Have you ever thought about the environmental impact that mining a Bitcoin has on the planet? After reading Leigh Matthew's article " The 9 most sustainable Cryptocurrencies for 2021", it is impossible not to think about how ecologically impactful Cryptocurrencies can be.
Bitcoin, the most famous cryptocurrency to date, actually has shocking environmental implications. This is why so many investors, while trying to lower carbon footprint of cryptos, are looking for greener, more eco-friendly options.
With more than 4,500 exciting mineable coins and tokens, we'll be sharing in this article, our five favorite sustainable coins.
The Factors To Take Into Consideration
It is really hard to actually class cryptocurrencies with their environmental print. Actually, to be able to give an honest and objective view on the topic, there are a lot of factors to take into account. Smaller cryptocurrencies have a lower impact on our ecology because obviously they do not represent the same amount of daily transactions as Bitcoin does. However, if you put them on the same rank of transactions as Bitcoin, then it is just as negative.
Yet, some cryptocurrencies are actually more efficient in terms of energy because they rely on other kind of systems. Bitcoin relies on a « Proof of Work » system that implies a lot of processing power to make a single token.
Other Cryptocurrencies make use of a ‘Proof of Storage’ or ‘Proof of Stake’ system: These systems use far less energy, as do currencies using a technology named block lattice, that doesn’t require mining.
« Even among ‘Proof of Work’ cryptocurrencies, however, some are more energy intensive than others. This is primarily because these currencies use ASIC-resistant algorithms that consume significantly more energy than should be expected relative to how much of the cryptocurrency market they represent. A good example of this is RavenCoin which, by one calculation, accounts for 4.32% of the total rated power of the top 20 cryptocurrencies but has a market capitalization of just 0.06%. Interestingly, Bitcoin uses an algorithm that does allow for mining ASIC-based devices, and these devices are considerably more energy efficient than conventional graphic processing units (GPUs). »
And obviously because Bitcoin is gaining popularity and rising its value, the climate is suffering. If its price was to decrease then obviously this would lead to miners slowing down or turning off their devices as it would no longer be profitable for them to run the machines at that price.
If we want cryptocurrencies to become mainstream and widely accepted, then we all need to keep in mind the price it holds on our planet. This is probably why Tesla decided not to accept Bitcoin payments anymore: Elon Musk will also be looking into greener options.
Our 5 favorite Greener options to look into!
#1. Cardano (ADA)
Cardano was developed by the co-founder of Ethereum, Charles Hoskinson, and was tested by academics and scientists as the world’s first peer-reviewed blockchain. It functions mainly as a digital currency but can also be used for digital contracts, DApps, and other purposes. Compared to Bitcoin’s 7 transactions a second, Cardano can achieve 1000 per second.
How it works
Cardano is inherently more energy efficient than Bitcoin as it uses a ‘Proof of Stake’ consensus mechanism where those participating in the currency buy tokens to join the network. This helps save a staggering amount of energy, with the founder of Cardano claiming that the cryptocurrency network consumes only 6 GWh of power.
Cardano is similar in some ways to Ethereum, but without a lot of the bloat associated with the latter token. This enables Cardano to scale up to meet increased demands for the cryptocurrency, without compromising on speed or efficiency.
#2. Stellar (XLM)
The Stellar network was released in 2014 (forking off from Ripple) with the goal of bridging the gap between traditional financial institutions and digital currencies. Stellar doesn’t charge institutions or individuals for using the network and is increasingly seen as a serious alternative to PayPal as it enables faster, easier, and more cost-effective cross-asset and cross-border transactions.
Stellar is operated by the Stellar Development Foundation, a non-profit organization. It got its start with funding from Stripe (the payments startup), along with donations from BlackRock, Google, and FastForward. Tax-deductible public donations fund the network’s operating costs and the hard market cap for Lumens and removal of an inflation standard demonstrates that the SDF is looking to maintain a network that enables easy, accessible, low-cost cross-border payments rather than to make a quick buck with massive gains in the price of Lumen.
The network has also attracted serious engagement from IBM and Deloitte, as well as banking institutions in Nigeria, the Philippines, India, France, the South Pacific, and most recently the Ukraine. This brings to life the SDF’s vision to “unlock the world’s economic potential by making money more fluid, markets more open, and people more empowered.” Stellar was the first distributed technology ledger to receive certification as Shariah compliant.
How it works
Through the Stellar network, you can exchange US Dollars, Bitcoin, Pesos, Yen, and pretty much any currency traditional or crypto. The network’s token, Lumens, are used to facilitate these trades on the blockchain-based distributed ledger at a fraction of a cent and with great efficiency (which also translates to a lower carbon footprint). The network also allows individuals and institutions to create tokens for use on the network, which has inspired some to use the network for sustainability initiatives such as investing in renewable energy.
The key distinguishing feature of the Stellar network is its consensus protocol. This SCP is open-source and relies on authentication of transactions occurring through a set of trustworthy nodes rather than running through the whole network as a proof-of-work or even proof-of-stake algorithm. The cycle for authentication is thus much shorter and faster, keeping costs low and energy use to a minimum. The algorithm behind this is known as a federated byzantine agreement and is an energy-efficient alternative to the Bitcoin style traditional mining network.
Stellar’s token, Lumens (XLM), can be bought and sold on most exchanges, including Binance, Coinbase, Kraken, Bittrex, Bitfinex, Upbit and Huobi.
#3. Ripple (XRP)
Ripple has been around since 2012 as a private platform that constitutes a voting system reliant on validators worldwide. XRP is not a currency in itself. Instead, it is a pre-mined token used to bridge asset transfers, with the network able to manage more than 1500 transactions per second.
How it works
Ripple uses the Ripple Protocol Consensus Algorithm (RPCA), which means that at least 80% of the network’s global validators have to approve a transaction before it gets added to the XRP ledger. The result is a secure, efficient network that allows users to move money around currencies with relative ease, little expense, and great speed (around 3-5 seconds per transaction!).
#4. Nano (NANO)
Nano is free, fast, and uses considerably less energy than Bitcoin and many other cryptocurrencies. It has been around since the end of 2015 and has a relatively small carbon footprint even now. It is also scalable and lightweight as it doesn’t rely on mining.
How it works
Nano uses block lattice technology, which is energy efficient. Digiconomist estimates that compared to 950 kWh for each Bitcoin transaction, Nano uses just 0.112 Wh. It is still reliant on a Proof of Work mechanism, but the block lattice goes beyond blockchain to create an account-chain for each user on the network. The Nano platform uses a system called Open Representative Voting (ORV), where account holders vote for their chosen representative, who then work to securely confirm blocks of transactions.
On the Nano platform, user accounts can be updated asynchronously, rather than needing to involve an entire linear blockchain as is the case with Bitcoin and others. Instead of competition and delays, then, Nano involves just the sender and receiver account-chains and can handle as many as 125 transactions per second.
#5. EOSIO (EOS)
EOSIO is a public blockchain beloved by developers because it is simple to set up and write applications in several programming languages, is highly scalable, and costs nothing.
How it works
EOSIO is another ‘Proof of Stake’ platform that uses pre-mined EOS tokens that can be traded on standard cryptocurrency exchanges such as Coinbase, Binance, and Kraken.