WhatTareTNFTsTandTcan theyThelpTwildlifeTconservation?

 

Some NTSs are raising cash for conversion but What on earth is digital Craze? And what are the downsides for investors wild life charities and the environment?

TheTworldTwasn’tTcryingToutTforTaTturtle-catThybrid.TButTtheTarrivalTofT‘Turtle-cat’TinT2018TprovedTsuchTaThitTthatTsomeoneTforkedToutTUS$25,000TforTit.TWhatTtheyTpaidTforTwasn’tTaTnew-to-scienceTdiscovery,TaTgeneticTexperiment,TaTtoy,TorTevenTanTastoundingTworkTofTart,TbutTwhatTisTratherTcatchilyTknownTasTaT‘non-fungibleTtoken’T(NFT).

IfTyou’reTlostTatTtheTwordsT‘fungible’TorT‘token’,Tyou’reTnotTalone.TNFTsTare

TaTbewilderingTsubject.TEssentially,Tthey’reTaTdigitalTtradingTsystem.

“Non-fungibleTtokensTareTsimilarTtoTcryptocurrencies,TlikeTBitcoin,”TexplainsTPeterTHowson,TseniorTlecturerTinTinternationalTdevelopmentTatNorthumbriaTUniversity

“TheTbigTdifferenceTisTthat,TwhereasTindividualTBitcoinsTallThaveTtheTsameTvalueTandTareTinterchangeable,TNFTsTareTmoreTlikeTantiqueTbaseballTcards:TeachThasTaTdifferentTvalue.TFungibleTmeansT‘mutuallyTinterchangeable’TandT‘ofTidenticalTvalue’.TAnythingTdigitalTcanTbeTrepresentedTasTanTNFT.TThey’reTcrypto-collectiblesTratherTthanTcryptocurrency.TYouTcollectTandTtradeTthemTwithTotherT

peopleTwhoTshareTyourTinterest.

TheTNFTTartworkT"UntitledT(SelfPortrait)"TbyTAndyTWarholTonTdisplayTatTtheTDigitalTArtTFairTAsiaTshowcasingTdigitalTandTNFTTartTinTHongTKong,TChina.T©TLamTYik/Bloomberg/Getty

PeteTHowsonTexplainsTtheTkeyTtermsTofTNFTsTbelow,TbutTforTmoreTdetailedT

information,TourTcolleaguesTonTBBCTScienceTFocusThaveTputTtogetherTanTguideTonTeverythingTyouTneedTtoTknowTaboutTNFTs.

WhatTareTNFTs?

Non-FungibleTTokensTareTsimilarTtoTcryptocurrencies,TsuchTasTBitcoin,TbutTwhereasTiiiindividualTBitcoinsTallThaveTtheTsameTvalueTandTareTinterchangeable,TeachTNFTThasTaTdifferentTvalue.TNFTsTexistTonTyourTcomputerTasTdigitalTrepresentationsTofTartworks,Tsongs,Tfilms,TeventTtickets,TandTgames.

WhatTisTaTblockchain?

ATblockchainTisTaTsharedTelectronicTdatabase,TlikeTaTDropBoxTfolder,Texcept

youTcanTonlyTaddTfilesTtoTit.TYouTcan’tTchangeTorTdeleteTanythingTalreadyTthere.TThereTareTloadsTofTdifferentTblockchains.TButTmostTNFTTcreatorsTuseT

Ethereum,TwhichTusesTanTenergyintensiveTcomputerTfunctionTcalledT‘mining’.TIt’sTcalledTminingTbecause,Tlike digitalTgoldTcoins,Tthat’sThowTnewTcryptocurrenciesTareTcreated.

WhatTisTmining?

