Summary: Blockchain is a decentralized digital ledger that allows for secure transactions. It has created a new gaming experience for businesses and players by allowing them to buy in-game assets with NFTs and cryptocurrencies and exchange them for real-world money.

Environmental sustainability for large businesses has never been more important in the history of the Earth. The public is demanding greater accountability from all industries while the world is dramatically transforming to adopt more sustainable measures. Let alone blockchain technology. Ethereum chose to reduce its carbon footprint from the largest emitter to practically Zero Carbon!

Energy Footprints And Carbon Credits

A carbon footprint is a way to quantify the effect that human activity has on the environment, specifically on climate change. It concerns how many greenhouse gasses (like CO2 - Carbon dioxide) are produced daily by burning fossil fuels for transportation, heating, power, and other means.

Carbon Credits

By creating a standard where businesses can exchange emissions permits, carbon credits were developed to lower greenhouse gas emissions. Companies are given a predetermined quantity of carbon credits under the system, which decreases over time. Companies have a financial incentive to cut their carbon emissions thanks to carbon credits. Those who find it difficult to minimize emissions can continue to operate, but it will cost them more money.

How Blockchain Impacts Environment

According to estimates made by experts at the University of Cambridge, over 200 million tonnes of carbon dioxide have been released by bitcoin miners in the cryptocurrency's brief lifespan. Their estimate for the 13 years since Bitcoin's creation exceeds Colombia's entire 2018 emissions output.

What Causes Such An Emission?

Cryptocurrencies like ether and bitcoin use a "consensus mechanism" to control how transactions are confirmed and added to the blockchain. The two biggest cryptocurrencies, Bitcoin and Ethereum 1.0, both use "proof of work" as their consensus method. Virtual miners who must solve a challenging mathematical puzzle are the central component of this process. The first miner to find a solution receives a certain quantity of cryptocurrency in exchange for updating the blockchain with the most recent verified transactions.

The amount of computer power and electricity needed for this operation is tremendous; according to some estimates, only one Ethereum 1.0 transaction can use as much energy. Transactions can use as much energy in a week as the typical US home does. Another significant problem is the electronic waste produced by the specialized equipment and computer servers used in mining, which typically have a short lifespan.

Proof of Stake:

So, Ethereum decided to adopt a different consensus mechanism called Proof of Stake. A network of "validators" participates in or "stakes" their own money in a proof-of-stake system in exchange for the opportunity to approve the new transaction, update the blockchain, and receive payment. The network employs an algorithm to choose a winner based on how much cryptocurrency each validator has in the pool and how long it has been there. The proof of stake consensus mechanism is said to utilize 99% less energy than the proof of work approach. Additionally, the hardware needed is more generic and comparable to a typical laptop, allowing the network to scale and lowering the amount of electronic trash produced.

We anticipate a rise in the popularity of more energy-efficient and economically viable cryptocurrencies that use the proof of stake mechanism as energy costs and environmental concerns rise.