, Senior Lecturer in International Development,Northumbria University, Newcastle, is republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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