WithTDropBoxTyourTsharedTfolderTisTlookedTafterTbyTaTcompanyTforTaTfee.TWithTaTblockchain,Tthere’sTnoTcompany.TInstead,TtheTblockchainTusesTaTglobalT

networkTofTmillionsTofT‘mining’TcomputersTthatTcompeteTtoTprocessTyourTdataforTaTfee.TTheyTplayTaTgameTtoTguessTtheTcombinationTtoTaTlongTstringTofTdigits,TwithTtheTmostTpowerfulTwinningTaTfewTthousandTpoundsTworthTofT

cryptocurrency.TTheTcombinationTchangesTeveryT15TsecondsTandTtheTcontest continuesTforever.

HowTdoTNFTsTworkTforTwildlifeTphotographes?

“TheTcollectorTofTanTNFTTownsTonlyTaTtokenT–TaTtypeTofTdigitalTcertificateTofTownership.TItsTvalueTisTdeterminedTbyTwhat

someoneTisTwillingTtoTpayTforTit,TbasedTonTexclusivityTandTtheTphotographer.T

TheTphotographerTownsTtheToriginalTimageTcopyrightTandTtheTcollectorTcan’tTreproduceTtheTimage,”TwildlifeTphotographerTRichardTBernabe.

“SometimesTtheTphotographerTwillTincludeTaTprintTasTaTniceTgesture,TorTmaybeT

theTcollectorTwouldTwantTtoTpossessTtheTimageTfileT(ieTJPEG)TtheTtokenT

represents.TThat’sTfine,TbutTneitherTisTwhereTtheTNFTTgetsTitsTvalue.TImagineTaTManchesterTUnitedTjerseyTsignedTbyTRonaldo.TIfTheTwereTtoTsignTitTandTthenTprovideTaTcertificateTstatingTitTisTtheTonlyToneTheThasTeverTsigned,TitTwouldTbeTtheTcertificate,TnotTtheTjerseyTitself,TthatTisTofTmostTvalue.TIt’sTtheTsameTwithTNFTs.”

Turtle-cat,TalsoTknownTasTHonu,TwasTcreatedTbyTonlineTblockchainTgameTCryptoKitties,TandTwasTauctionedTtoTraiseTmoneyTforTmarineTconservation.TItTwasTaTsignTofT

thingsTtoTcomeTNFTsTnowTsellTforTludicrousTsumsTofTmoney,TandTareTprovingTaTsignificantT

sourceTofTrevenueTforTcharities.

“WhenTthisTprettyTrubbishTpictureTofTaTturtlecatTsoldTforTUS$25,000,TpeopleTwereTlike:T‘What’sTgoingTon?’TItTwasTaTmind-blowingTsumTofTmoney,”TsaysTHowson.T“ButTthatTcryptocurrencyTwentTtoToceanTconservationTcharities.TAsTlongTasTthereThaveTbeenTNFTs,TthereThaveTbeenTwildlifeTcharitiesTmakingTmoneyTfromTpeopleTdonatingTthemTorTgivingTthemTtheTproceeds.TCartoonTapesThaveTsoldTforT£700,000,TwithTtheTmoneyTgoingTtoTanTorangutanTcharity.T£500,000TfromTNFTsTalsoTwentTtoTVirungaTNationalTPark.”

EmergingTinT2015,TNFTsThaveTrangedTfromTcollectionsTofTanimalTdrawings,TlikeTPepeTtheTFrog,TtoTaThouseTonTMarsT(digital,TnotTreal)TthatTsoldTforTUS$500,000.TTheTvalueTofTanTNFTTisn’tTconnectedTtoTitsTbrilliance,TbeautyTorTphysicalvalue,TsoTanTNFTTofTaTphotographicTmasterpieceTisn’tTnecessarilyTofThigherTvalueT

thanTaTquirkyTcartoon.TCryptoPunkT7804,TforTexample,TaTpixelatedTfigureTsmokingTaTpipe,TsoldTforTUS$7.5Tmillion.

