Green Blockchain (Cryptocurrency): Here’s What You Need to Know
Bitcoin was released in 2009 and introduced blockchain technology to the world. Since then, the popularity of blockchain has skyrocketed. Today, blockchain has emerged as one of the most innovative technologies of the 21st century.
Despite the usefulness of blockchain in creating decentralized solutions, there’s one major concern associated with it – a high carbon footprint.
The global CO2 emissions of the blockchain industry are enormous. If we talk only about Bitcoin, it generates approximately 23 million metric tons of CO2 in a single year. Other blockchains, including Ethereum and Litecoin, are also responsible for releasing significant amounts of carbon dioxide into the environment.
In general, the proof-of-work (PoW) consensus algorithm used by blockchains is responsible for high power consumption, and thus more carbon footprint.
PoW is a consensus mechanism used to validate transactions in a blockchain network. It demands a lot of computational power as the nodes of a blockchain network need to solve complex mathematical problems to validate transactions.
However, a more refined consensus algorithm is available that significantly brings down the computational power required to validate transactions, known as proof-of-stake (PoS). Also, there are other consensus algorithms, like delegated proof-of-stake (DPoS), that require low computational power to record transactions. We utilize these consensus algorithms to create green blockchains or cryptocurrencies that are energy efficient.
Let’s take a deep dive into the concept of green blockchain and understand how it helps to bring down the overall carbon footprint of the blockchain industry.
What is Green Blockchain (Cryptocurrency)?
Any blockchain or cryptocurrency that has a low carbon footprint is known as a green blockchain or cryptocurrency. In general, a blockchain is a decentralized network that is a combination of various nodes. Moreover, nodes are computing devices that are responsible for validating and recording transactions on a blockchain network.
Blockchains like Bitcoin and Ethereum use the proof-of-work consensus algorithm, which consumes a lot of energy to record a transaction. Green blockchains, on the other hand, require comparatively less energy to validate and record a transaction in the network. They have a low carbon footprint and help us to make the most of blockchain technology without compromising the network performance.
Role of Consensus Algorithm in Making a Blockchain Eco-Friendly
Proof-of-work (PoW) is a popular consensus algorithm introduced by the first and the most popular cryptocurrency – Bitcoin. Also, PoW consensus brings forth the concept of mining, where several nodes in the network compete to solve complex mathematical puzzles for recording transactions on the blockchain network. The node that solves the mathematical puzzle to add a new block in the network gets awarded with a certain amount of cryptocurrency native to the blockchain.
To solve complex mathematical problems, it becomes essential to use high-end computer hardware, like application-specific integrated circuits (ASICs), as nodes. These devices consume a large amount of electricity to provide the computational power required to solve mathematical problems.
Despite being a useful consensus mechanism, PoW is energy-intensive. Also, the complexity of mathematical puzzles keeps on increasing as more nodes join the network. Any blockchain that makes use of PoW consensus has a huge carbon footprint. This is exactly why the world is moving towards more eco-friendly consensus algorithms like proof-of-stake (PoS).
In PoS, some random nodes are selected to validate transactions. They simply get a small amount of fee in the form of cryptocurrencies for validating the transactions. As limited nodes participate in the validation process, the demand for computation power is low, and so does the electricity consumption by the computing devices.
In this way, PoS emerges as a much more energy-efficient alternative to PoW and facilitates the creation of a green cryptocurrency or blockchain.
5 Most Popular Green Blockchain Platforms/Cryptocurrencies
Several cryptocurrencies or blockchains inflict significantly lesser damage to the environment compared to the likes of Bitcoin and Ethereum. Following is a list of the 5 most eco-friendly cryptocurrencies:
Developed by Charles Hoskinson, who is also the co-founder of the Ethereum blockchain, Cardano is a powerful blockchain platform. The best thing about Cardano is that it supports smart contracts and dApps. Also, it makes use of the PoS consensus mechanism for validating transactions on the network.
Cardano is a fast blockchain that can process up to 1000 transactions per second. According to its founder, the annual power consumption of the Cardano network is 6 GWh, which is extremely low compared to the 110 TWh power consumption by the Bitcoin network.
Stellar is a decentralized protocol and open network that simplifies the process of exchanging cryptocurrencies with fiat money. It also acts as a great choice for making cross-border transactions at low prices.
Apart from being scalable and cost-effective, Stellar is eco-friendly. Compared to Bitcoin, which consumes nearly 1575.9 kWh of electricity for a single transaction, Stellar consumes merely 0.00022kWh.
Tezos is another eco-friendly blockchain platform that also utilizes the proof-of-stake consensus mechanism. Developed by Arthur Breitman and Kathleen Breitman, Tezos was launched in 2018.
This blockchain platform is ideal for executing peer-to-peer transactions and supports the deployment of smart contracts. Also, it is a suitable blockchain for creating DeFi applications, NFTs, and games.
Chia is an emerging blockchain developed by Bram Cohen, who is also the author of the BitTorrent protocol. The platform relies on the proof of space and time (PoST) consensus algorithm, which makes use of the extra storage space available in the hard drives.
A node or participant in the network needs to provide a certain amount of storage space for a certain amount of time to run the Chia network and earn Chia tokens as a reward.
Last but not least, Algorand is a powerful blockchain that facilitates fast transactions at low fees. It is an energy-efficient blockchain with a negative carbon footprint.
Released in 2019, Algorand uses a version of the proof-of-stake consensus to minimize electricity consumption. Also, the Algorand blockchain supports smart contracts, which makes it a good choice for creating dApps.
Why Choose a Green Blockchain for Your Business?
Climate change is a major problem that the world is facing today. To reduce greenhouse gas emissions and reverse climate change, most businesses are taking various measures for lowering their carbon footprint.
Any business looking to leverage blockchain technology to ramp up its operational efficiency can switch to eco-friendly blockchains. Working with energy-intensive blockchains like Bitcoin and Ethereum is not good for the environment. Also, with the increasing concern for climate change, businesses have to switch to green blockchains sooner or later.
How Teqnovos Can Help Your Business with Green Blockchain Development?
Teqnovos is a leading blockchain development company with a team of blockchain developers to help you create eco-friendly blockchain solutions. Our team has in-depth knowledge and experience in working with several green blockchains and cryptocurrencies, including Algorand, Cardano, EOS, Ripple, Stellar, Tezos, and Tron.
Whether you want to develop an eco-friendly cryptocurrency, a blockchain platform, or blockchain-based solutions, we are here to turn your ideas into reality.
You can reach out to us anytime for discussing your blockchain project and get expert guidance to make your project a successful endeavor.
Many blockchain platforms out there are energy-intensive and are putting a negative impact on the environment. Especially, when it comes to blockchains that use the proof-of-work consensus algorithm, such as Bitcoin and Ethereum, they require a lot of power for processing transactions.
Green blockchains mostly use the proof-of-stake consensus algorithm, which drastically brings down the energy needed to process transactions. These blockchains are the future of the blockchain industry. They offer similar or sometimes even better efficiency and security than conventional blockchains.
As a business, it would be a great idea to use eco-friendly blockchains and contribute toward environmental conservation.