Explore the opportunities of blockchain in creating a sustainable environment
Over the past few years, the pursuit of cryptocurrencies has become a massive phenomenon. The global blockchain market size was estimated to be around $4.8 billion in 2021 and is expected It’ll go up to $69 billion by 2030. Sounds cool for a technology no one really believed in, right?
People feel comfortable investing in cryptocurrencies and earning crypto assets. But there is a price for convenience that may grow exponentially in the future.
For years, people have expressed concerns about the environmental cost of blockchain networks. Cryptocurrencies are often accused of consuming massive amounts of energy, being an absolute climate disaster.
Some crypto assets, such as Bitcoin, annually carry a huge carbon footprint estimated in energy consumption Compared to a medium-sized country Like Argentina or the United Arab Emirates. 1 bitcoin transaction would be born The equivalent of CO2 706765 swipes from a Visa credit card. Given the need to mine the most popular cryptocurrencies, this is not just about Bitcoin.
Blockchain mining is often driven by a Proof of Work (PoW) consensus mechanism, which means decentralizing validating new transactions by doing some math, adding them to the blockchain, and getting rewarded. Since vast energy resources support this process, the environmental impacts are getting worse with the rapid increase in the number of crypto users.
In response, the crypto industry has to change course, moving towards carbon neutrality by adopting green blockchain strategies. Fortunately, this sector is undergoing continuous improvement and development due to the increasing number of green blockchain solutions.
When the energy use issue is identified, the main question is how the crypto industry can contribute to carbon neutrality, or primarily a carbon neutral blockchain initiative. There are many alternatives to mining-based systems, although they are not yet widely adopted.
Let’s examine some options:
Proof of Stake working algorithms
As PoW, the Proof of Stake (PoS) protocol also has the main task of ensuring trust in the blockchain network. But there is one important difference – Proof of Stake requires much less work to validate the transaction because it does not solve any mathematical problem, unlike Proof of Work, and therefore consumes less power. It looks like the POS consensus mechanism could be the future of the green blockchain.
Ethereum, one of the most popular cryptocurrencies in the world, has decided to change its ecosystem. Recently, it has shifted the method of obtaining tokens to a more sustainable method – PoS, and besides achieving better energy efficiency, Ethereum became too A more decentralized and scalable solution.
The other few consensus mechanisms are considered to be energy efficient:
Burn proof: A mechanism that requires you to burn some tokens to get the right to mine the next block, so you need to spend some money to get the possibility of mining.
Proof of ability: A system that uses free hard disk storage space to verify its health. This way, the more storage you have, the more solutions you can store and reuse.
Proof of elapsed time: Another consensus mechanism that prevents high resource use and energy consumption is using lotteries to decide who will update the blockchain, so it is very random.
Carbon emissions into credits with blockchain
So what’s next after reducing energy consumption? The answer is carbon credits. After the establishment of the carbon credit market due to Kyoto ProtocolCompanies can buy carbon credits to offset their emissions. Typically, these carbon credits are boosted by projects that can offset emissions.
For example, suppose that one ton of carbon emissions is offset by one carbon that costs $100. When you buy ten carbon credits from a company that supports a reforestation project, you are investing in reforestation to offset your emissions.
The carbon market includes two different markets that depend on the end user: compliance and voluntary. The first type is used by government signers and large emitters. Usually, these companies receive carbon credits to offset their emissions to a certain point. The company will have to pay a fine if its emissions are higher. However, if a company emits less carbon than it is entitled to, it can resell those carbon credits to another company and make some money instead.
In contrast, voluntary markets are not explicitly defined. Companies, individuals or private entities are free to choose whether or not to purchase the carbon offset, and the project to which these credits may be associated – a solar/wind farm or forestation initiative.
There is a problem with the voluntary carbon market – it lacks transparency and quality control, which hinders potential participants.
Blockchain technology, at this point, is ideal for solving the problem of transparency and voluntary market availability for all. The role of blockchain in the carbon credit market is very simple but effective.
Using the blockchain, we can create a system to collect carbon dioxide measurement data on Earth and store it permanently in the blockchain with further validation. The collected data will be converted to carbon offsets while maintaining transparency and security. Essentially, this approach turns carbon emissions into verified blockchain carbon credit tokens that can be exchanged to offset the carbon dioxide footprint.
One way to measure your carbon footprint is to use IoT technology with remote sensing. Quantum Geo Analytics platform It is the right tool for that. The platform has all the features required for out-of-box forest CO2 emissions estimation.
We will definitely share how we detect carbon dioxide emissions with GeoAPSo be sure not to miss this thread!
Today, we are experimenting with the first completely carbon-neutral blockchain network, Algorand.
We are currently collaborating with Vigee.Art team on green blockchain technology project with a sustainable mission. Vigee.Art is the world’s first NFT community focused primarily on supporting the artist community by all means through lowest fees, various rewards, charity auctions, and support for cultural initiatives with the ability to receive solidarity funding from the network.
Choosing Algorand as the foundation of the network was essential due to the fact that it complies with a range of our technical requirements, such as low fees and transaction costs, secure and fast protocols, and reduced power consumption required to build a block. As a niche leader due to its efficiency, environmentally friendly approach, and a partner of the Climate Trade Organization, Algorand works to increase its client audience by providing innovative services and leveraging carbon offset capabilities.
As a bonus, Algorand has allowed us to build a versatile product architecture base that we can reuse in many other projects, so consider this technology for your project. Still undecided if it will fit your job assignment? write to us and get expert advice.
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