 

ATgalleryTassistantTholdsTupTaTsmartphoneTdisplayingTtheTgallery'sTonlineT

marketplaceTnearTanTNFTTandTsignedTlithographT"SealedTCryptopunkT#3036"TbyTLarvaTLabsTarranged,TduringTtheTpressTpreviewTofTtheTPortraitTofTanTEraT

exhiition,TatTtheTHouseTofTFineTArtT(HOFA)TGalleryTinTLondon,TU.K.T©TChrisT

J.TRatcliffe/Bloomberg/Getty

TheTvalueTisTinsteadTdeterminedTbyTwhatTpeopleTareTwillingTtoTpayTandTtheT

NFT’sTexclusivity,TincludingThowTmanyTareTmintedT(publishedTforTpurchase).T“TheTmostTexpensiveTNFTTsoTfar,TTheTMerge,TsoldTforTUS$91.8TmillionTinDecemberT2021,”TsaysTHowson.T“It’sTjustTtwoTgreyTballsTonTaTblackTbackground.TYouTcouldTbuyTthreeTprivateTjets,TorTthisTimageTofTtwoTgreyTballs.TTheTtalentTofTtheTartistTdoesn’tTseemTtoTmakeTanyTdifferenceTtoTtheTpricesTNFTsTareTfetching.TATlotTofTtheTvalueTisTdownTtoTbuzzTamongTtheTcollectors.”

WhoTownsTanTNFT?

AndTitTgetsTstrangerTthanTthat.TNFTsTareToftenTcomparedTtoTsomethingTlikeTaT

rareTbaseballTcard.TButTwithTaTbaseballTcard,TorTanyTmemorabiliaTitem,TyouTgetTtoTtakeTitThome,TholdTit,TdisplayTit,TlookTatTit.TWithTNFTs,TallTyouTusuallyT‘own’TisTaTdigitalTreceipt.

“It’sTlikeTmeTsayingT‘I’llTsellTyouTtheTMonaTLisa’TbutTitTstillThasTtoTliveTinTtheT

LouvreTinTParis,”TsaysTHowson.T“YouTjustTgetTtoTsayTyouTownTit.TYouTcan’tT

makeTcopies,TprintTitTorTmoveTitTanywhere.TWhenTyouTbuyTanTNFT,Tyou’reT

buyingTaTcertificateTofTownershipT–TaTreceiptTfileTthatTlivesTinTaT‘crypto-wallet’.TTheTtransactionTisTpermanentlyTwrittenTontoTaTblockchain.TTheTcreatorTofTtheTartworkTusuallyTretainsTtheTactualT‘thing’T–TtheTTweet,Tphoto,TpaintingTorTsong.TInTmostTcasesTwithTdigitalTart,TyouTownT

littleTmoreTthanTbraggingTrights.TThisTisTtheTbizarreTworldTofTNFTs.”

 

DavidTGersch,Tartist,TauctionsTphysicalTartworksTwithTauthenticatedTNFTTdigitalT

copiesTandTdigitalTNFTs,TbyTvariousTartists,TduringTtheTNFT.SOHOTeventTinT

London,TU.K.T©LukeTMacGregor/Bloomberg/Getty

WeTwereTpromisedThologramTphonesTandTflyingTcars.TInstead,TweTgetTaT‘

Schrödinger’sTcat’TtradingTsystem,TwhereTyouTownTaTthingTandTdon’tTownTitTatT

theTsameTtime.So,TwhyTbother?T“ForTNFTTartworks,Tit’sTpureTspeculation,”TsaysTHowson.T“AsT

withTanythingTcryptorelated,TtheTmajorityTofTpeopleTbuyTtheseTdigitalTassetsTbecauseTtheyTexpectTtheTvalueTofTthemTtoTgoTupTinTfuture.TNFTsTareTseenTasTanTinvestment.”

HowTdoTNFTsTraiseTmoneyTforTendangeredTspecies?

