The impact of technology in today’s world so far is nothing but amazing. Technology is developing so much that it currently controls so many aspects of our society today. Whether in education, health, or the corporate sector, there is no place we can’t apply ICT.
The financial market is not left behind. The world is currently moving towards a paperless economy. Digital money is becoming more popular and we now use e-commerce to move our markets online. As a result, cryptocurrency was introduced as another means of storing wealth.
However, we have to consider how this development affects our physical environment. Climate change is ultimately most glaring issue across the globe. So we must address how sustainable this industry is. Are we risking our environmental safety by using crypto? Keep reading for more!
What are sustainable cryptocurrencies?
Fintech is one of the largest industries of the world today and it is mainly powered by cryptocurrency. Cryptocurrency is a digital currency and it only operates electronically (Rose, 2015). It isn’t regulated by governmental policies but it has real value. Bitcoin is a widely popular cryptocurrency. It is also sometimes described as the very first cryptocurrency.
The crypto market has gotten a lot of interest over the years because of how lucrative it is. So many people have been able to build a great income stream from investing in this digital money. Cryptocurrency definitely is the future of our global financial market.
Regardless, this financial profit may result in a huge loss to our environment if we are not careful. The mining of crypto coins like bitcoin requires a lot of energy consumption. In producing bitcoin, the power used is greater than the power consumption used in some small countries. This results in a lot of carbon emissions and it is bad for the environment.
Due to concern for the environment, alternative cryptocurrencies were developed. These altcoins are created to be more eco-friendly and reduce carbon footprints. According to Tesla CEO Elon Musk, it matters that cryptocurrencies are not using energy in a way that negatively impacts the environment.
Sustainable cryptocurrencies are low in energy consumption. They also use more renewable energy resources like solar power. In the creation of digital coins, the focus is now on sustainability. Eco-conscious cryptocurrencies are now very popular.
Some Alternative Crypto coins and how sustainable they are
This is one of the popular crypto coins. It was developed in 2013 by a couple of software engineers. One of the founders of this coin admitted that at the initial creation of dogecoin, the environmental impact was not considered.
It was originally developed as a joke but so far it has proved itself to be among the world’s leading crypto assets. Furthermore, it has also contributed to reducing cryptocurrencies’ carbon footprint. Bitcoin mining and transactions use a lot of coal, which results in terrible fuel emissions. On the other hand, Dogecoin transactions use much less energy consumption.
Dogecoin uses a different type of algorithm for mining that is more energy-efficient. It uses Scrypt, which is quicker and saves more energy (Shrivas & Yeboah, 2014). Bitcoin uses the SHA-256 algorithm which although it is safer, is a lot more complex.
While bitcoin requires about 707 kilowatt-hours for each transaction, dogecoin only requires just 0.12 kilowatt. Dogecoin is also more accessible to amateur miners. It is also a favorite of many green-conscious crypto enthusiasts like Elon Musk himself.
Another alternative cryptocurrency we have to consider in terms of sustainability is XRP (Ripple). Although its financial market has not been really explored, it is quite green. The creators constantly promote it as one of the most eco-friendly and less energy-consuming cryptocurrencies.
The main purpose of XRP was to function as a middleman instrument of exchange between two networks. It is also widely known as having a solid digital payment protocol. Asides from this, XRP does not use a complex method of mining and is pre-mined (Houben & Snyers 2018).
This makes it faster and much more reliable than other rival coins. It uses a decentralized system that consumes almost unnoticeable amounts of energy. XRP transactions are very fast and cost less than bitcoin. While it has more coins in the market, it uses less power than bitcoin. According to TRG Datacenters, it consumes only 0.0079 kilowatts per transaction.
Ethereum is often regarded as the largest cryptocurrency, next to bitcoin. It uses a system model that is quite similar to bitcoin called the “Proof of Work” system. In this model, miners burn a lot of power by solving complicated math problems. This is all to ensure that no user can take over the system.
Meanwhile, this system is very bad for the environment because it encourages a lot of energy consumption. It isn’t really a more sustainable option since it’s so similar to bitcoin. The current structure could have really damaging effects on the environment.
However, there is already a plan in place to shift to a new eco-friendly structure that will ultimately reduce its carbon emissions by 100%. This is called Etherum 2.0. There will be a shift from the “Proof of Work” to a “Proof of Stake” system.
Under this structure, users will be required to stake a part of their currency for every transaction. Power will also be allocated to users based on how much there they already hold. This new system will reduce the power consumption from 5.13 gigawatts to 2.62 megawatts. It will also create a more secure network while using much less energy.
The trend of cryptocurrency has only just begun and we have a long way to go. Ecommerce is the future and we cannot run away from it. Regardless, there are also environmental risks to be considered.
While digital money is already changing the future of money and exchange, it could also be quite damaging. By now you will have learned how these sustainable online coins contribute to more positive climate change action. Alternative crypto coins are definitely the future and the way forward for online trades.
By David Adeyemo SEO & Content Marketing Specialist.
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