Cryptocurrency, Nfts, And The Metaverse
How to Prevent an Environmental Nightmare
It's time to address blockchain's dismal environmental track record as worries about the cryptocurrency industry's impact on the environment grow and hearings are scheduled in the US. The first step should be to alter the way blockchain transactions work, which may reduce its energy use by 99.99%.
Unlike traditional money, cryptocurrency is a digital representation of value that isn't created by a central bank or other government body. Blockchain technology, which enables the exchange of digital coins like bitcoin and ether, powers cryptocurrencies.
The technique of creating new currencies by resolving challenging mathematical puzzles is known as cryptocurrency mining. Additionally, the cryptocurrency's network transactions are validated during the mining process, demonstrating their validity.
The two basic methods used to validate cryptocurrency transactions are "proof of work" and "proof of stake."
To prove their claims, miners must compete to solve a mathematical challenge. The winner receives a fixed sum of cryptocurrency in addition to the authority to validate transactions.
Owners of cryptocurrencies use proof of stake to verify blockchain transactions based on the quantity of their staked coins. In other words, in order to have the chance to successfully approve transactions, cryptocurrency owners must pledge their own bitcoin as collateral.
Although proof of labor is slower and more energy-intensive than proof of stake, it is more secure. Blockchains that were innovative at the time, like Bitcoin, rely on proof of work for their mining processes, which are very energy-intensive. However, switching to proof of stake for transactions has the potential to significantly reduce emissions.
Although some bitcoin operations are currently powered by renewable energy, the energy may undoubtedly be used better elsewhere, such as to power homes or businesses. Instead, blockchain transactions may use just 0.01% of their initial energy if they were confirmed by proof of stake, a change Ethereum plans to make.
An astounding 7.46 gigawatts (GW) of power is thought to be required annually to power the Bitcoin network globally. In contrast, a nuclear power plant of typical size in 2020 generated about 1GW of electricity annually. An average US home could be run for more than 70 days on the energy used in just one bitcoin transaction.
More than 70 million tonnes of CO2 are released into the sky annually by Bitcoin and Ethereum mining operations combined. The annual exhaust emissions of more than 15.5 million autos are equal to that. In order to produce more energy, one cryptocurrency mining company is even attempting to restart operations at two coal-fired power plants in Pennsylvania.
Preventing Environmental Nightmare
Although it might seem paradoxical, implementing blockchain technology could ultimately benefit the environment in the long run. This is due to the possibility of automating many of the complicated payment processes used by businesses, which would cut down on the number of employees that must commute and lower emissions from transportation.
Even while it's difficult to forecast how far this revolution will go, it's becoming obvious that as blockchain technology develops, so will its advantages. For instance, bitcoin is accelerating financial inclusion for individuals who have traditionally been barred from participation in official financial institutions, while blockchain advancements continue to pave the way in business and finance.
Governments and authorities should work to guarantee that environmental impacts are minimized without inhibiting innovation as more companies enter the metaverse. A decent place to start would be to make proof of stake mandatory for blockchains.