Sustainability is the New Cryptocurrency
January 22, 2019, 6:37 am
The Bitcoin technology has disrupted our view on money, but can it also truly change our approach to being sustainable?
The “Rebound Effect” is a term used for explaining challenges in determining energy savings from efficiency. The effect has two components. The “direct rebound” is the percentage of energy savings from efficiency that are offset by increased use. Efficiency makes an energy-consuming technology less expensive to use, so people use it more often. These savings are not lost, but redirected to other uses. The issue is the “indirect rebound” which refers to the way saved money is being spent. A user saves money from energy spending, but redirects the funds to purchasing other items, which involve labor, materials and capital costs. Therefore, the shift towards a more sustainable lifestyle and approach is only superficial. How can the “rebound effect” be avoided?
Green cryptocurrencies seem to be the solution. For example, GENERcoin is a cryptocoin which can be redeemed for a specific solid biofuel, or traded like bitcoins. GENERcoin is backed by the energy outputs purchased from renewable energy generating facilities, such as Arterran Renewables, that are then sold to wholesale distributors, and end users. Arterran uses cellulose, an abundant organic polymer, in the form of manure, municipal solid waste, or wood waste, and their proprietary technology, to create a truly renewable solid biofuel that is a direct replacement for non-renewable fossil fuels. By being attached to a renewable type of fuel, GENERcoin cancels the “indirect rebound effect”.
SolarCoin is a popular green cryptocurrency, aimed at customers who are already adopters of solar powered energy generators. Its creators describe it as being “like air-miles for Solar electricity generation.” The total reserves of SolarCoin represent 97,500 Terawatt hours of solar-energy.
Even if they tackle our approach to conscious spending, cryptcurrencies – and especially Bitcoin – might be associated with another sustainability issue. According to the World Economic Forum, the electricity used in a single Bitcoin transaction, for instance, could power a house for a month. In 2020 Bitcoin will consume more power than the world does today.
The issue lies in the process of mining. Proof of work (PoW) – which existed before bitcoin – is a requirement to define an expensive computer calculation, also called mining, that needs to be performed in order to create a new group of trustless transactions (called block) on a distributed ledger (called blockchain). Bitcoin mining consumes the same amount of electricity every year as Denmark – 33TWh and its energy use was reportedly growing at a rate of 25% per month. Proof of stake (PoS) challenges the process, by choosing the creator of a new block in a deterministic way, depending on its wealth (called stake). The switch from PoW to PoS provides benefits such as energy savings and a higher level of safety.
Several green cryptocurrencies are challenging fundamental functioning aspects of regular cryptocurrencies and adopting PoS. Bitcoin Green (BITG) aims to raise awareness for sustainability issues that are being created by PoW. The cryptocurrency, founded on the “Green Protocol” is considered to be dramatically faster, cheaper, and more scalable than Bitcoin in its current form, addressing nearly all of Bitcoin’s limitations and problems (high network fees, slow transaction times, massive energy consumption etc.).
EnergyCoin is innovative and sustainable in its operational structure. EnergyCoin is a peer-to-peer cryptocurrency and works similarly to a local or community currency. Transactions in EnergyCoin run on the PoS protocol. The choice was conscious, taking into consideration that staking is more energy efficient compared to mining. Producers can earn SolarCoins, a bitcoin with a twist, by presenting their solar renewable-energy certificates.
Nano might be the greatest disrupter on the list. Growing in popularity, Nano’s greatest differentiator is being the first cryptocurrency solely designed to work as an actual currency. Because it doesn’t use mining, Nano doesn’t share Bitcoin’s issues related to sustainability. It also leads to cheaper costs of running a business: using conventional payment methods, many small businesses are faced with unsustainable charges for processing transactions that use a credit or debit card. They can freely accept Nano, without having to pay any additional fees, as Nano is a peer-to-peer decentralized currency, with only the payment sender and receiver involved in each transaction.
The future of cryptocurrencies looks green, as sustainability is being considered and integrated from an early stage into the process. Green cryptocurrencies might just be the driver needed to make the biggest change of all: our mentality and habits.