The rise of cryptocurrency has been spectacular. There are now thousands of different digital tokens, each with its own unique use case and audience. But just as importantly, the world of cryptocurrency has also become increasingly conscious of its environmental impact. While most transactions take place electronically, cryptocurrencies themselves are essentially non-physical assets that exist as strings of code on a blockchain network. This means that mining them — a process which involves solving complex math problems — uses an extremely high amount of electricity in comparison to other traditional financial transactions like buying stocks or even PayPal payments. At the time of writing, the top 5 largest crypto miners by electricity consumption are: – Bitmain (Bitcoin mining) -BitFury (Bitcoin mining) -Ingestion (Litecoin mining) -WhalesVEND (Litecoin mining) And all this is before we get into the technicalities of Proof-of-Work vs Proof-of-Stake vs Masternodes!
Our sole interest is to list the top old cryptos in the space and mimic them with different crypto categories in the market. So your shiny cryptos will not feature on the list.
Cardano is a smart contract blockchain platform with a unique philosophy and process. It’s built on a decentralized peer-to-peer network of nodes, each with a copy of the ledger. Unlike Bitcoin, Ethereum and other “mined” tokens, there is no central body in control. Instead, a Cardano consensus mechanism uses a “select few” nodes to verify the network. This avoids the problem of centralization, which is one of the biggest issues facing the crypto world. The Cardano team is also working hard to improve their environmental impact, aiming to reduce their carbon footprint and work only with renewable energy providers.
Ethereum is the second-largest cryptocurrency by market cap and the most widely used decentralized application platform. Ethereum’s blockchain network is also home to a large number of Initial Coin Offerings (ICOs), so it may not be a surprise to see that it has a high demand for electricity. Although Ethereum is an efficient and effective network, the amount of electricity required to power it is significant. Ethereum is not only a currency but an entire decentralized platform and the most widely used ICO platform in the world.
Bitcoin Cash
Bitcoin Cash is a fork of the Bitcoin blockchain, but rather than try to replace the original, it was created with a different goal – to be used as a peer-to-peer electronic cash system. As a result, it has a very different mining system than other cryptocurrencies, including Bitcoin. Mining BCH is done by “stacking” them in a digital wallet and waiting for rewards, which are distributed based on how much computing power you contribute to the network. The more computing power you contribute, the more often you get paid for it, but you also use more energy. And unfortunately, BCH’s energy use is pretty high – around one gigawatt, according to one source. That may be an underestimate.
Litecoin is a fork of Bitcoin designed to be much more efficient, affordable and scalable. The Litecoin blockchain is a decentralized peer-to-peer network where Litecoin miners work to verify transactions. This uses a large amount of electricity, but the Litecoin team is working on ways to reduce this. The team is considering switching to a “proof-of-stake” model in which verification is done by “miners” who own the most tokens. This would reduce the amount of electricity used by the network.
Stellar Lumens
Stellar is a decentralized payment network and protocol that aims to connect banks and other financial institutions to facilitate cross-asset exchanges. Like other cryptocurrencies, the Stellar network uses a combination of proof-of-work and proof-of-stake consensus mechanisms. This means that an energy-hungry mining process is required, but that a more energy efficient model will be used in the future. This is expected to be implemented sometime in 2020. Stellar has a number of advantages over Bitcoin, and it is often referred to as “the next generation of blockchain”.
Zcash was forked from the Bitcoin blockchain in 2016 and is a decentralized and open-source cryptocurrency. It uses a proof-of-work consensus mechanism, which requires a large amount of computing power. Zcash claims that it will reduce their carbon footprint by increasing their use of renewable energy sources while also switching their mining system to a “proof-of-stake” model.
Summing up
The cryptocurrency landscape is ever-changing, and new developments are always emerging. But with these new developments also comes an increased awareness of the need for cryptocurrencies to be sustainable, environmentally friendly and in many cases, cheaper to use. With many blockchain projects now making efforts to reduce their carbon footprint and/or become cheaper to operate, the future of crypto certainly looks bright!
DISCLAIMER: This article is for educative purposes and it should not be considered a piece of investment advice. As greedy as crypto is, I will never advise you to invest in crypto, always DYOR.
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