The world doesn’t just have to be greener. Gradually this wording together with all those related to the theme of ecology, will have to describe a normal way of living in society. In this sense, the green has also arrived in the world of cryptocurrencies. It all started with a fierce criticism, which Bitcoin encountered for various reasons. The cryptocurrency for transactions and to support the entire network would adopt a high energy consumption. But not only. Here are the polluting characteristics of the crypto system and which are the virtuous ones that the next green cryptocurrency will have to have in order to be eco friendly also in all transaction phases.
The first blockchains
Bitcoin, Ethereum, ZCash (…) albeit with different characteristics, are all based on POW validation. To simplify, these networks to validate transactions use very complex and therefore polluting processes due to energy consumption. Bitcoin, for example, is on the single transaction, the most polluting. Always bearing in mind that consumption is the most disadvantageous side of the coin of the first networks and that they depend on the technology used.
Another aspect that makes the first blockchains polluting is the geography of mining. Mining is the activity at the basis of the entire cryptocurrency system. Indicates the set of techniques that have as their object the extraction of useful information from large amounts of data, through automatic or semi-automatic methods. It is easy to understand how energy mining is extremely expensive in terms of energy. But not only. The location where the mining takes place must also be considered.
In the case of Bitcoin it is almost exclusively China, where the regulatory protocols are different and not always in line with the European ones on eco-sustainability. In other cases, however, there could be a more decentralized situation, but in any case difficult to control in terms of consumption, since the relative mining is carried out from home.
More transactions, more sustainable?
Another aspect to intervene on is scalability, i.e. the ability to support a large number of transactions in the long term. Many networks are low-power until they reach the optimum point for the number of transactions on the network per second. After that they can become very energy consuming. In fact, consumption per transaction is crucial, especially over the medium and long term. The single transaction is not truthful in terms of consumption. It is essential that consumption does not rise as transactions increase.
With the POS or Proof of Stake method there was a first draft of change. These are validation algorithms in Proof of Stake that allow to no longer need too complex calculations. They therefore allow to reduce consumption with greater scalability.
So the main question. What must a cryptocurrency have to be truly green?
There are two ways to answer this question. In fact, there are cryptocurrencies that use energy-saving technologies or that draw on renewable sources and without too much waste and those that instead have been created precisely for environmental purposes.
The former are blockchains that aim to use more energy efficient algorithms for example.
As for cryptocurrencies born with ecological purposes instead, these often belong to the world of renewable energy. Some offer prizes to those who engage in environmentally virtuous behaviour, while others use alternative energy quotas. These are sectors that do not compete with each other and in general with the world of cryptocurrencies.
What must a cryptocurrency have to be truly green?
Apart from this category in itself, some points must be observed to define a green cryptocurrency. Individual transactions and scalability have already been enumerated. It is the turn of the PoW protocols which is the one used by Bitcoin and by the first very energy-intensive systems. Many are moving to PoS that is much more energy efficient even if with some security flaws to fix.
Many of the green blockchain protocols, often implementing centralization by design, allow cheaper and greener transactions, but with a lower level of security than PoW algorithms. Another more eco-sustainable solution in terms of consumption and greater scalability is sharding. It is also a more competitive tool, because it allows to evaluate a higher number of transactions per second with equal conditions. This mode can also be useful for evaluating more optimal energy consumption.
To deepen the topic: