Non Fungible Tokens, NFTs, are not new to the crypto space, they have been used to create collectible and even climate credits since 2017. But NFTs did not become a household name until 2021, when the art world and a renaissance 2.0 marketplace elevated them to new heights.
Beeple’s $70 million auction at Christies was a resounding message. NFTs now allow digital art, historically cursed to not sell original pieces, to finally do so. With an NFT, a creator using a digital medium (eg. art or music) can register an official product or file and claim its uniqueness. While copies can be made and distributed, the source file is officially registered and can have a single owner.
It’s undeniable that NFTs in the art space are here to stay, but to what degree is still to be determined. The market already surpassed $7 billion. Whilst this is expected to oscillate with crypto markets, in general its tendency is to grow and expand into different sectors of the digital economy. For example, the intersection between the climate and NFT space had a massive explosion that is still silent to the mainstream world.
The Klima DAO, for example, uses NFTs to register and index carbon credits from the voluntary market into a decentralized treasury. The carbon token treasury allows the minting of a new carbon-based currency, the KLIMA. Based on the mechanics of the Decentralized Autonomous Organization (DAO), the use of the currency incentivizes the lock up of more carbon in the treasury. Since its inception in September 2021, the Klima treasury has now locked up 11 million tonnes of carbon, and almost $1 billion in market cap in just 3 months.
“We continue to see how artists and creators have an growing voice in the social impact space thanks to NFTs, it ushered in a major social innovation,” says Martin Wainstein, executive director of Open Earth Foundation.
After a breathtaking year for the crypto market bitcoin hit all time highs with the sector landing back into Miami for a global gathering. Bitcoin Miami was the biggest crypto conference to-date with an estimated attendance of 12,000. Now the Miami Art Basel is expected to be the biggest Art gathering in years.
Miami City has opened its doors to the blockchain, DeFi and NFT space with two large events. Mayor Francis Suarez believes this has a key role in the future, playing a role in finance, art, data privacy and community development. In fact, the city launched its very own Miami Coin, designed to boost the citizen engagement network and local economy empowerment.
Philanthropy And NFTs For Good
The NFT art and collectibles bubble has had its first pop, but some of its debris creates new opportunities for innovations in the digital economy. For example, after Christie’s Beeple auction, the sector had another splash with a new format that has grown steadily, charitable NFT auctions.
It was Beeple who participated in the first big charitable NFT art event with the CarbonDrop, raising $6.6M to fund Open Earth Foundation’s open digital infrastructure for the Paris’ climate agreement. This sustained interest is also due to the fact that the crypto space rebounded, putting Ethereum in its all time high and bringing a new wave of crypto millionaires.
The social impact format got replicated several times throughout the year, including by Ethereum founder Vitalik Buterin and a new announcement by Sotheby’s. This sustained interest and high NFT prices is also due to the fact that the crypto space rebounded, putting Ethereum in its all time high and bringing a new wave of crypto millionaires.
The momentum opened a new opportunity for NFT auction houses themselves with the launch of DoinGud, a platform exclusively focused on NFTs for good. The platform allows artists and creators to select what percentage of their primary or secondary NFT sale goes towards a charitable organization of choice.
Other philanthropic NFT innovation in 2021 includes Rewilder.xyz. This initiative uses NFTs to transparently track donations to buy real estate in environmentally distressed areas in order to place them under legal conservation. The smart contract is designed to run the entire land acquisition process on-chain and crypto compatible.
The CarbonDrop drop auction didn’t just usher the charitable NFT auction. The event had a clear paradox given it was supporting climate change work, but also had a carbon footprint of its own due the use of NiftyGateway’s Ethereum based platform. The footprint is not specifically related to NFTs or their auction platforms, but to the underlying blockchains that power them.
Ethereum is the most impactful from an NFT carbon standpoint and is by far the most environmentally impactful network, since the bitcoin network hardly plays a role in the NFT sector. To compensate, the CarbonDrop introduced another innovation by pegging NFTs of carbon credits to the art NFTs. This paradox and innovation accelerated the conversations and tensions of the environmental impact on the NFT space.
