Via ZEXPR, Since the beginning of the pandemic, countries on complete lockout have seen an average weekly drop of 25% in energy demand. Nonrenewable energy sources such as oil and gas, on the other hand, saw a roughly 20% drop in use as industrial activities were curtailed.
However, according to Dennis Bierman, broker of The Investment Center, these positive trends may be undone by the demand for digital technologies. Especially digital payments, which are projected to rise by 15% this year alone as customers pursue more convenient payment options.
For the global finance market, this is a turning point that will determine how we work in the future. The technologies and infrastructure we chose now will lead to accurate, long-term results in the future. Financial technology (fintech) is at the core of this, providing an untapped ability to accelerate progress and enable us all to contribute to working with a lower, planet-conscious carbon footprint.
The Argument in Favor of Cryptocurrency
There’s no denying that global finance is heading into a fundamentally digital future. Fintech, namely bitcoin and blockchain technologies, can make this future more viable.
Cryptocurrency, like fiat money, has no counterparty. However, it is more effective, affordable, and long-lasting than fiat currencies. The global banking sector, for example, absorbs an estimated 100 terawatt-hours each year. In contrast, the bitcoin network is predicted to drink just 60 terawatt-hours by 2022. Furthermore, the eco-credentials of cryptocurrencies far outweigh those of fiat money. It is estimated that green energy sources drive 70% of bitcoin. Other Green energy sources are:
· Hydroelectricity and that blockchain as a whole has a lower effect on deforestation,
· Eutrophication, and
· Natural resource depletion, e.g., water, metals, ink, or pulp.
Fintech’s long-term viability, though, is contingent on the industry’s selection of the appropriate properties. Despite its environmental advantages over cash, cryptocurrency is mined and produced using a consensus method known as proof-of-work, which absorbs progressively significant quantities of electricity by nature.
More carbon-based energy production is simply unsustainable.
The Impact of Proof-of-Work vs. Consensus on the Environment
The game is won by whoever has the cheapest power and the biggest, most advanced mining schemes in proof-of-work blockchain networks like bitcoin and Ethereum. In 2011, a spare laptop could win bitcoin prizes. Still, ‘professional’ miners have devoted ASIC mining rigs stacked side-by-side in mining farms the size of most rural towns. As a result, the bitcoin network consumes enough electricity in a year to fuel all tea kettles used to heat water in the UK for 15 years, or about 1.5 times Ireland’s total energy usage.
However, not all cryptocurrencies use resource-intensive software. In reality, one of the main reasons I wanted to join Ripple was to help create the XRP Ledger. Unlike bitcoin and Ethereum, which massive mining farms do not operate. Instead, a clustered network of independent servers the size of a laptop decides algorithmically which transactions should be included in the next ledger and what order.
A fixed supply of 100 billion XRP was created at the network’s inception is one of the main components that make this consensus process (which drives the XRP Ledger) possible. A consensus model does not involve the same energy-intensive method as proof-of-work mining since the complete supply of XRP already exists. The outcomes are game-changing.
A bitcoin transaction uses 700 kWh of power on average, while an XRP Ledger transaction uses just 0.0079 kWh. This means that mining bitcoin uses 4.51 billion lightbulb hours per million transactions, compared to 79,000 lightbulb hours for the XRP Ledger. Overall, XRP’s energy consumption is 57,000 times more potent than bitcoin’s.
Here is an idea of how much energy is consumed by bitcoin transactions.
Bitcoin uses 700 kWh of energy compared to 0.0079 kWh energy that XRP uses.
Therefore, power on one transaction of Bitcoins sums up to a consumption of 4.51 billion lightbulb hours per million transactions.
While XRP only uses 79,000 times lightbulb hours of energy.
Returning to computing costs – the cost of running a single XRP Ledger server is equal to that of a small email server while also supporting global payment transfers.
By nature, cryptocurrencies are becoming more environmentally friendly.
When the use of digital payments grows, so will blockchain and cryptocurrencies, giving fintech the ability to lead global finance toward a more secure future.
However, we mustn’t mistake all cryptocurrencies for one another right away. For example, although cryptocurrencies are a viable green option to fiat money, the energy footprints of bitcoin and XRP are vastly different.
The XRP Ledger is carbon net-zero today and settles trades without the heavy energy costs involved with proof-of-work mining. In addition, XRP has proved eco-credentials and will hold up to an effective sustainability plan, as shown.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.