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Cryptocurrencies have garnered a lot of attention over the last couple of years. Unfortunately, as we step towards mainstream adoption, there are a couple of issues that we can't just overlook. One of these is the energy consumption in crypto mining. The Proof of Work mechanism that powers Bitcoin consumes as much power as a small country. This has been counterproductive to the global efforts to combat greenhouse emissions and the climate change.
While we can't ignore the underlying problem, we also can't just dismiss blockchain innovations just because of the energy consumption of a couple of protocols. Especially as many protocols are now moving away from the Proof of Work Mechanisms and adopting the Proof of Stake.
Most of the newer protocols are committed to reducing energy consumption on the blockchains. The good thing is that the Proof of Stake (POS) doesn't rely on energy-intensive mining processes like the Proof of Work (POW). To provide a sustainable solution for this problem, we'll highlight the utility blockchain protocols offer in the fight against global warming.
Blockchain technology will play a significant role in combating the climate change. That's through managing clean energy solutions and enabling enhanced automation. The power businesses can digitize and value clean energy investments by tapping into blockchains.
But that won't come easily, of course. For such efforts to succeed, additional capital must be deployed to greener investment opportunities, stronger accountability, and transparency toward climate-friendly commitments.
One of the most reliable solutions here is hybrid smart contracts, the new backend framework for building cleaner energy solutions. The framework of hybrid smart contracts will use blockchain to track and set multi-party processes and smart contracts that define applicable rules for all parties involved.
Hybrid smart contracts also use oracles which are interoperability solutions for blockchains. Oracles help integrate data and other non-blockchain infrastructure into the blockchain contracts. There are already so many companies worldwide that have started studying, testing, and deploying these solutions.
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The number of blockchain countries worldwide as of 2019
As more companies realize the worth of blockchain technology, oracles, and smart contracts, this trend will become an industry norm. Blockchain technology can make it possible to tokenize carbon credits which companies can use to offset emissions.
These tokens can be easily traded, tracked, and oracles can be used to issue and audit carbon credits. Through remote sensing data and satellites, oracles are there to measure carbon prints of a particular project's stated carbon offset before the project began.
Using smart contracts, blockchains can mitigate the risk of the climate change. Smart contracts could make it easy for states to abide by their commitments to the climate change with a deposit - possibly a stake in a specific resource.
Any state that fails to comply with the carbon-offset obligations could be absolved and redistributed to other states that uphold their responsibilities. Also, by using smart contracts, states could stake resources on the blockchain. This will ensure further enforcement of the commitments.
We are trying to move beyond the carbon-neutral print blockchains. However, there's still so much to be done. Yearly Bitcoin production has an estimated 22 million metric tons of carbon dioxide emissions, which is at par with carbon emission levels of countries like Sri Lanka.
Bitcoin still commands a lot of attention, but the rest of the industry is moving towards a cleaner and healthier carbon footprint. Therefore, as more crypto developers adopt greener blockchain technology, the industry can lean more towards looking for sustainability in a broader context.
It's not just about the environment anymore. This is also about meeting your needs without compromising the future generations' resources. Therefore, sustainability is also about social equity and economic and material resources. That said, it's up to us to work with government entities and educators to explore this technology's nuances and provide the fabric for the next generation of technologies to build on.