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 development services in creating decentralized solutions, there’s one major concern associated with it. That concern is a high carbon footprint.

The global CO2 emissions linked to energy-intensive blockchain networks remain a concern, especially for systems that depend on high computational power. Other proof-of-work blockchains can also contribute to higher energy use and carbon emissions.

In general, the proof-of-work (PoW) consensus algorithm used by blockchains is responsible for high power consumption and thus a larger 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.

This also explains what green cryptocurrency is. It refers to a cryptocurrency that uses an energy-efficient network or a low-energy consensus model to reduce environmental impact.

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 is 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 blockchain or cryptocurrency.

5 Most Popular Green Blockchains and Cryptocurrencies

Several green blockchains and cryptocurrencies use lower energy models than traditional Proof of Work networks like Bitcoin. Following is a list of five platforms often discussed in the green blockchain space:

Cardano (ADA)

Developed by Charles Hoskinson, who is also the co-founder of the Ethereum blockchain, Cardano is a powerful blockchain platform. Businesses comparing the best blockchain platforms for dApp development can also evaluate Cardano for its smart contract support and Proof of Stake model. 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 (XLM)

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 (XTZ)

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 (XCH)

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.

Algorand (ALGO)

Last but not least, Algorand is a powerful blockchain that facilitates fast transactions at low fees. It is often discussed as one of the cleaner blockchain networks because of its energy efficient design.

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 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 lower their carbon footprint.

Any business looking to use blockchain technology for better operational efficiency can explore green blockchain models. Working with energy-intensive Proof of Work networks can increase environmental concerns. As climate concerns grow, businesses may prefer green blockchains that support lower energy consumption and sustainability goals.

How Teqnovos Supports Green Blockchain Development

Teqnovos works as a blockchain development company for businesses that want to build practical and scalable green blockchain solutions. The team has experience with several green blockchains and cryptocurrency ecosystems, including Algorand, Cardano, Stellar, Tezos, and Tron.

Businesses can develop a low-impact cryptocurrency blockchain platform or decentralized solution based on their goals.

Teqnovos can help businesses plan the right architecture, choose suitable blockchain networks, and move forward with expert development support.

Conclusion

Many blockchain platforms are energy-intensive and can have a negative impact on the environment. Proof-of-work blockchains, such as Bitcoin, require a lot of power for processing transactions.

Green blockchains often use Proof of Stake or other low-energy consensus models to reduce the energy needed for processing transactions. These blockchains are the future of the blockchain industry. They offer similar or sometimes even better efficiency and security than conventional blockchains.

For businesses, green blockchain adoption can support innovation, efficiency, and environmental responsibility.