TheTworld’sTwildlifeTisTinTcrisis.TCharityTdonationsThaveTdeclined,TwithTpeople’sTlivelihoodsTandTearningsThitTbyTtheTglobalTpandemic,TandTfundraisingTeventsThaveTbeenTcancelled.TOlderTdonors,TwhoTareTmoreTlikelyTtoTgiveTregularly,TareT

graduallyTdyingTout,TleavingTwildlifeTcharitiesTneedingTtoTattractTyoungerTsupporters.TThisTisTwhereT‘exciting’Ttech,TsuchTasTNFTs,TcomesTinThandy.

“WithTNFTs,TweTcanTreachTaTwholeTnewTdemographic,”TsaysTTristanTWood,T

directorTofTwildlifeTcharityTSavingTTheTSurvivors,TwhichThasTraisedTUS$7,000fromTNFTs.T“We’veThadTpiecesTofTartTdonatedTinTtheTpastTandTartistsThaveT

sharedTrevenueTfromTsalesTwithTus,TbutTwithTNFTs,TyouThaveTaTglobalT

accessibilityTandTyouTcanTpresentTworksTtoTyourTaudienceTatTspeed.”

SmartTContractsT–TrulesTonTtransactions,TwrittenTintoTtheTcodeT–TareTaTbigTpartTofTNFTs’Tappeal.TTheyToftenTofferTaT10%TresaleTroyalty,Tso

individualsTorTorganisationsTkeepTearningTasTtheTNFTTisTtraded.

NFTsTcanTalsoTraiseTawareness.TPeopleTcouldTdisplayTtheirTNFTsTasTprofile

TpicturesTonTsocialTmedia,TtoTactTasTambassadorsTforTwildlifeTcharities.TTheyT

couldTalsoTkeepTtheTdigitalTartworkTorThaveTitTprintedTonTaTmugTorTT-shirt.

WildlifeTphotographerTRichardTBernabeTisToneTofTmanyTwhoThaveTdelvedTintoT

NFTs,TincludingTaTnewlyTmintedTLivingTLegaciesTcollectionTofTblack-and-whiteTAfricanTwildlifeTimagesTwithT15%TofTproceedsTgoingTtoTwildlifeT

conservationTorganisations,TincludingTAfricanTWildlifeTFoundation,TBornTFreeTFoundationTandTWildAid.

“MyTexperienceTwithTNFTsThasTbeenTextremelyTpositive,”TheTsays.T“WhenTIT

realisedTmyTphotographyTcouldTbeTtokenisedTasTNFTsTandTcollectorsTcouldT

investTinTmeTdirectly,TwithoutTtheTtraditionalTintermediariesTandTbarriersTofTgalleryTcurators,Tbrokers,TmanagersTandTagents,TITknewTITwasTseeingTintoTtheTfuture.TThere’sTaTgenuineTspiritTofTcommunityTamongTphotographers,Tartists,TandTcollectors,TandTweTallTseemTtoTrealiseTwe’reTatTtheTveryTbeginningTofTwhatTwillTsoonTbeTtrulyTbig.TOfTcourse,TweTcouldTallTbeTwrong.TThisTcouldTendTupTbeingTaT

fadTorTbubbleTthatTburstsTtomorrow.TButTITdon’tTthinkTso

.”

 

NFTsTallowTaTphotographerTtoTmakeTmoneyTfromTtheirTimagesTwithoutTgivingTupTtheTcopyright.T©TAlamy

WhatTareTtheTrisksTwithTNFTs?

PartTofTtheTappealTofTNFTs,TBitcoinTandTcryptocurrenciesTisTthatT

they’reTdecentralised,TexistingToutsideTtheTregulationsTofTinternationalTbanksTorT

governments.TThatTbringsTbenefitsTandTrisks.T“WithTanyTcryptoTinstrument,T

they’reTaTbitTscammy,”TsaysTHowson.T“PeopleTlikeTDamienTHirst,TParisTHiltonT

andTElonTMuskTallTsellTNFTs,TbutTthere’sToftenTnoTwayTofTknowingTwhoTisT

legitTandTwhoTisn’t.”

