Many of the artists and creators who mint nonfungible tokens (NFTs) are concerned about the environmental impact of the blockchain.
But what if they could pair carbon removal with any given NFT to make it carbon-negative?
Alexander Salnikov is Cofounder and Chief Strategy Officer at Rarible: a multichain, community-centric NFT marketplace.
On this episode of Reversing Climate Change, Alexander joins Ross and cohost Alexsandra Guerra, Nori’s Director of Corporate Development, to discuss the partnership between Nori and Rarible, describing how it affords Rarible users the opportunity to address their carbon footprint.
Alexander explains how NFTs function as an effective way to store assets on the blockchain, exploring the many different use cases for NFTs, and how having access to a community is attracting new users to the space.
Listen in for Alexander’s insight around the future of NFTs and learn how blockchain technology might be used to make all our systems more transparent, faster, and more efficient.
More from the show
Ad-free episodes and other benefits come with a paid subscription.
Carbon Removal Newsroom, the news show that ran alongside this one, is over. Its episodes are still up, on the feed Climate Workers Anonymous now uses.
Carbon Removal Memes is still going.
Resources
Aspen Ideas Climate Conference
Retina Ghost: creator of the Nori Proof-of-Attendance NFTs from the Miami event
Nori Token Pre-Launch Carnival Recap
Jesse Smith on Reversing Climate Change S3EP12
Ross’s Nori Logo Graveyard NFT
Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper
Imogen Heap on Reversing Climate Change S2EP72
Full Transcript
Alexsandra Guerra: You’re listening to the Reversing Climate Change podcast by the team at Nori, the carbon removal marketplace. This is a show about the innovators and entrepreneurs developing solutions to climate change.
Ross Kenyon: Hello and welcome to the Reversing Climate Change podcast with Nori. I’m Ross Kenyon. Alexsandra Guerra here from Nori, director of corporate development. How are you, Alexsandra? [unclear]
Alexsandra Guerra: Well, how are you?
Ross Kenyon: I’m doing well. Thanks for being here. And today we have with us as our guest Alexander Salnikov, co-founder and chief strategy officer at Rarible, a major NFT marketplace. Hey, Alex.
Alexander Salnikov: Hi Ross, hi Alexsandra. Thank you so much for having me.
Ross Kenyon: We’re happy to have you here. We’ve been working with you for a while now, Nori and Rarible, which is great, and we want to tell our audience about it. I’m not sure how much our audience knows about NFTs and web three beyond some of the shows we’ve done about them, and we’ve glossed over NFTs more than we really should. So I wonder if we could start maybe at the beginning of what exactly even is an NFT. Why do you think it’s important? Why are you spending your time making it easier to interact with NFTs? No small questions, but why don’t you give that a shot, Alexander?
Alexander Salnikov: Yeah, sure. So I’d like to begin with probably the fact that I’m born crypto. I discovered crypto in the second year during my university, and I was taken down the rabbit hole instantly. I loved it. I loved the spirit. I loved everything about crypto, and the biggest idea that I loved about crypto was the permissionlessness and self-sovereignty. What that means is that you basically don’t need to ask anyone’s permission. My money is my money. I can move it where I want when I want, I can take it with me on my phone to another country without an exchange, and it will be always with me, and all this [unclear] nonsense.
And an NFT is an effective way to store an asset on the blockchain which is non-fungible — that’s what it stands for, NFT is non-fungible token. Talking fungibility: it is the property that allows you to exchange one piece of something for another. So for example, a dollar bill is fungible. You get one dollar bill, it always equals another dollar bill. So fungible tokens, they’re more like money. NFTs are singular and they’re more like items. They work more like an actual item, a physical item that has some image attached, the metadata. So an NFT is effectively a number stored on the blockchain saying the wallet number five owns the item number six, and here’s the picture of that item.
Ross Kenyon: That simple. Is that— there’s been so much hype around them. I think people think of Bored Apes and things like that. Originally it was CryptoKitties, which was also fairly derided by the general public insofar as they knew about it. Some of these use cases might seem superficial, wasteful of energy, harmful to the environment, et cetera. Is that true? I know that’s a big question, but more broadly, are there applications that people who think those are dumb will care about? Are there good uses of NFTs that are coming or already exist that are genuinely exciting and mainstream? And I kind of stacked those. [unclear] the first part of this question, the super question, and then Alex, maybe you can answer the last one.
