Welcome back to Part Two of the State of Things in Music report. Last week we released Part One, highlighting projects, trends and processes that are happening within the music3 space, as well as the potential future consequences and considerations.
As we have seen in the past one year, the music industry is experiencing a period of continuous and ongoing innovation, with various communities getting built around the mutual trust in these revolutionizing technologies and a shared belief in a future where an artist, fan and collector are slowly fusing into one.
We are currently undergoing the process of building web3 (the new internet), which ultimately leads to ideological debates, especially with regards to legacy music business structures. This so-called battle between new innovative approaches and more traditional legacy approaches is subsequently resulting in an unprecedented amount of innovation and ideas, making the music tech industry a very interesting market to follow.
The tools that enhance the user experience will have a great role to play in the years to come. The thing is that as of last year, more investment has been made into NFT tools for artists than actually committed to the artists themselves. It highlights the fact that at this point of the adoption curve, these tools are extremely vital in helping the overall user experience and the implementation of the right tools will help drive adoption further.
They are needed to eliminate different types of frictions faced by users of the platforms, and by doing so help improve accessibility and the overall experience. Consequently these tools will take different forms, such helping users to simplify more complicated tasks like the introduction of a credit card fiat currency payment option, and enhancing the complexity of the task by allowing higher customization and control of the minting process for example.
As popularity and adoption continue to grow, so do the amount of new ideas, platforms, projects and new users. During the foreseeable future it is very likely that the subsequent development of tools will strongly drive these processes further and with time will make them more accessible and easy to use for the general population.
It certainly is no secret that there are massive environmental concerns surrounding the CryptoArt industry. These concerns arise from the fact that the majority of cryptocurrencies used to buy and sell NFTs are responsible for a substantial amount of carbon dioxide emissions.
All of the coins that run on the proof of work mechanism, such as Ethereum, heavily rely on computing power and energy to verify transactions, and hence do become extremely unethical tools with regards to the very relevant climate concerns. As a consequence of this development, there is a significant number of artists and creators that do see the benefits of the CryptoArt world, but do not use and advocate for the technology purely out of their stance on the climate situation.
That leads us to an interesting situation, where the technology itself gives a lot of hope in terms of equality and redistribution of wealth within the music industry, while simultaneously having a very costly disadvantage of contributing to environmental pollution. It is of course impossible to predict the turn of future events, but nonetheless it is important to mention the potential solutions of the problem that can come to fruition within the foreseeable future:
More clear distinction between tokens and cryptocurrencies is vital to fully assess the use of energy in this case. Even though NFTs do contribute to the energy usage and also send reassuring signals to the miners all across the world, it must be underlined that the problem itself is rooted in the cryptocurrencies and their operational mechanism, rather than the sales and purchases of tokens.
As of now, NFTs still account for a relatively small proportion of energy use of cryptocurrencies. What it tells us is that with certain solutions within the crypto world, the digital collectible technology does have an opportunity to do good without the unethical concerns that are definitely apparent at the current moment.
Proof of stake vs proof of work is probably the biggest discussion happening in the world of cryptocurrencies with respect to environmental concerns. The thing is that proof of stake offers an alternative, non-energy heavy approach to validating transactions on the decentralized ledger of blockchain.
It operates via staking or locking in a certain amount of coins you possess in order to validate transactions without heavily relying on the computing power and energy. We are still yet to see the effect of a proof of stake implementation on a network as large as Ethereum, but there are certainly hopes of eliminating a substantial amount of energy waste. That in turn would alleviate some of the aforementioned environmental concerns.
Systematic problem of the lack of renewable energy is what it boils down to at the end. For instance if every single artist would invest a part of the proceeds from the token sale into renewable energy projects and technologies then carbon emissions of the whole CryptoArt industry would be fully offset. This scenario is very much in line with almost every single existing environmental issue, namely with the fact that the burden is on the shoulders of individuals as opposed to governments and institutions.
Just the same way that household individual energy usage accounts for a tiny part of the global environmental pollution as opposed to the industrial and military energy waste, the sales and purchases of NFTs can surely be viewed through a similar light.
To rephrase it is a notion that without a more clearly defined systematic global policymaking with regards to climate change and environment we won’t be able to fully transition to renewable energy sources, which would be a perfect solution to this (and many other) problems.
Simultaneously, in the absence of any substantial change in that regard, further growth in NFT sales, and especially so low cost – high volume NFT sales will surely bring detrimental effects to our environment.