NFTs: The World Wildlife Fund attempted to raise funds through digital art but afterwards reversed its decision – environmental NGOs should follow suit.
Most photographs on the internet are only a right-click away from being part of someone’s personal collection. They are, for the most part, unrestricted. As a result, it’s difficult for charities to raise money using them. That is, until non-fungible tokens, or NFTs, were introduced in 2017. NFTs, unlike ordinary digital media, are difficult to duplicate. Conservation organisations have been using them for fundraising for as long as they have existed.
In 2018, a cartoon drawing of Honu, a cat-turtle, raised US$25,000 (£18,485) for ocean conservation groups. Rewilder is a non-profit organisation that raises revenue for reforestation by holding NFT auctions. The organisation claims to have raised $241,700 dollars.
Various cartoon apes have been sold for $850,000, with the proceeds going to orangutan conservation organisations. In December 2021, the most expensive NFT to date, a picture of some little grey balls, sold for US$92 million to various bidders.
With so many UK charities in financial distress, it’s no wonder that some want in on the crypto fun as well.
With its Tokens for Nature collection, WWF UK just joined the NFT circus. However, even before the fundraiser began, environmentalists raised concerns about the project’s carbon footprint on the internet. The deal was cancelled in a few of days.
NFTs that are “environmentally friendly”?
According to one estimate, NFTs produce more carbon emissions as a result of their energy usage than Singapore.
The majority of NFT producers use Ethereum, which is a blockchain system similar to Bitcoin that involves mining, an energy-intensive computer function. Specialist mining computers take turns validating transactions while guessing a large string of randomly generated digits. The first computer to successfully guess the combination receives a payout in ether, a cryptocurrency.
However, unlike ordinary NFTs, WWF claimed that its NFAs were “environmentally benign.” According to the charity’s sustainability statement, selling all 8,000 or so NFAs would have a carbon impact comparable to a pint of milk or a half-dozen eggs. They claimed that a sophisticated blockchain application called Polygon, which would have allowed WWF’s initiative to have less direct interactions with the Ethereum blockchain, was the reason for the little impact. The WWF wouldn’t have to shoulder as much of the blame for Ethereum’s massive carbon footprint.
So, what’s the deal with the Twitter outbursts?
The assumption made by WWF was a hard one. This is because Polygon relies on Ethereum contracts to perform critical functions like moving assets between Ethereum and Polygon and establishing checkpoints between the two. According to Alex de Vries of the cryptocurrency monitoring website Digiconomist, WWF’s project had a footprint that was 2,100 times larger (12,600 eggs) than the charity’s estimate.
Second-order impacts must also be considered. The amount of carbon emitted by Ethereum is unrelated to the number of transactions that take place on the network. Ethereum’s shady reputation stems from its use of proof-of-work (PoW) mining. The collection could drive up the price of Ethereum by inflating the excitement around NFT marketplaces. More PoW mining would be encouraged as a result, increasing the network’s overall carbon footprint.
NFAs would be purchased on the WWF’s special website at first. Buyers, on the other hand, can relist their artwork on OpenSea, a popular NFT marketplace. OpenSea is now the most gas-hungry node on the Ethereum network, accounting for almost 20% of all transactions.
Backlash against blockchain technology
The WWF isn’t the first organisation to reconsider its stance on cryptocurrency donations. After seven years, Greenpeace decided to discontinue accepting bitcoin payments in 2021. Friends of the Earth was the next to arrive. The WWF controversy forced International Animal Rescue, a wildlife nonprofit, to put its NFT fundraising efforts on hold indefinitely. Mozilla and Wikipedia, both internet NGOs, have rethought their crypto-giving strategies in light of climate change.
There are a number of NFT-friendly blockchains that are carbon-free. Despite this, research suggests that using NFTs to fundraise without getting their hands dirty is tough for nonprofits.
The growing public opposition of blockchain projects should be taken into account by charities. Some say that unscrupulous marketing methods are driving the technology. Others argue that blockchain is a platform for Ponzi scams, swindling, and multi-level marketing. According to OpenSea, 80% of the NFTs generated on its platform are spam, frauds, or otherwise fraudulent.
Cryptocurrencies, according to research, can potentially limit the operations of conservation organisations. AidChain, a blockchain development company, teamed with WWF in 2018. AidChain encouraged WWF to pay its service providers with AidCoin, a cryptocurrency, to promote transparency in the donor tracking process. Donors might then track and control their funds using an Ethereum smart contract.
Non-expert crypto donors may be able to encode precise conditions to their gifts using platforms like these. If you break the rules, you’ll lose your money. It’s fantastic for the donor. It’s a bad day for the charity’s conservationists.
Conservation organisations like the WWF should do their study before succumbing to the crypto-giving hysteria. Jpegs of animals and cryptocurrency may appear to be a harmless approach to raise money. However, rashly going on the blockchain bandwagon may tie their hands, causing longtime donors to abandon them.
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