Alexsandra Guerra: Yes. Yeah, you know, people ask us all the time. There’s a lot of criticism. Last night we were at an event, it was Aspen Ideas: Climate here in Miami Beach, and lots of people were asking this question. And I think it’s really important to recognize, just like electricity, you have different forms of creating one watt of energy. It can come from solar energy, it can come from wind, or it can come from fossil fuel like natural gas or coal. So there’s this distinction that needs to be made with blockchain. It’s the same. You have things that are like proof of work or proof of stake, proof of X and the other thing.
And the idea is, let’s move from ways that are highly energy intensive and then go to ways that are much more energy efficient. So at a fraction of the energy cost you can still maintain that blockchain. I just wanted to say that so people understand it’s all not treated equally, and a lot of the space is looking at what are the most efficient, energy efficient ways that we can maintain the blockchain, provide cryptocurrencies as well as NFTs.
Ross Kenyon: Anything you’d like to add, for texture, different directions for that response, Alex?
Alexander Salnikov: Yeah. So environmental impact of NFTs is directly derived from the environmental impact of blockchains, and blockchains — this is directly tied to the definition of why are we spending time on any of these. We spend time on NFTs because we want to bring this idea that you will own your item to the metaverse, so that you own all your items digitally, and the security of the blockchain is what enables all that, so that different applications connect to the same database and use it as the source of truth. So this source of truth is absolutely critical and important to achieve that vision, and it should be extremely protected, and different blockchains use different technologies to enable security for those assets.
And blockchains like Bitcoin and Ethereum, and everybody who uses proof of work, they use mining, and to mine you need to basically make all sorts of calculations and you need to burn electricity. And for that electricity, usually the cheap sources of electricity win, because you want to earn money for spending that electricity, so you want the highest ROI. And that’s why oftentimes this electricity comes from the cheap sources that produce a lot of carbon footprint. So this is how the narrative behind “oh, NFTs are bad for the environment” came to be. Now, I don’t necessarily view that it holds.
So Ethereum is undergoing the merge now, this year, that will get rid of proof of work completely. You won’t burn electricity anymore to protect NFTs on Ethereum at all. It will reduce 99.8 percent of all the carbon emissions on Ethereum, maybe 99.9. So maybe the only one that is still in danger is Bitcoin, that will not be able to make the change from proof of work because it’s super stable. As for the use cases for NFTs — that’s why I believe that this narrative doesn’t necessarily hold, because on the planet scale, waiting several months until Ethereum will change, it is not too much. And in general, I think the tech is the lowest carbon footprint producing sector. So I believe this narrative is a little bit overrated for NFTs, but still we want to go above and beyond and offset everything that we do right now, and even go negative by offsetting more than is produced.
Now, as for the use cases. NFTs travelled and started from CryptoKitties, which was kind of a toy, and I still believe that toys are a big part of the NFT use case. And there are other startups that are doing only NFT toys, because the young generation of children, they have an iPhone or iPad too, and they spend most of their time in the metaverse, so they are as happy with digital toys as they are with real toys.
The next big use case was art, digital art. And again, it’s brilliant. The digital artist had almost no way to monetize their creation. The best way to monetize digital art is probably to make prints or create an Instagram account, post your art and monetize followers. So NFTs give a direct way to monetize for the crypto artists. You can actually sell your item, which is provably scarce — there will not be any more digital art like this piece.
And the third big use case that we’ve seen is the profile pictures. And while there is a lot of criticism about profile pictures, it is widely used because it works as the community pass. If you own a Doodle or [unclear], you put it on your avatar. It is the signal that you belong to this very special social club that shares the same values, and when people interact with you on Twitter, which is part of the metaverse, they can recognize you faster, they can understand which values you hold faster. So this is very important as well.