A strong request for environmental standards by artists, collectors and broad users, was a cry that was eventually heard and prompted the move of several NFT platforms away from Ethereum, into other non proof of work (PoW) environments but mostly to Ethereum’s layer 2 blockchain called Polygon. Polygon is a faster and significantly more environmentally friendly child of the Ethereum layer 1 blockchain because it uses a PoW algorithm.
Now, only two major platforms are still using Ethereum’s layer 1 and growing their carbon footprint, but they both announced they were making a transition away from PoW and taking steps in the meantime to offset all emissions. It’s possible that by 2022 or 2023 the NFT space will have a fully carbon efficient digital space given its users can be hyper conscious and sensitive to climate impacts.
From The CarbonDrop To The OceanDrop
With the backdrop of Art Basel in Miami, the Open Earth Foundation is now launching this weekend the OceanDrop, a charitable NFT art drop to support open digital technologies for marine conservation. With almost 23 artists involved, including Warren Buffet’s granddaughter and NFT raising star Nicole, the OceanDrop is expected to be a main event throughout the Miami Art Basel. This charitable auction also introduces three innovative NFT formats: a digital twin, a hologram and a meta NFT.
The digital twin implies that an NFT has a physical artwork counterpart, but they are linked in order to prevent “double counting” of NFT originals. This is particularly relevant to bring physical artwork into the NFT space. The second innovation, the Hologram, implies exactly what it sounds: all OceanDrop art digital files are compatible with 3D visualization seen as a hologram inside a PORTL, a human-scale holographic box.
The meta NFT, however, is perhaps the most distinctive feature of the OceanDrop. It is an NFT of the entire art collection, inside a virtual gallery within Ethereum based metaverse OVR.ai and located in Cocos Island, off the coast of Costa Rica (the virtual version of the island) where the first marine conservation pilot will occur. The winning bidder of this NFT will hold a file of an entire art experience accessed through the immersive virtual reality metaverse space.
Adds Wainstein, “The metaverse is the next frontier in the digital economy, we will see more minting of entire immersive experiences rather than just digital artwork… we have been inspired and humbled by the collaborative support from artists and the OVR.ai metaverse to develop a virtual gallery in one of the most pristine ocean environments remaining like Cocos Island, Costa Rica.
“We carry on the challenge ahead with OceanDrop, we must establish marine based ecosystem credits, financially valuing pristine nature, to help governments operate and expand the no-catch conservation zones in the ocean.”
The Metaverse Will Not Be Televised
While 2021 was the year of the NFT, what is looming in the background to take the world stage in 2022 is the Metaverse. While the internet is a network of websites that one interacts with through a screen, the metaverse is a web connected virtual space blending the physical with the digital, using tools from both blockchain and virtual and augmented reality.
The perspectives for how encompassing the metaverse can be are hard to estimate, but Facebook is betting so much on the metaverse future they are now called Meta. Facebook is however fraught with its degree of centrality and stigmatized by surveillance and data privacy issues. The metaverse is their opportunity to truly bring a decentralized networking system, borrowing from the blockchain architecture, or may be a territory where Facebook will eventually be challenged by the fast paced open source community in the crypto world.
The NFT art space may be a quick onramp for the metaverse adoption. The collector of Beeples $70 artwork, MetaKovan, claimed the purchase was exclusively a metaverse investment, to establish an art gallery in virtual space. The OceanDrop introduces the concept of minting entire experiences in the metaverse for collectors to own, display in their virtual world and remote visitors to immersive in engagement.
As crypto high net worth, investors and enthusiasts seek new horizons, the metaverse and DAOs are primed to be a major frontier for the upcoming year, with impacts on sectors ranging from social networks, art, entertainment, environmental management and digital finance. Watch this space, though you will likely need a virtual reality headset to catch it.