Are Green Energy and Cryptocurrencies a Good Match?
It would be an understatement to say that Bitcoin uses a lot of energy. The bitcoin network currently consumes more electricity than Argentina. Worse, energy consumption is rapidly increasing, with estimates suggesting that it will have finished the power generated by all solar panels on the planet by the end of next year.
Bitcoin miners are locating their machines in areas with lower electricity and cooling costs, and some are even using renewable energy. However, using renewable energy is not the same as conserving energy, and Bitcoin already consumes a significant amount of the world’s cheapest renewable electricity (the exact amount is unknown). And that’s on top of running a computer-driven financial ledger system that’s excruciatingly slow, with transactions 10,000 times slower than VISA.
Fortunately, there are other cryptocurrencies, known as altcoins, that consume far less energy.
What are green cryptocurrencies, and how do they work?
Despite their growing popularity, many people are unaware of the technology behind cryptocurrencies. In a nutshell, cryptocurrency is digital money. Unlike fiat money, which local governments print, cryptocurrencies control by software known as a blockchain.
Unlike traditional banking systems, transactions on the blockchain will view through a public ledger. Each computer on the network has access to the most up-to-date data, obviating the need for intermediaries, banks, or other third parties to confirm transactions.
What are green cryptocurrencies, exactly?
Green cryptocurrencies are those that do not require mining to validate transactions or discover new ones.
Mining entails solving a series of mathematical equations with powerful computers and graphics cards. The commissions paid when sending bitcoin transactions and the fact that the Bitcoin protocol currently offers a reward of 6.25 bitcoins every 10 minutes make this effort extremely resource-intensive.
For validations, some cryptocurrencies, such as Bitcoin, use the concept of “Proof of Work” (PoW), which usually involves mining. Many other currencies, on the other hand, use alternative or hybrid approaches. As a result, they are less reliant on energy to complete the process, effectively making them green alternatives to mining.
If the entire Bitcoin network switched to the “Proof of Stake” system tomorrow, the network’s energy consumption would be cut in half.
The breakthrough here is that, unlike proof-of-work, which is inherently competitive, proof-of-stake requires participants to cooperate. If Bitcoin is a never-ending and ever-increasing zero-sum fight, proof-of-stake is a group of people with a common goal to borrow a boxing analogy.
Let’s look at some green cryptocurrency examples.
EnergyCoin and SolarCoin are two coins created to encourage the development of solar farms, but to be honest, these projects haven’t been very successful.
Do you want to invest in green cryptocurrencies?
Cryptocurrencies can be extremely risky in general, owing to the high volatility and uncertainty levels in the cryptocurrency market. There are also many cryptocurrency scams, which raises the risk.
The new regulations may have a significant impact on its potential. Retailers, financial institutions, and other organizations may be interested, which could increase its viability.
Finally, if you think you’d like to include green cryptocurrencies in your portfolio, only invest what you can afford to lose. This cannot be the location of your retirement funds. It may be worth a shot if you want to diversify your portfolio and are willing to take a chance.
The Nano is currently the best green cryptocurrency. Nano is on mathematical formulas that are far more advanced and optimized than bitcoin. As a result, it solves the Bitcoin network’s speed, cost, and energy consumption issues. It’s an elegant and scalable digital money solution that’s also quick, free, and, most importantly, long-term.
The Nano network employs a block network that extends beyond the chain of blocks. Because the blockchain is linear, transactions are grouped on the same chain, creating competition and delays. The block network differs from other networks in that each user has their chain of blocks, also known as the blockchain. It allows user accounts to be updated asynchronously, with only the “sender” and “receiver” account chains involved rather than the entire network.