AnTNFTTcreatorTorTcuratorTcouldTalsoTsayTthey’reTgivingTtheTproceedsTtoTcharity,TbutTitTmightTnotTbeTtrue.T“IfTaTcharityThasTcuratedTaTcollectionTofTNFTs,TyouTshouldTgoTdirectTtoTtheTcharityTandTthey’llTpointTyouTtoTwhereTyouTcanTbuyTthem,”TadvisesTHowson.

TheseTaren’tTtheTonlyTrisks.T“We’reTactuallyTseeingTveryTfewTNFTsTresellTforT

moreTthanTwhatTtheToriginalTbuyerTpaid,”THowsonTadds.T“‘NormalTpeople’TshouldTdefinitelyTnotTseeTthemTasTanTalternativeTtoTaTpensionTplan.TButTwhoTknows?TInT100Tyears,TmaybeTthey’llTbeTworthTmillions,TlikeTsuper-rareTstamps.”

AreTNFTsTbadTforTtheTenvironment?

YetTthereTisTwhatTPeterTHowsonTcallsTanT“intolerableTcontradiction”TatTtheTheartTofTNFTsTbeingTusedTbyTwildlifeTandTenvironmentalTcharities.TCreatingTNFTsTisTincrediblyTdamagingTtoTtheTenvironment,TmeaningTcharitiesTareTcontributingTtoT

theTdestructionTofTtheTveryTnaturalTworldTthey’reTworkingTtoTprotect.

“TheTclimateTchangeTaspectTneedsTtoTbeTlookedTat,”TarguesTHowson.T

“BlockchainsTlikeTEthereum,TwhichTmostTNFTsTareTmintedTon,TuseTanTimmenseTamountTofTenergy,TrequiringTmillionsTofT‘mining’TcomputersTaroundTtheTworldTthatTcompileTandTverifyTtransactions.TEthereumTusesTmoreTenergyTannuallyTthanTtheTNetherlands.TTheTblockchainThasTaTcarbonTfootprintTlargerTthanTSweden’sT–TaroundT50TmillionTtonnesTofTCO2.TEachTindividualTNFTTisTresponsibleTforT115.07kgTofTCO2TperTtransaction.TIfTyouTwatchedT20,000ThoursTofTYouTube,T

you’dTgenerateTlessTCO2TthanTifTyouTboughtTorTsoldTanTNFTTonce.”

OrganisationsTsuchTasTGreenpeaceThaveTrejectedTworkingTwithTNFTsTor

TacceptingTdonationsTinTBitcoinTandTotherTcryptocurrenciesTonTenergy-consumptionTgrounds.T“MostTordinaryTpeopleTareTbecomingTmoreTawareTofTtheT

environmentalTandTsocialTimpactTofTNFTs,TandTareTstartingTtoTquestionTit,”T

suggestsTHowson.T“ThisTisTwhyTwe’reTseeingTsomeTcharitiesTpullingToutTofTthisTspace,TandTalsoTgovernmentsTandTcountries,TlikeTIcelandTandTKosovo,TregulatingTitTmoreTandTmakingTitTillegalTonTenvironmentalTgrounds.”

InternationalTAnimalTRescue,TwhoTraisedTmoreTthanTUS$50,000TinTitsTfirstTmonthTofTusingTNFTsTinT2021TandTwereTaimingTtoTraiseTaTfurtherTUS$500,000T

throughTanTNFTTpartnership,ThasTchangedTitsTpolicyTlargelyTdueTtoTenvironmentalTconcerns,TnoTlongerTacceptingTcryptoTdonationsTandTconcludingTallTrelationshipsTwithTNFTTprojects.T“TheTpotentialTforTblockchainTtechnologyTisTvast,TasTisTtheTpotentialTforTfundraising,”TsaysTaTspokesperson,T“butTtheTtechnologyTneedsTtoTbeTmoreTalignedTwithTourTvalues.”