Now we’re seeing the fourth use case that is arising heavily. It is the gaming NFT use case. So games are digital environments where we spend a lot of time. I did spend a lot of time in games myself, before I encountered this new game, capitalism. Imagine all the things you own in the game are not just hosted by the game, but they’re hosted by your wallet, and you can move them from one game to another. Many of us have seen Ready Player One. That’s the quintessential view on how this gaming world can look like in the future. So I believe these are the use cases that have long-term fundamentals beyond speculation, and each of them will hold and stay. And of course we will have many more.
Ross Kenyon: Some of the things that I’ve heard that have been perhaps more persuasive to skeptics of NFTs, or people who don’t really get it — I’ve seen things like concert tickets or memberships being held in this way, things that interface more immediately with physical reality. I think examples like the metaverse and video games, sometimes people are maybe a little bit less warm to that than other things. Are you finding that too, or do you think people are not yet aware how much of our lives will be metaverse in the future?
Alexander Salnikov: I think this more instantly understandable use cases are important for the transition period. I’m personally a big fan of all digital things. I’m a nomad. I have very little presence in the physical world.
Ross Kenyon: What does that mean? You just bounce around, you know, you don’t have a regular place you live?
Alexander Salnikov: Yeah, I don’t have one yet, a regular place to live. I live on Airbnbs, for the past two years of my life. Of course it’s a little exhausting, but I carry everything in just one suitcase. The MacBook is one of the most precious physical things that I own. So I’m rooting for all digital. But of course, if that’s crypto art, you want to have a mural at your home, the digital display that will show that beautiful piece of artwork that you have. So combination between physical and digital is important. As for the tickets, NFTs are a pretty useful thing to store the ticket. It does not bring a lot of value in terms of the core idea of an NFT, which is to be able to change ownership, and we don’t really change ownership over a ticket too much, although there are secondary assets.
And to be frank, the blockchain technology is still expensive to use NFTs as tickets, because the gas prices are too high. With the next generation of blockchains, we might see many, many more use cases that allow much smaller things to be NFT-ized.
Ross Kenyon: So say— I’ve never heard that term, the verb “NFT-ized.” That’s cool.
Alexsandra Guerra: So we did at Nori a couple months back — was it one month ago? I don’t know, time is this weird illusion — in April, we did a carnival to pre-launch our token, and we had Rarible there because we were partnered together. And we had, like, you know, different games where all the different partners were a part of. So there was a ring toss, and for the ring toss all the bottles were painted in that really pretty Rarible yellow color. And then Alex is on this panel with us, and we also had these NFTs.
So we had an artist, Retina Ghost was his name, and he did like 3D renderings of Nori’s logo in all different types of plants, in different backgrounds. And so there were 500 of these that we kind of gave away to people as, like, a hybrid proof of attendance thing. It wasn’t technically a POAP because it wasn’t in the smart contract, but we had minted them all on Rarible and then had sent them to our attendees after the fact. And the idea is — and I’m saying this more for the audience here — like, you know, now you have this beautiful thing that represents, let’s say, a brand that you really care about like Nori. The people who came, their longtime fans, and it’s just a beautiful representation of something that you value, and then it gives you access, let’s say, to future events or community things.
And I think I’ve heard that too, Ross, with regard to Bored Apes, that it’s almost just like the exclusivity of the club, of the people that you get to talk to, and what that gives you access to, as opposed to just the art itself. So super multifaceted, these NFTs.
Ross Kenyon: Yeah, my experience with NFTs personally: well, I got that one from Nori’s proof of attendance for Miami. That was cool. And I minted one on Rarible because I wanted to try out the flow, because after you mint an NFT on Ethereum with Rarible, you have the option to remove carbon with Nori. So that was really cool to experience. I made an image that’s a graveyard of failed logo redesigns from our recent logo updating. That’s cool. I’ve got a link to it or something in the show notes.
And I bought one recently that caught my eye. We do the podcast — the Jesse Smith of White Buffalo Land Trust — and they had mentioned having an NFT be a membership card for access to their regenerative wine-growing club. So that was the first one that I thought, hmm, I think I would like to be a part of that, and this as a token of my fidelity to this group actually might mean something, or be something that I’d be interested in parting with money for. I think that might have been the moment I got hooked a little bit.
