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What do you think of NFT's?

NFT's are the talk of the town in art and illustration circles at the moment. Here are some questions I have:

-What are some of the pro's and cons of getting into the market as a creator?
-How real is the environmental impact of the blockchain?
-Are NFT's here to stay or do you think the current market is speculative bubble that will soon burst?
Justin Poulter
Justin Poulter
Senior Illustrator and Art Director

Replies8

  • Maria Cerrato Ayala
    Maria Cerrato Ayala
    Creative Designer - Motion Graphics
    @Roland Lindner Thank you soo much for this article - very clear.
    I think the wonderful thing about this as well is the concept of finally having digital art officially and properly recognized.
  • Roland Lindner
    Roland Lindner
    Motion Designer & 3D Generalist @ Coley Porter Bell (Ogilvy/WPP)
    @Maria Cerrato Ayala

    The general message of this Insta post is true and important, but there's also some things that are not completely correct (besides the mispronunciation of the name Ethereum)…

    First, “The annual energy consumption […] will only get bigger…”

    This is only true in the short term.

    The Ethereum blockchain is currently in the process of moving to the much more energy-efficient PoS (Proof of Stake) algorithm. Alternatively, Cardano, with its native PoS system will host NFT marketplaces soon.

    Second, “The only motive for creating [an NFT] is speculation…”

    This might be true for many, but it is also true that I never ever before have seen so much exciting and high quality work in such a short time frame and the general hype also leads to exposure of this art to a wider audience, which would otherwise not even be aware of its existence.

    Of course, there's also a lot of garbage out there and this will always be the case.

    But I generally agree. The energy issue needs to be solved sooner rather than later and basically everyone involved in those blockchain projects is hot on the job, because they are all aware of these problems and the future success of their endeavours hinges on solving them.
  • Maria Cerrato Ayala
    Maria Cerrato Ayala
    Creative Designer - Motion Graphics
    I was wondering the same and researching...
    Then, Cabeza Patata (wonderful animators I highly admire) published the following: https://www.instagram.com/p/CMFDloun9I8/?utm_source=ig_web_copy_link

    I guess it's a matter of personal choice. In my case, I always try to be as friendly with the environment as possible.

    Which is why I think the reason that they give for me is a deal breaker: "The annual energy consumption of the Ethereum network is equivalent to the entire country of Ecuador. This will only get bigger(...)".
  • Roland Lindner
    Roland Lindner
    Motion Designer & 3D Generalist @ Coley Porter Bell (Ogilvy/WPP)
    It's a super interesting topic and will forever change (if not revolutionise) the art, fashion and music markets for digital, but also physical creations and goods.

    I don't see any cons for artists really, but there's a lot of things you can do wrong when going in (like spamming the market with thousands of pieces you've already put up on your Instagram for example).

    The main obstacle for creators at the moment are the high gas fees (it's what miners charge you to write your NFTs to the next block in the chain). These fees fluctuate based on traffic on the network and are currently particularely high due to scaleability issues of the Ethereum blockchain.

    The other, more global, issue is the cost to the environment indeed. A single transaction can easily consume 25+ Kg CO₂. The reason for this is the fact that Ethereum (like Bitcoin) is based on a “proof-of-work” consensus algorithm, which basically means that artificially complex mathematical “puzzles” are required to be solved (by miners) in order to write blocks to the blockchain.

    You can check any ETH address at https://carbon.fyi/
    Another interesting project to visualise the impact is http://cryptoart.wtf/

    A successful piece goes through several transactions (trades in the secondary market) accumulating hundreds of Kg CO₂.

    That being said, developers are already working on solutions to these issues. One that helps with both challenges is the move to the “proof-off stake” algorithm, which is much faster and more energy efficient, with fees a fraction of the current gas costs. This will be implemented along the way to ETH 2.0 which should get rid of all these issues.

    Another glimmer of hope on the horizon are alternative blockchains like Cardano, which runs on proof-of-stake since its launch. NFT marketplaces on Cardano will pop up soon as the technology to support this step was just implemented with the Mary hard fork on March 1st.

    And to your final question. Yes, it's definitely a bubble with overvalued projects and insane prices.

    Eventually though, the markets will calm down, but the technology and many of the benefits will stay for decades and change our cultures and economies along the way, just like the internet did and like crypto technology in general does already. Why? Because an NFT can not only be used to verify the authenticity of a Nyan Cat GIF, it can also be used to verify the authenticity of your vote in a national election.

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