An Attempt to a Greener Future with Blockchain and Cryptocurrency

Blockchain and cryptocurrency are taking the world to an eco-friendly and greener future.

In today's world, every new invention does not only bring hope for a better future, but the current condition of the earth makes people also think about how this invention is going to affect the environment. Since the concept of blockchain and cryptocurrency is at an early stage of innovation, there are a lot of doubts and misunderstandings about their energy consumption and carbon allowance. A blockchain is a collection of information that is stored electronically on a computer system. Information or data in databases is typically structured in table format to allow for easier searching and filtering for specific information. Blockchain is used mostly in cryptocurrencies like Bitcoin etc. Cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.

The Transition from PoW to PoS

The fact that cryptocurrency consumes a lot less energy is proved by the launch of Ethereum 2.0 and the move from a Proof of Work (PoW) consensus to a Proof of Stake model (PoS). PoW refers to the decentralized system that powers the Bitcoin network, with the model requiring huge amounts of energy to validate transactions and mint new tokens. But PoS allows miners to mine and validate block transactions based on the number of coins that they hold. As PoS demands significantly lower hardware requirements than PoW, the energy needed to facilitate secure transactions will only continue to fall in the future. Some forecasting models show that Ethereum 2.0's PoS model will be 99% more energy-efficient than PoW models. The Ethereum network consumes almost 100 Twh less than the Bitcoin network.

The difference with the traditional systems

It is important to note that the traditional international financial system requires significantly more energy than the Bitcoin network. All of the disparate parts that make up the whole of the global banking network, banking data centers, card network data centers, ATMs, and bank branches use a lot of energy. The traditional financial sector provides financing for some of the most environmentally damaging projects on Earth. On the other hand, most of the electricity used for crypto mining comes from renewable sources. Research from the University of Cambridge shows that the renewable share of these energy mining pools is as high as 78%. Crypto miners are increasingly using excess electricity that would otherwise go to waste. The emergence of crypto mining farms has soaked up the extra capacity and prevented the waste of unused renewable energy.

A renewable future with blockchain

Blockchain projects have already been deployed in a range of different fields, from wholesale electricity distribution and peer-to-peer energy trading to electricity data management and commodity trading. One area that is particularly ripe for disruption is the global supply chain, in particular the energy sector. Amidst this transition between polluting fossil fuels and a clean, renewable future, people should be looking for ways to mitigate and streamline the processes involved in extracting and transporting energy. Blockchain provides a platform that gives real-time speed and efficiency, not to mention traceability and transparency. With blockchain, transactions such as energy trading can be recorded and settled almost instantly, with no need for an intermediary and with little or no need for reconciliation since all parties are using the same platform. There's essentially nothing to reconcile since there's only one system and one entry for the transaction, which is shared by all parties.

Initiatives were taken in India

Major Indian steel conglomerate Tata Steel is partnering with HSBC to experiment with smart contracts on the blockchain, exporting raw materials around the globe while cutting contract settlement times from a matter of weeks to a matter of days. It will save a lot of energy. Meanwhile, the Carbon Utility Token (CUT) is an example of a growing class of green assets designed in large part to help corporations, manage their carbon allowances. The sale of each CUT token goes towards investments in carbon capture and carbon offsetting programs, representing a tangible step towards carbon neutrality in the crypto ecosystem. As more and more corporations begin to add Bitcoin and other cryptocurrencies to their balance sheets, it's good to know that CUT provides an avenue to completely offset the carbon footprint behind each coin. It proves the fact that cryptocurrency and blockchain have the potential to lead people towards a much greener planet, with the discussion surrounding crypto and energy stimulating people to hasten their transition to clean energy sources with the help of proper tools.