But I haven’t felt that way previously. I haven’t felt the burning desire to own a profile pic in the same way, and sometimes I attribute that to personal failure. Like, is this just not that good of an idea? Is it not for me? Or is there something wrong with me, that means I’m not appreciating this or seeing this in the correct way in order to appreciate it? I don’t know if either of you have reactions to any of that, but there’s a lot of—
Alexsandra Guerra: Definitely something wrong with you, Ross, but I don’t know if that’s it.
Ross Kenyon: That’s true. We can say that with safety.
Alexsandra Guerra: Yes. But it’s actually cool that you made an NFT of all the, like, failed Nori logos, or like the iterations, I should say. Not fails, but the iterations. I’d love to see that. I did not know that you did that.
Ross Kenyon: Oh, I’ll send it to you right now. Yeah, I don’t know. That was the first one that at least I kind of got it. I could see why it’s a fun thing to participate in. I saw Nathaniel Popper, formerly of the New York Times, author of Digital Gold, who wrote a lot about crypto, saying that after he left the New York Times he was allowed finally to firsthand own crypto and mess with NFTs himself. He said that he didn’t expect it to be this fun, basically being able to own a digital asset and join a community as a result of that. So I sort of get that. I don’t know if you have, as a nomad with no attachment to anything, Alex — he’s floating in cyberspace — I don’t know if this belonging, community aspect works on your mind or not, but what do you think about all that?
Alexander Salnikov: Definitely it works, and I’ve experienced it myself.
Ross Kenyon: You are muted, if you are speaking.
Alexander Salnikov: Okay. I absolutely believe it’s true and I experienced it myself. I use several NFTs as my profile picture, and for example I was hesitating a lot before doing that because they’re kind of expensive. Ultimately I found several collections that represent me, that I felt like they represent the values that I want to hold, like Doodles, for example. They are minimal, they are neutral, they are positive. Kind of reminds me a little bit of the Apple mentality, where you cut everything that’s not [unclear]. And I put it on my avatar, and there was like 400 likes and people were welcoming to the community, and it felt like you are part of something bigger now, and something big and positive. So that is absolutely true.
The second one that I did, it was like mfers. It’s a funny collection with the little guys that are hand-drawn, that are looking a little bit like a degen sitting around on the internet all day in their chair and smoking and researching. And that reminded me about me five years ago, when I was sitting in my rental apartment reading white papers and researching the space all night long. So when you feel that it’s something that you have an internal emotional attachment to, that’s when it clicked for me.
Alexsandra Guerra: So Nori and Rarible, we got connected back at NFT.NYC in 2021. What was that, last year? Again, time is an illusion that I’m having a very hard time keeping track of recently. So it’s only just a few months ago. But Rarible really wanted to do something about its carbon emissions, and so during Giving Tuesday, which is in November — and that was the Tuesday right before Art Basel Miami, which is a big thing where artists come in, and we’ve been doing this in Miami for a very long time, but all of a sudden it was filled with everybody in the NFT space. So the merging of web three, of crypto, with artists at a thing that already happens in Miami anyway. So for a week, a week’s worth of emissions for any NFTs minted during that week, we repaid 120 percent of those carbon emissions. It was about 906 tonnes of carbon for that week in those [unclear].
And then we started working together, our two product teams, on integrating, so that there’s a webhook that we created at Nori. It’s not quite an API, so it’s kind of like that first step to automation and innovations, and there’s some other things Nori has to figure out before we get to that level. But now any creator on Rarible can go to Nori, pay for a tonne of carbon removed from the atmosphere, get a certificate of that, and then their NFT on Rarible’s platform has this very specific label, like the little green sprout emoji that labels it carbon negative. It’s part of this whole, like, we’re addressing and allowing — I think it’s more about allowing artists and people to take part and engage in that story themselves.
Ross Kenyon: Yeah. What was the motivation like for you, Alexander? How did this come about? Seemed like a good idea, something that we should be working on?
Alexander Salnikov: I guess as the platform for artists, as we started our journey in the NFT space, we found artists to be extremely passionate about social causes. So whenever something happens outside in the world, usually there is a group of artists that was targeting the specific event with their NFTs, with the memes, jokes, or art that is showing the new way of looking at the problem. So this instant, this fire hose of creativity that exists on the platform, often was targeted towards this issue of the climate change and environmental impact of the industry, and they were vocal about that. And brands that adopted the platform with their NFT strategies were concerned about their carbon footprint.
