NFTs, Cryptocurrency and the Metaverse – avoiding an environmental nightmare

Concerns are rising about the effect cryptocurrency is having on the environment. Most people find that shocking because it’s a digital currency. However, the blockchain has a poor sustainability record.

Most people feel that the blockchain needs to change how its transactions operate to cut energy usage by about 99.99 percent.

Cryptocurrency is the digital representation of value, and it isn’t issued by an agency or central bank. They’re solely powered by blockchain technology, allowing the exchange of virtual coins (Ether and Bitcoin).

However, cryptocurrency mining creates new coins when someone solves a complex mathematical problem. The mining process can validate transactions on the network to prove they’re genuine, too.

They become validated by a proof-of-stake or proof-of-work mechanism.

Proof of work means that miners throughout the world compete to solve math puzzles. The winner gets a specific amount of crypto and can validate the transaction.

However, proof of stake means cryptocurrency owners must validate blockchain transactions by how many they put up as collateral to approve the transactions successfully.

Generally, proof of work is more secure, but it consumes more energy and is much slower. The mining activities of Bitcoin blockchains are based on that and use significant amounts of energy. If everyone switches to the proof of stake option, emissions could be drastically cut.

While renewable energy is used to power some of those activities, the energy could be put to use in other areas, such as to power businesses and homes. If blockchain transactions get verified through proof of stake only (a move Ethereum hopes to make) energy consumption could be about 0.01 percent of the original value.

Emissions

It’s estimated that the Bitcoin network needs 7.46 gigawatts of power per year to run throughout the world. In 2020, average-sized nuclear plants only produced about 1 gigawatt of electrical power. In a sense, one transaction on the blockchain could very well power a US home for over 70 days!

The US committee found that one Bitcoin transaction adds about 400 kg of carbon dioxide into the atmosphere. Together, Ethereum and Bitcoin mining emits about 70 million tons of carbon dioxide into the air. That’s about the amount of exhaust emissions per year for 15.5 million cars!

Crypto futures

The main issue raised is that there is a huge potential for a significant increase in cryptocurrency value. Therefore, the required energy consumption and impact on the environment could keep growing exponentially.

That’s partly to blame because of related markets like non-fungible tokens and decentralized finance, which are based largely on Ethereum’s blockchain.

DeFi is a financial system that uses blockchain technology for users to make investments and transactions without using a central mediator. NTFs are unique digital media pieces stored within the blockchain.

While DeFi just launched in 2017, it already has a value of about $85 billion from 2021. The NFTs’ total sales grew from $74 million to $29.6 billion in one year.

Plus, NFTs are often created on the Ethereum blockchain, using the proof of work method to verify transactions. Therefore, it takes much more energy to create one. Since NFTs are part of the growing metaverse, the energy demand is likely to increase.

That doesn’t mean you can’t buy/sell Bitcoin yourself. However, many investors don’t have this issue because they trade online through various platforms. Those who want to automate the process may prefer bitcoin champion . You don’t own Bitcoin and can trade CFDs without hurting the environment.

Conclusion

Though adopting blockchain technology can indeed benefit the environment long-term, it’s still important to think about these things now. Mining efforts are still prevalent, but there are only so many Bitcoins and Ether to go around.

Overall, the benefits of the blockchain and cryptocurrency continue to soar. It’s just a matter of figuring out how to use less energy to get things done.