There are many reasons to believe that crypto is not eco-friendly. Many examples have been brought to the table, including the electricity consumption of the Bitcoin network alone. This network is already consuming more than the entire country of Sweden, which has over ten million people. This has not been the only problem in crypto, as it has been faced with many malicious actors that pollute the networks and NFT markets. Novel solutions are required to fix the problems, and this is where eco-friendly crypto comes in.
Starting with the consensus mechanisms
One of the biggest hurdles is the way transactions are validated. In the traditional Proof of Work setting, this requires a lot of computation. Therefore, eco-friendly crypto has been looking for alternatives by working on novel consensus mechanisms. The well-known Proof of Stake is a good example. Instead of letting loads of computers work on computations, they randomly select several network participants based on their stake to validate the transactions. The idea is that the higher the stake in the network, the more interest you must positively maintain in the network.
Use cases are another important element of eco-friendly crypto
Apart from consensus, many projects focus on bringing sustainable innovations to the market through blockchain. In this section, we will highlight several examples of these use cases.
This innovation becomes especially important with the introduction of solar panels and other ways for consumers to generate electricity. Although most of the energy that is generated is consumed, consumers often have some spare energy left. Through blockchain-powered networks, they can buy and sell this electricity to other users. This allows them to trade directly with each other, often automatically, across vast distances.
Traceability of products
Coffee beans, diamonds, a piece of a garment or an eco-friendly crypto; tracking the origin of products is becoming more relevant than ever. Consumers want to know where the product comes from. Has it been produced sustainably? Has child labor been involved? These questions can be answered by supply chain blockchain technology that makes it traceable for consumers to see where raw materials, production, and distribution take place.
Efficient international trade
When it comes to international trade, there are many parties involved in the traditional supply chain. Often, raw materials are brought from one continent to another, and then back. This has huge implications for the planet. Eco-friendly crypto currencies aim to solve this by making intermediaries obsolete and letting manufacturers and producers talk directly to each other. This smoothens the international trade processes.