The View | Wild west of art NFTs needs regulating, but government oversight is not the answer
- Government regulation to curb cryptocurrencies and, by extension, regulate art NFTs will prove fruitless given the internet’s ability to reach any determined consumer
- Instead, we need a system of decentralised governance working in tandem with private entities to prevent predatory trades
The recent explosion of art non-fungible tokens has given rise to many such NFT projects throughout the world, with sales in the billions of dollars in 2021. Current top NFT projects include Ethereum-based CryptoPunks, the Bored Ape Yacht Club and Decentraland, to name but a few.
Seeing this concern, should NFTs be governed and, if so, is regulation feasible?
Art NFTs do have issues that need addressing. The high carbon cost of NFTs, for one, necessitates regulatory intervention. The process of creating, or minting, art NFTs typically involves significant amounts of computing energy to solve complex puzzles.
Ethereum, one of the most prominent platforms for NFTs, generates a significant carbon footprint every time an NFT is minted through its proof-of-work framework. By one estimate, an average single-edition NFT generates over 200kg of carbon emissions during its creation process.