 

TheTcreationTofTNFTsTareTdamagingTtoTtheTenvironment,TsoTisTitTappropriateTtoTcreateTNFTsTtoTraiseTmoneyTforTwildlifeTconservation?T©TOwenTDavey/FolioTArt

TheTenvironmentalTimpactTpresentsTaTseriousTproblemTthatTcouldTstrangleTNFTTuseTforTconservation.THowever,TlessTenergy-intensiveTblockchainsTdoTexist,TandTthere’sTplentyTofTtimeTtoTreformTNFTs.T“WithTBitcoin,TEthereumTandTLitecoin,TpeopleTdidn’tTgiveTaTdamnTaboutTtheT

environmentalTimpactT–TtheyTjustTwantedTtoTmakeTmoney,”TsaysTHowson.

“ButTifTyouTbringTinTpeopleTwhoTcareTaboutTtheTenvironmentTandTwildlife,TtheyTputTpressureTonTEthereumTandTothersTtoTmakeTthoseTplatformsTmoreTenergy-efficientTandTenvironmentallyTsustainable.TIfTNFTsTareTgoingTtoTsurvive,Tthey’llT

haveTtoTbecomeTmoreTsustainable.TOtherwiseTpeopleTwillTjustTstopTusingTthem.”

WildlifeTcharitiesTareTtryingTtoTaddressTtheseTenvironmentalTconcerns.TWWF’sT

recentTNonFungibleTAnimalsTorTNFAsTwereTcreatedTonTPolygon,TwhichTisTdescribedTasTaT“sustainable,Teco-friendlyTblockchain”.

ButTtheTideaTofT‘GreenTNFTs’TthatTuseTmoreTsustainableTblockchainsTonlyTtellsTpartTofTtheTstory.T“EvenTifTyouTuseTaTmoreTsustainableTblockchainTplatformTtoT

buyTandTsellTNFTs,TpeopleTareTstillTgoingTtoTpayTforTthemTusingTBitcoinTandT

Ethereum,TwhichTareTenergyintensive,TwithTaTmassiveTcarbonTfootprint,”TexplainsTHowson.T“IfTyou’reTinvolvedTinTNFTs,TyouTcan’tTavoidTgettingTyourThandsTdirty.”

ThereTareTotherTnegativeTimpactsTthatTneedTconsiderationTtoo.T“AnTenormousTamountTofTelectronicTwasteTisTcausedTbyTNFTTandTcryptoTplatforms,”THowsonTexplains.T“PilesTofTcomputerTparts,TgraphicsTcards,TmachinesTandTmemoryTdrivesTgettingTburnedToutTandTdumpedTinTtheTglobalTsouth,TinTIndiaTorTChina,TwhereThazardousTelectronicTwasteTisTpickedTthroughTbyTtheTpoorestTpeopleTinTtheTworld.TEveryTtransactionTisTtheTequivalentTofTthrowingTawayTtwoTiPhones.”

What'sTtheTfutureTforTNFTs?

WillTNFTsTdieTout,TorTwillTtheyTevolveTandTthrive?TTheTfuture’sThardTtoTpredict.TButTyouTcanTexpectTtheTunexpected.

“We’reTseeingTdigitalTrepresentationsTofTrareTwildlife,TlikeTplatypuses,TbeingTsoldTasTNFTsTforTuseTinTmetaverseTgamingTtoTraiseTawarenessTofTtheTplightTofTplatypusesTinTAustralia,”TsaysTHowson.

“We’reTstartingTtoTseeTcarbonTcreditsTtradedTasTNFTs.TJustTwhenTyouTthinkTwildlifeTfundraisingThasTgotTasTweirdTasTitTcanTpossiblyTget,TsomeoneTpaysTmillionsTforTaTdigitalTpairTofTsocksTforTtheirTrareTmetaverseTpandaTavatar,TorTsomething.TThat’sTjustTaTnormalTdayTinTtheTworldTofTNFTs.”