NFT — A potential tool to accelerate social good
According to Wikipedia, A non-fungible token (NFT) is a record on a blockchain that is associated with a particular digital or physical asset. The ownership of an NFT is recorded in the blockchain so it is unique and cannot be transferred without the owner’s permission. Due to a variety of reasons, including investment, exploration, social status, technology, etc, people are buying it with increasing interest.
In 2014, NFT began to appear in the market, and it has been growing in popularity since 2018, by 2020, it has grown nearly tenfold. The number of NFT trades expanded considerably in 2021, from roughly 545,000 in 2020 to around 28.6 million in 2021. And each week, around $10 to $20 million in the NFT marketplace is traded on the blockchain network. Up until now, the most valued NFT (“The Meg”) has a market value of more than $91 million. And it is projected that the NFT Industry will hit a valuation of $80 billion US dollars by the year 2025.
With its growing popularity, many organizations develop their own NFT products and sell them on the market, so that they can collect funds and use them for good causes. For example, Nfinita created the world’s first NFTs for good and generated funds to protect endangered turtles from poachers. Others donate a certain percentage of their sales to community and charity causes, for example, the Trotting Turkeys donate 50% of all royalties to Feeding America and also to local hunger relief. Some collaborate with charities and work together to address social issues; for example, Joshua Lapidus worked with the non-profit group ‘RIP Medical Debt,’ to raise enough money to pay off around $7 million in medical debt for families in the United States. Notably, the marketplace itself, Binance, has initiated the “NFT for Good” program for social good, in which the company collaborates with talented artists and donates sales to charity projects for children in need worldwide.
NFTs have great potential for raising money and using it for social good, but they are considered bad for the environment. The Ethereum cryptocurrency, which is primarily traded in the NFT market, utilizes 44.94 terawatt-hours of electrical energy, which is similar to most countries’ annual usage. It also emits around 21.35 metric tonnes of CO2 each year, which is similar to Sudan’s carbon impact. The good news is people are trying to develop the Ethereum 2.0 technology, which has the potential to cut energy consumption by more than 99%. Additionally, Carbon Collective NFT will reinvest 15% of the proceeds from its NFT sale into forest management and 50% to fund sustainable projects. So they are actually using the NFT sales to plant more trees and cut carbon emissions.
Despite higher energy consumption, NFTs rose in popularity and into the mainstream, especially among younger generations. While the NFT is just one way of utilizing the blockchain technology for good, you can find more ways in our earlier post that talks about blockchain and social innovation.
Edit by SOCIAL INNOVATION INSIGHT
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Originally published at http://soinnoinsight.wordpress.com on August 31, 2022.
