By Shailendra Singh Rao
Crypto has been in the limelight as an emerging asset class for a while now. Blockchain, the talk of the town in the tech world, has given rise to hundreds of cryptocurrencies since its introduction in 2008. Today, blockchain has become somewhat synonymous with crypto, and both are often used interchangeably. It is important to remember that a blockchain is like a digital ledger for transactions spread across a network of computers and can be deployed to different fields like other technologies. On the other hand, crypto is a decentralized, digital currency that can be used to make purchases by users.
Being one of the most talked-about technologies, blockchain is considered the future tech that has the ability to transform industries like banking, cybersecurity, intellectual, healthcare, etc. It is considered to be one of the safest ways to store data since the data on the blockchain cannot be modified.
Bitcoin, one of the highest valued cryptocurrencies, was one of the first applications of blockchain technology. In the recent past, both Bitcoin and blockchain have come under fire and worried environmentalists across the globe for contributing to increasing carbon emissions. It has been argued that there is massive energy consumption in mining cryptocurrencies, leading to an increased carbon footprint. It is not completely true because the companies have been using renewable energy sources for mining.
Both blockchain technology and cryptocurrencies have the potential to make the future greener.
Blockchain’s environmental benefits
The UN Environment Programme has suggested that blockchain technology has the potential to solve several environmental challenges that the earth is facing today. The technology can be deployed in various environmental initiatives once it is understood by policymakers, scientists and blockchain solution developers.
Blockchain’s ability to maintain records, transparency, value transfer and tokenized ecosystems make it a possibility to address environmental issues like air pollution, ocean sustainability, and biodiversity conservation. It offers greener alternatives. Like Ethereum enables the development of decentralized apps with a positive impact on the environment. It includes applications like supply chain management, recycling, energy, environmental treaties, environmental charities, carbon taxes, etc.
Making crypto sustainable
Cryptocurrencies also have the opportunity to go green with carbon offsets. What is a carbon offset? It is a credit that a company can purchase to reduce its carbon footprint. One carbon credit is a digital certificate that a firm
or environmental project has avoided emission (pollution) of 1 tonne of CO2 or equivalent greenhouse gas in a given year. A company is carbon neutral if the number of its carbon credits is the same as its carbon footprint.
The offsets in cryptocurrencies can turn into an essential climate mitigation tool. Currently, there are several examples of green cryptocurrencies in the global market. For instance, minting every one unit of Bitcoin Zero, which builds on the bitcoin network, 10 tonnes of carbon credits are generated using the REDD+ projects to offset the carbon footprint of each token.
Blockchain and crypto have a lot of scope to transform the world by addressing larger global challenges of the environment, energy, infrastructure, etc. All we need is a deeper understanding of the technology and how to leverage it to serve humanity. Using carbon credits through crypto and blockchain, we can reduce or offset current emissions and remove previous emissions from the atmosphere to reverse Climate Change and avoid its dire consequences.
The author is founder and managing director,
By Shailendra Singh Rao