So it kind of all matched together into the idea that we want to do something about it. We want the industry to be flawless and not have this, like, giant low-hanging fruit of every critic that wants to come to the space and say, oh, you’re doing [unclear], NFTs are cool, but... So this all fit together into the idea that we want to make NFTs carbon negative.
And I don’t necessarily believe that we will offset a lot of carbon per se ourselves, but we wanted to contribute to the movement, to the social cause. And since the artist is often the generator of the idea that gets spread around the world after — so art is the way of expressing your thoughts, new ideas, new feelings. So connecting this carbon removal with art, to just help broaden the visibility of the issue itself with the help of this creative power, I guess that’s the main contribution that we’re making. You will not have a lot of tonnes of carbon offset from NFTs, because there is not many of them, and there’s not much footprint. But you will go to the popular, probably the most popular thing of 2021, and you will see, oh, we do care about environment too. And that’s how you make this whole world a better place.
Alexsandra Guerra: I completely agree. What’s interesting, and something to note here for people who have been listening to Nori for a long time — you know, we’ve been at this for almost four and a half, five years, and we started selling, you know, to the corporates, or at least at the very least with an attempt, and then really kind of pivoted and focused on, okay, that doesn’t seem to really be the right market for us. Mainly because we have this unique ability to provide access to people who are smaller buyers, who wouldn’t have resources to create these big projects, right? Like sustainability officers find large projects, develop them, [unclear], et cetera.
So we kind of pivoted, and then we ended up seeing, once we kind of really leaned into that and making that more accessible to anybody on the nori.com website, was that artists were coming. So Grammy award-winning singer and songwriter Imogen Heap was our first artist to come, and she wanted to do an NFT release, which she did for three different NFTs, like samples of some songs she had written, and then took five percent of the proceeds and paid for removing carbon through Nori. And then it kind of became this — not just like a snowball, and not even slowly, but quickly grew, and more than a quarter of our historical sales have gone to companies in the web three space, and half of that [unclear]. And I think it’s because artists really understand artists, and crypto folks — it’s just this perfect alignment for Nori as a customer base, because they feel very deeply the importance about doing something about climate change, and are also willing to take more innovative approaches in how they might see addressing those with something like Nori.
Ross Kenyon: Alexander, what do you think is next for NFTs? I know I’ve seen a lot of articles this week about the NFT market, quote-unquote, collapsing, but I suspect it’s probably broader things happening than merely NFTs. But what do you expect is going to happen with NFTs in the next couple months, or even couple of years?
Alexander Salnikov: That’s a very good question. So let’s try to expand on that one. First of all, when this article says that an NFT market, quote-unquote, collapsed, it is mostly referring to the NFT prices. Of course, many of the NFTs without their price tag will be forgotten. But NFTs are the forefront of the innovation in the blockchain space, and by definition it’s the right side of the risk spectrum. So the bond market goes 0.1 percent down, the stock market goes 2 percent down, Bitcoin goes 5 percent down, Ethereum goes 10 percent down, and NFTs go 25 percent down. That’s the cascade of leverage that we have in the capital flow in the system, the same way on the way up.
So obviously, with the macro environment that we have today, we see the prices fall down across many industries, across stocks, across tech, across blockchain, across NFTs. And NFTs are the right side of the spectrum, it gets down with one of the biggest leverages. Now, that all doesn’t apply to the art market. The art market is not the capital market. So every consumer NFT that was bought there for enjoyment of the buyer, for the use, for the actual use, as a club, as the utility there — they’re doing fine. In the several next months there will be the separation of what had primarily speculation driving prices and what had an actual utility, that that will stay through, let’s say, quote-unquote bear market that we are probably about to face.
Now the overall crypto will undergo this phase of transition. People don’t care about prices, but care more about the technology. The people who are not long-term believers will go away, and people who are long-term believers will stay and build the next generation of technology that will drive the next generation of use cases for everything — for NFTs, for crypto, for wallets, for all this.
