Why is everyone talking about the environmental impact of cryptocurrencies?
When Elon Musk announced in March this year that he was abandoning his decision to accept Bitcoin (BTC) payments for Tesla vehicles, he raised the world and made the blockchain industry as a whole aware of its environmental impact. The mining process used by Bitcoin and others requires a large energy supply as it needs powerful machines to run at full throttle to run transactions.
The level of computer processing power required results in high electricity consumption. This led to people starting to discuss environmental impacts.
First of all, how do cryptocurrencies harm the environment?
Sustainability remains one of the key points in discussions about the future of cryptocurrencies. Some of the biggest cryptocurrencies today require huge amounts of energy consumption. It turns out that blockchain mining to verify transactions is harmful to the environment. As the number and size of server centers around the world increase, we are also seeing an increase in environmental concerns. However, with increasing innovations, alternative business solutions are emerging that can help reduce energy consumption.
New coins are generated to reward miners for their work. This proof-of-work (PoW) protocol also helps protect the network from outside attacks. In a distributed network, mining is used to avoid double-spending cryptocurrencies.
Many of the crypto industry's powerful players dedicate their time to discussing the sustainable future of cryptocurrencies. Led by MicroStrategy CEO Michael Saylor, the Bitcoin Mining Council aims to promote energy consumption transparency and increase sustainability in blockchain initiatives.
Proof of labor moves to proof of share
Most of the newer blockchain networks prefer to use proof-of-stake (PoS) systems over proof-of-work. Proof-of-work systems perform inefficient cryptographic problem solving and ultimately become energy dependent. On the contrary, the users involved in the proof-of-stake are validators, not miners. Validators can add to the blockchain by staking large amounts of cryptocurrencies. This eliminates the need for competition between miners, saves energy, and the blockchain can run each transaction more efficiently.
Will a "green cryptocurrency" exist?
All transactions carried out in cryptocurrency networks are broadcast to all computers in the network, and this interconnected system verifies the transactions. The environment-damaging mining inefficiency threatens the understanding of blockchain as a long-term business solution.
Fortunately, there are studies on environmentally friendly digital assets and we are seeing rapid innovations in this area. Proof-of-stake is now the basis for relatively newer protocols such as Cardano (ADA) and XinFin (XDC).
XDC Network is powered by master nodes responsible for block generation. The XinFin platform is a powerful blockchain protocol that can integrate seamlessly with legacy systems and overcome some of the major problems faced by centralized platforms.
XinFin XDC Network, which also has an authorized proof-of-stake based cryptocurrency, is now able to show peak performance without being heavily dependent on power consumption. XinFin fills the gap for all businesses that want to benefit from decentralized applications. Founded in 2017, XinFin Network has positioned itself as a high-end enterprise blockchain and has partnered with organizations to improve infrastructure across multiple industries with cutting-edge technology using advanced smart contracts. XDC significantly reduces energy consumption and therefore its carbon footprint.
What's next for the industry's green movement?
Evaluating the environmental consequences of blockchain technology has resulted in new innovations in the crypto space. This has spurred networks like XDC to create sustainable alternative technology solutions for businesses that want to operate with digital currencies and Ledgermail, StorX, GoPlugin, TradeFinex, stablecoins and many more in the future. With more and more developers starting to use cryptocurrencies to integrate with blockchain technology, XinFin is helping to reduce environmental impact.