Ross Kenyon: Yeah, I suppose we’ll see what’s going to happen with this. Beyond NFTs, Alexander, what are you looking forward to for web three, blockchain, crypto in general?
Alexander Salnikov: So, in general, it’s absolutely the loveliest thing that ever happened to the internet. Internet started as a decentralized technology. I wouldn’t probably be false if I say that that was the task of the creators of the internet. I heard it somewhere that basically the internet was designed to survive the nuclear war, when your command centers might get offline, and to continue to work under extremely harsh conditions. And that’s probably why the whole internet took over the whole world, because it’s the free space where the information can be exchanged freely and in the decentralized manner that cannot be stopped. The same way, web three is bringing that to the end consumer.
You will say that the digital signature is one of the greatest inventions of the 20th century, and I fully agree with that. And at the core of the web three technology, this digital signature innovation is what stands at the core. Everybody has a wallet, and wallet is the private and public key. So if we just rewrite the whole system — court system, monetary policy system, stock system — to the blockchain, it will become more transparent, more efficient, clearly more fast.
You cannot send a bank transfer on the holiday. How crazy that is in the 21st century, when you can send gigabytes of video to your friend in another country in minutes, and transfer of money is just as simple as transferring the message, just in a trusted environment. SWIFT, the system, it’s just a system to transfer messages across banks, and it doesn’t work on a weekend. I’m excited about web three, all parts of web three, beyond the level of possible excitement that somebody can have. Frankly, it’s amazing.
Ross Kenyon: That’s the old-school vision of crypto, too, which I feel people have been much more excited about, you know, the non-monetary uses of cryptocurrency. They’re excited about art, or they’re excited about governance and DAOs or something like that. But I don’t always encounter people who are just excited about the innovations to money that it inspires. Like, that takes a special kind of nerd, but you’ve probably been in this long enough for that to still be motivating and exciting to you.
Alexander Salnikov: It’s not only money, and I used money as the example, and it was the first use case of the blockchain, obviously, because people care a lot about money, and that’s one of the simplest things to transfer as a message. But more broadly, there is a great project, it’s called Aragon Court. It’s a court system where there is a pool of judges that are doing arbitration, and they can be randomly selected, and they will sign the arbitration process with their private key. It reminds me a lot about how the same systems are done for the corporate governance. There is a board that is doing company resolutions, that is deciding on how things will work, and there are shareholders who sit on the board. And the DAOs are at the forefront of that space as innovation of the new corporate structure and a new work environment, when people across the globe can be united in one trustless environment, when they don’t need to trust a person to operate their bank account, and they have a collective governance over things that will be executed on chain without anybody being able to interrupt that process.
So it reminds me of rewriting. In the end, we’re all humans, and it’s just the social structure, social organization. The governance existed in tribes when 10 people were sitting around the fireplace and deciding what they’re going to do now, and the same governance can be done with paper, then with internet, and now finally with blockchain. And each step is just the evolution, and it may be a revolution of the process that makes it 10x better.
Ross Kenyon: Anything you’d like to add, Alexsandra? I’ll certainly link to the blog about Nori and Rarible working together, but anything you’d like to conclude with?
Alexsandra Guerra: Well, I just wanted to thank you for your time and your genuineness. Like, it comes across that this is something that you care about, and it’s not just something that you’re doing for all of the other ego reasons. It’s something that really speaks to you, and the things that you’d like to see this world adopt as a way of changing the way that we live. So I appreciate that, it seems very true to you. And then I also want to thank you and your team in general for just working with Nori. It’s been a really fun ride since we started working together, and I think that the world can expect a little bit more from these types of collaborations. Thank you so much.
Ross Kenyon: Yeah. Thanks for being here, Alexander. And links to Rarible, our work together, etcetera, they’re all in the show notes. Everything we talked about, there’s links in the show notes. Thanks so much for listening. If you like what we do here, please give us a rating and review on Apple Podcasts or Spotify. Have a lovely day, and thanks again for listening.
Thank you so much for listening. If you could please subscribe and give us a great rating and review on Apple Podcasts, or a rating on Spotify, that’d be much appreciated. It helps us get our content out to more people. You can sign up for our newsletter at nori.com, follow us on social media. We will catch you next time.
